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Get Your Debt Under Control


By Vera Laxxon

Carrying a debt load has become the norm rather than the exception for most North Americans. Whether for cars, homes, education or fancy toys, we borrow, borrow, borrow. But some people are getting in so deep they can't see a way out. If that includes you, or you are headed in that direction, here are some tips to regain your financial balance.

If you feel yourself falling deeper into debt each month, determine what you are spending your money on. Write down every expenditure for one month, then figure out where you can cut back. Getting a fancy latte everyday before work? Why not make coffee at home? This alone can save you over $100 a month.

To wrestle with debt and win, you need a good plan. Take a hard look at all of your debts. Which are charging the most interest? They're the ones you need to pay down first. If you owe a lot of money or have several loans, then you might benefit from the advice of a debt counselling service.

Try to consolidate your debts. If you have three credit cards each carrying a balance, get them all onto one card, and get rid of the others. Try to find a card offering a lower interest rate. If you have several loans, see if your bank can offer you a low interest consolidation loan. Just be sure that the interest is lower than what you are currently paying.

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Maintaining a credit card balance is the very last thing you should be doing, because the interest rates are so high. So if you are putting cash into savings accounts or other low interest investments rather than paying down your credit card, you are simply digging yourself a bigger debt hole. By getting back to even on your credit card, you will eventually create the room to make some good investments.

It's important to chip away at credit card debt, even if you feel you have to maintain a balance. Never pay just the minimum amount required, because most of it is comprised of interest. When you keep stacking up more purchases each month while just paying the minimum, you're headed down a big debt hole.

Payment holidays are typically offered for credit card debt once or twice a year. But don't even think about skipping a payment, because the interest continues to build and you end up owing more.

While ignoring mounting debt may seem the easiest thing to do, because the financial reality is so frightening, it's a very brief and ineffective solution.

Facing reality squarely and as early as possible in the debt cycle will start the process to bring the results you really want: putting you, and not your debt, in control of your life.

© Vera Laxxon

 

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