Getting out of debt is never an easy task, but it’s infinitely harder when you’re on a low income. As disheartening as it may be to see the interest charges racking up each month, know that you’re not alone and that it’s absolutely still possible to get out of debt on a low income.

Stop Comparing Yourself to Others

This is both the hardest and easiest step, and one that’s absolutely vital to undertake before you can even begin to get a handle on your debt. When you’re looking at stories of other people who have gotten out of debt faster than you, you have to remember that you’re not them and that comparing your situation to theirs is futile. You have no idea what the people you’re comparing yourself to are dealing with privately. You don’t know what their financial or familial situations are like, and you don’t know what kind of help they might be getting from their parents, partners, or friends to help them through.

Just focus on the reality of your own situation and think about what you can do to help pull yourself out of debt. Accept what’s happened and don’t let bitterness or envy affect your ability to move forward.

How Much Do You Owe?

As cathartic as the mental image of aggressively throwing money at the problem might be, you can’t realistically start tackling your debt without a concrete plan in place. In order to do that, you need to know A) How much money is coming in each month, B) How much money is going back out again each month (for things like bills, rent, food etc) and C) How much is left over.

You also need to know exactly how much money you owe and how that debt is spread out across your various credit cards, loans, and lines of credit. Make a chart that lists every single source of credit you have access to on the left-hand side. Across the top, have four corresponding columns that say: Total Debt Owed, Total Available Credit, Interest Rate, and Minimum Payment (see sample chart below).

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There are few things as difficult as trying to get out of debt. Whether you’ve been struggling on and off for years or were just recently hit with a large and unexpected financial burden, the hopelessness that accompanies  being severely in debt can feel impossible to overcome.

We’ve compiled a list of some of our most relevant posts to help you look towards the future with your head held high while planning how to get out of debt.

Causes of Debt:

• Want more information regarding the main causes of credit card debt that everyone should be aware of? Read this.
• Here’s a post on how to put the brakes on debt.
• Not sure which of your past behaviours might have hurt credit score? Here are some of the most common negative credit habits a person can have (and how to break them before they do irreparable damage to your credit score).
• Are you going into debt?
• Curious about how many other people are in your situation? Here are some of the most common credit problems Canadians face.
• Here’s a list of some bad credit warning signs to pay attention to before the problem becomes too big for you to handle.

Recognizing the Problem and Finding Help:

• Being harassed by debt collectors? Here’s how to make them stop calling you.
• Is it time for a credit intervention?
• Here’s how to stay calm when faced with money troubles.
• Asking for help can be one of the hardest parts of working through debt. Here are some tips on how to reach out to others when you need assistance.

Strategies to Get Out of Debt:

• You’re ready to face your debt head on … you’re just not sure how. Read this to find out whether the snowball or the avalanche method makes more sense for your particular situation.
• Considering loan refinancing? Here’s what you need to know.
• Curious about whether debt consolidation might be the best solution? Read this.
• Depending on the severity of your debt, you may seriously be considering filing for bankruptcy. But there’s another option you should know about before making a decision: a consumer proposal. Click here to learn the difference between a proposal and bankruptcy so you can choose the option that makes the most sense for you.

Re-Establishing Your Credit Score:

• Whether you’ve already started to get a handle on your debt or your trying to plan for the future, it’s never too early to educate yourself. Here’s how to re-establish your credit after dealing with debt.
• Looking for more resources on building your credit? Check out this post.
• There’s a difference between good debt and bad debt. How much do you know about both categories?
• Credit utilization is a vital part of your credit score and can significantly impact your credit history. Learn more about the different components that make up your score right here.
• It’s important to understand up front all the different financial factors that can negatively impact your score so you can prevent them from happening. Here’s a post that outlines some of the most common reasons for your credit score to drop.

Still feeling overwhelmed by the thought of getting a handle on your debt? We can help. Fill out our online application right here to book an appointment today!

Whether you’ve had the same car for a number of years or are looking to buy your first one, there are a number of questions you should ask yourself before taking the next step and buying a new car.

How are your Finances?

 

One of the first things you should look at when considering whether or not you’re ready to buy a new car is if you can realistically afford it. In addition to the actual car payments, you’ll need to have enough contingency money set aside to cover any unforeseen expenses and you’ll need to check how much your insurance is going to cost each month.

How are you planning on financing your new vehicle? Have you already been pre-approved for a loan through your bank (the best option) or are you planning on getting financing directly through the dealership? What about your down payment – do you have enough saved up or should you wait a few more months until you’ve got a more comfortable savings buffer?

Have you done your Research?

 

Make sure you have a list of vehicles you’re interested in rather than just focusing on one specific make or model. As dead set as you might be on a certain vehicle right now, you may be surprised to discover that it doesn’t feel like the right fit when you finally see it in person and/or take it for a test drive.

What is the environmental impact of the vehicle you’re interested in? Assuming you’re not buying an electric or hybrid vehicle, how much will it cost to fill the tank with gas? Are there any promotions or deals online that could help you save some additional money? Have you considered buying a used car or leasing a vehicle rather than buying new?

Remember to expand your reach beyond just the dealerships immediately closest to your home. On top of doing price comparisons online, visit and speak to different dealers to ensure you’re getting the best deal

If you’re still uncertain, a good rule of thumb is to see what the general consensus is online from other owners of the vehicles you’re considering buying. While you should never take the word of a stranger on the internet as gospel, reading reviews can be a great resource when you’re trying to narrow your choices down.

You’ll know your done researching when you’ve found a short list of vehicles that appeal to you aesthetically, that complement your lifestyle, and that fit comfortably within your budget.

Continue reading “Are you Ready for a New Car?”