Articles Archives - Get Me Debt Free

Why Getting Out of Debt Should Be Your Top Priority

Adeel Adeel — Fri, 01 Mar 2024 18:46:18 +0000

The shackles of debt weigh down millions in today’s society. Credit card bills, student loans, car payments – the monthly burden of owing money has become the new normal.

We numbly accept that a large chunk of each paycheck must go straight to creditors, leaving little leftover for much of anything else, let alone to pursue your dream. But what if freedom was possible? What if you could break those financial chains and find release?

Life without the crushing stress of debt not only exists but should be your top priority. Why? Because carrying all that debt keeps you stuck financially, costs you a fortune in interest, and prevents you from investing in the future you really want.

Making debt freedom your top priority can open up new opportunities to build savings or wealth, and to live life on your own terms. The financial, mental, and emotional benefits of becoming debt-free make it one of the wisest investments you can ever make.

This is why getting out of debt must become your number one goal. The burden has weighed on you long enough. It’s time to regain control of your finances and future. Freedom requires decisive action.

Once you emerge on the other side, you are more prepared to build the life you prefer, unrestricted by what you owe. Pursuing debt relief brings hope of breaking free permanently. A better financial chapter lies ahead.

The Deadly Quicksand of Debt

It’s easy to think, “I’ve got this – I can handle the debt I’m carrying.” But far too many individuals ignore the short and long-term consequences of carrying debt while failing to make any real progress in paying it off.

Debt is often referred to as a quicksand for good reason. It sucks you in deeper and deeper until you feel like there’s no way out. And the longer you stay stuck, the more you have robbed your future self.

Debt Restricts Your Ability to Save and Build Wealth

When a large percentage of your income gets automatically drained by debt payments every month, little money remains for saving and investing toward other goals.

Building savings or wealth requires having excess cash to put to work – whether saving up to buy a home without a giant mortgage, starting a thriving business on the side, pursuing an advanced degree to amplify your earning potential, enjoying retirement, or even just looking to build a rainy day fund for unexpected expenses.

The quicksand of debt obligations prevents setting cash aside, restricting you to only covering the basics, at best.

Debt Causes Continuous Stress That Impacts Your Whole Life

The sheer burden of total money owed also fuels endless stress, which bleeds into every area of life. Financial fears and uncertainty about how future expenses will get paid lead to tossing and turning at night.

This robs mental energy that could be directed towards the people and passions you cherish most. Money fights damage intimate relationships. The cloud of debt triggers health issues like headaches, high blood pressure, and weight gain over time due to chronic stress.

Debt Is Expensive Due to the Burden of Interest

Carrying debt over many years or decades causes balances to balloon, thanks to interest expenses that keep piling up. Even if financial discipline allows covering minimum payments each month, the principal owed often hardly budges.

A debt avalanche may loom where, eventually, monthly minimums become unaffordable. Getting on top of interest costs by attacking the principal aggressively is key to avoiding this quagmire.

Why Start Fighting Debt Right Now?

After years or decades of financial struggles, getting out of debt may seem impossible. But while the road requires sacrifice, pursuing freedom lights that path forward. It can become your road map. Breaking those financial chains allows space to build wealth and transform what’s possible.

Without huge monthly debt payments automatically withdrawing funds, you suddenly have options with that freed-up income. Saving and investing open windows towards major goals like buying a home, getting additional debt-free education, or launching a promising business venture. With interest costs no longer weighing you down, net worth can rapidly accelerate.

Eliminating debt also lifts a giant weight mentally and emotionally. Gone are those nights lying awake, questioning how bills will get handled this month or next. No more financial fights damaging close relationships. Energy, once drained by money distress, gets refocused towards enriching priorities.

6 Quick Tips to Fight Debt Now

Track all spending – Use a budgeting app or spreadsheet to categorize where every dollar goes each month. Understanding spending leaks that can get cut back is key.
Slash discretionary costs – Eliminate or reduce expenses that are nice-to-haves rather than essential—gym memberships, take-out coffees, etc. Shift to free entertainment options.
Pay minimums on all debts except one – The debt snowball method focuses on wiping out accounts one by one, starting with the smallest balance.
Sell assets collecting dust – Old electronics, musical instruments, or other items taking up space could fetch cash to put towards debts.
Negotiate lower interest rates – Call credit card companies and loan providers to politely request better rates. Even 1% less, helps.
Pick up a weekend side gig – Use extra hours each week driving for a rideshare service, walking dogs, or doing freelance writing to tackle balances faster.

The key is intensity and focus. Make debt freedom the center of your financial world. Maintain an unrelenting daily focus on boosting income and minimizing unnecessary costs until you break free!

Start Knocking Out Debt with a Specialized Relief Company

The relentless stress of unmanageable debt keeps your finances and your life underwater – unable to come up for air. It’s time to change that. By working with a dedicated team of experts at GetMeDebtFree provides a lifeline to eliminate what you owe for good.

Our experience across thousands of client situations allows us to customize the optimal debt relief strategy to fit your unique circumstances. Our goal is not to burden you with new chains once old ones get broken. We want to help you achieve lasting freedom – both financially and mentally. No more struggling endlessly to stay afloat each month. No more despair that relief remains out of reach. Just a clear path to knocking out debt for good.

You can reclaim control over your finances and your life. Our team stands ready to throw you a lifeline and pull you out of crushing debt once and for all. Contact us when you’re ready to start breathing freely again.

The post Why Getting Out of Debt Should Be Your Top Priority appeared first on Get Me Debt Free.

4 Tips To Overcoming Mounting Debt

Adeel Adeel — Thu, 18 Jan 2024 18:42:49 +0000

Dealing with life’s run of the mill challenges can be enough to manage, nevermind the consuming stress that can come with growing debt. And for millions of individuals, it’s a constant battle. But the good news is that with some smart strategies and commitment, you can overcome your mounting debt and get back on track toward financial stability.

The Risks of Ignoring Growing Debt

Many choose to simply ignore their growing debt, hoping it will go away on its own. And although we understand the mindset behind this type of inactivity, unfortunately this approach often leads to more serious consequences down the road.

Ignoring mounting debt can ultimately lead to outright financial distress. Additionally, challenges that may arise by ignoring mounting debt can be scenarios such as: high-interest rates and late fees piling up, damaging your credit score and making it harder to get approved for loans or credit cards in the future. It can also lead to collection agencies harassing you and potential legal action being taken against you.

So instead of ignoring your financial problems, take control and start implementing these four tips to overcome your mounting debt:

How Can I Pay Off My Debt?

It’s easy to think that the solution to getting out of debt is simply paying it off. However, the debt based financial system allows, and even promotes, consumers to borrow so much debt that, barring a windfall, they will never have the ability to pay it off in their lifetime. As such, for many people struggling with debt, simply paying it off may not be a realistic or sustainable option.

As we’ve seen, ignoring the problem can make it worse. However, trying to pay off debt quickly without proper planning or budgeting can lead to financial strain in other areas of life, and ultimately failure in the plan.

So, what is the best approach? Here are a some tips, and cautions, to help you get started down the road to being debt-free:

1. Get Honest With Yourself

The first step is often the hardest, and with debt, that means being honest with yourself about your financial situation. Take stock of all your debts, including credit cards, loans, and any other outstanding balances.

Make a list of the total amount owed on each one, as well as the interest rates and minimum monthly payments. This will give you a clear picture of what you’re dealing with.

You may find that you can shave off some expenses and put that money toward paying down your debt. Or, you may realize that your current income simply isn’t enough to cover all of your debts and living expenses. Being honest with yourself will help guide your next steps in creating a plan to tackle your debt.

2. Talk to Your Lenders

Now, before taking this step, proceed with caution, we cannot stress the caution enough. The option of talking to lenders, is not a recommendation to contact your creditors and bare all to them. In fact, doing so could compromise your position with them and they could take steps such as cut off credit supply, label you as a risk, or maybe even call the loan. You know your financial situation along with your own capability to speak with lenders, without giving away too much and putting yourself in a bind. After that very cautionary note here is a known way that some people find helps them get a handle on their debt. Contact your lenders directly to find out if you have options such as:

Lower interest rates to reduce monthly charges
Extended payment plans to make payments more affordable
Partial settlement agreements to resolve collection balances, at a discount

Engaging lenders shows good faith effort to address debts rather than avoidance. It also helps facilitate customized assistance. You never know what options may be available to you unless you ask.

But again, be very careful and tread lightly. We put this option in the article because it is a real option, and it does work for some. Not everybody’s financial situation, type of lenders, nor abilities are the same. In the same respect, we bring attention to this option because it seems to be one that is floating around out there, but seldom is there a word of caution attached to it. This may or may not be an option for you, and is something you need to determine for yourself.

3. Explore Debt Management Plans

Another way to help gain control of your debt is through a Debt Management Plan (DMP). A DMP is an agreement between you and your creditors where you make one monthly payment to a credit counseling agency, which then distributes the funds to your creditors on your behalf. This can help simplify your payments and potentially lower interest rates.

As with the prior option, a few words of caution when considering a DMP. First, it is important to know that credit counselors tend to receive their funding from the creditor side of the industry. So, you have to ask yourself if you believe that to be a conflict. If someone else is paying them, then who are they really working for? That is a good question to always ask when somebody tells you that their service will cost you nothing. Secondly, we tend to only recommend exploring the credit counseling, or debt management plans, on lower debt amounts. And by lower, we often mean $4000 or lower. As the debt level rises, a plan like this can often become quite expensive, and will tend to not improve your monthly cash flow. Any solid debt relief plan should always be looking to improve your monthly cash flow, because ultimately that is where you are going to feel, and see, the relief. Lastly, creditors are not obligated to partake in a credit counseling program, and you are not lawfully protected from your creditors. Because of that, attempting such a program could make life more expensive and stressful. So, like option #2 in this article, why do we mention it? Simple. When looking for debt relief, it is imperative to look at all options. By doing this, you will sleep better at night knowing that you have reviewed all options, and have absolutely picked the one that is best for your situation. Furthermore, as mentioned, a credit counseling plan could work for some who have lower debt levels. Doing your due diligence in asking the right questions can help ensure whether or not a DMP is the right option for you.

4. Consult a Specialized Relief Company

For professional guidance on advanced debt intervention options, contact specialized financial experts like us at GetMeDebtFree. Depending on your specific situation, we look at what a customized solution for you would look like, including:

Consumer Proposal which becomes a lawful agreement between you and your creditors. This option will stop the interest, likely reduce the debt load, and should improve monthly cash flow.
Interest rate reductions through refinancing options.
Accelerated Debt Payments – this method can work very well if you currently have the available cash flow to pay more than the minimum payment on your debt, every month.
Bankruptcy evaluation (if appropriate) and tailored to your advantage as much as possible. Bankruptcy can be very expensive and can take a long time to complete. Therefore, having someone on your side working for your best interest, is probably a good idea, at least that’s what we believe.

Our experience across thousands of client cases combined with independence from lender influence can enable highly favorable outcomes. And rather than seeking to replace your struggling finances with a new set of burdens, our goal is to help you achieve true freedom. The end result? A life without debt – and the contentment that comes with it.

You Don’t Have To Drown In Debt

A life underwater, where one is constantly struggling to stay afloat and feeling overwhelmed by the weight of debt, is not the life anyone dreams of. Yet for many people, it becomes their reality. The constant stress, anxiety, and fear that come with living in debt can take a toll on your mental and physical health as well as your relationships.

But there is hope. With our team at GetMeDebtFree, you can break free from the chains of debt and reclaim control over your finances. Our experience and knowledge in debt elimination strategies have helped a multitude of individuals and families achieve financial freedom, and we are ready to do the same for you.

Ready to start your journey towards a debt-free life? Members of our expert team will work with you to create a personalized plan that fits your unique situation and goals. We understand that everyone’s financial circumstances are different, and we believe in finding the best solution for YOU.

The post 4 Tips To Overcoming Mounting Debt appeared first on Get Me Debt Free.

How to Choose a Debt Consulting Agency

Adeel Adeel — Wed, 22 Nov 2023 23:27:08 +0000

In times of financial distress, when the weight of mounting debt becomes overwhelming, seeking help from a debt consulting agency can provide a lifeline. These agencies should designed to assist individuals facing financial hardship by offering guidance, support, and solutions to manage and eventually eliminate debt.

However, not all debt consulting agencies are created equal, some may even be predatory or unscrupulous and navigating the landscape of debt relief can be daunting.

Why you need a good debt consulting agency

Before delving into the process of choosing a debt consulting agency, it’s crucial to recognize the unfortunate reality that some companies exploit the vulnerabilities of consumers in financial crisis. These predatory agencies often promise quick fixes and instant relief, but their intentions are far from altruistic. They prey on the desperation of individuals in debt, charging exorbitant fees, and providing ineffective or even harmful solutions. A good and ethical agency will genuinely want to help you regain control of your finances. They understand the emotional toll that financial distress can take and are committed to guiding you toward a brighter financial future, without taking advantage of your misfortune.

Identifying Trustworthy Debt Consulting Agencies

Here are some key considerations to help you select a debt consulting agency that truly has your best interests at heart.

Research and Verify

Start by conducting thorough research on potential agencies. Look for online reviews, ratings, and testimonials from past clients. Verify their credentials and ensure they are accredited by reputable organizations.

Transparency

A trustworthy agency will be transparent about its services, fees, and the potential outcomes. Beware of agencies that promise to erase your debt entirely or guarantee unrealistic results. Debt relief is a complex process, and no one can guarantee specific outcomes.

Fee Structure

Understand the agency’s fee structure before committing. Reputable agencies do typically charge reasonable fees, often based on a percentage of the debt they help you manage or a flat fee. Be wary of upfront fees or agencies that demand large payments before delivering any services. Agencies who get a percentage, or a portion, of the funds you will be paying to your creditors, should also give you pause and cause you to investigate further.

Personalized Solutions

Look for an agency that tailors its solutions to your unique financial situation. Cookie-cutter approaches rarely provide effective relief. Sometimes the cookie cutter approach does provide a level of relief, however it is of course possible that the relief could have been more so, with a custom tailored plan. A compassionate agency will take the time to understand your individual circumstances and create a personalized plan to address your debt.

Free Consultations

Many legitimate debt consulting agencies offer free initial consultations. Use this opportunity to gauge their professionalism, knowledge, and willingness to help. Ask questions about their approach and assess how well they listen to your concerns.

Licensing and Certification

Although licensing and certification can be good. It is important to understand the authority of the license. Just because someone has a license, does not mean they are on your team or working for you. So do not be professionally dominated, or make a decision out of authority bias, simply because someone tells you they are ‘licensed’.

Avoid Pressure Tactics

Beware of agencies that use high-pressure sales tactics or make you feel rushed into making a decision. A compassionate agency will respect your need for time to consider your options carefully.

Avoid Promises of Immediate Results

Debt relief is a process that takes time and commitment. Be cautious of agencies that promise immediate solutions or claim that they can eliminate your debt overnight. Sustainable debt management requires a patient and consistent approach.

The Road to Financial Recovery

Choosing a reputable debt consulting agency is a critical step toward financial recovery. However, it’s essential to remember that debt relief is not a one-size-fits-all solution. A compassionate agency will work with you to develop a plan that aligns with your goals and resources and will offer advice and various services.

If you are considering options about what to do with your debt, our consultation is free, relaxed, and for information only. We take our time to review all options with you and answer your questions. You will not get any pressure from us, in any way, to take action. We know that our client’s success is our success, and that all begins right from the first phone call. If we know of solutions that are better suited for you and yet are outside of the realm of services we offer, then we will be sure to present those options to you, and maybe even know who we can refer you too. Contact us today, your debt free future awaits!

The post How to Choose a Debt Consulting Agency appeared first on Get Me Debt Free.

Should Bankruptcy be a Last Resort for Debt Relief?

Adeel Adeel — Mon, 20 Nov 2023 21:10:54 +0000

When exploring debt solutions, the topic of bankruptcy often looms as a last resort—a financial decision to be taken when all other options have been exhausted. For those burdened with unmanageable debt, the thought of bankruptcy can be daunting. While it is one option, there are some alternatives available to those facing financial hardship, and several factors will need to be considered before deciding whether bankruptcy is the right choice.

Understanding Bankruptcy

Bankruptcy is a federally regulated legal process, governed by the Bankruptcy and Insolvency Act (BIA). It provides individuals and businesses with a way to discharge their unsecured debts when they are unable to pay them off. When someone files for bankruptcy, their assets are assessed, and non-exempt assets may be sold by the bankruptcy trustee to repay a portion of the debt.

After completing the process, most of the unsecured debts are discharged, allowing a person to make a fresh start financially. However, bankruptcy also has significant consequences, including a negative impact on creditworthiness and the potential loss of assets.

While bankruptcy can provide a fresh start for those drowning in debt, it is often considered a last resort for several reasons.

Impact on Credit

Bankruptcy remains on your credit report for several years, making it challenging to secure new credit, loans, or mortgages during that time. This can affect your ability to buy a home, finance a vehicle, or even obtain credit cards.

Income Monitoring

While in bankruptcy, income can be severely limited. The bankrupt person is to make monthly reports to the bankruptcy trustee, in order to have their income monitored. If they earn over the prescribed amount, which tends to be too low to live on, the trustee is required to receive half of everything over the limit. The more a person earns while in bankruptcy, the more they pay. What is more, if one makes more than this low limit, their bankruptcy is extended to either 21 months, or 36 months. This can make for a very long, stressful, and financially challenging time.

Asset Loss

In bankruptcy, non-exempt assets may be sold to repay creditors. Canadians value their homes, cars, and personal possessions, making the potential loss of assets a daunting prospect.

Career Implications

Certain professions and industries may scrutinize an individual’s financial history. Bankruptcy could potentially impact job opportunities in these fields.

Exploring Debt Relief Alternatives

Thankfully, people who owe money have access to various debt relief alternatives that can help them avoid bankruptcy. It’s essential to understand these options and consider them before making a final decision.

Debt Consolidation

Debt consolidation involves combining multiple debts into a single, more manageable loan. This can reduce the overall interest rate and monthly payments, making it easier to repay debts over time. However, at the time of writing this article, interest rates on a prime rate consolidation loans are quiet high and for large loan amounts, the lender tends to want collateral.

Consumer Proposal

A consumer proposal is a legally binding agreement between the consumer and the creditors. It allows for a potentially reduced debt amount, usually lower payment, and it does not bear any interest. A consumer proposal can be a powerful tool to avoid bankruptcy while still providing debt relief.

Credit Counseling

Credit counseling agencies provide valuable financial education, budgeting assistance, and some very basic debt management. These services can help individuals regain control of their finances and work toward becoming debt-free. Saying that; credit counseling seems to be best when the debt amount is quite low, and only if a consumer proposal is not viable.

Debt Settlement

Debt settlement involves negotiating with creditors to settle your debt for less than the total amount owed. While it can negatively impact credit scores, it may be a viable option for some individuals. A word of caution: debt settlement can have its pitfalls, and a consumer could end up in worse shape than when they began. All agreements with the creditor need to be in writing, for the protection of the consumer. It is important to remember this method only deals with one creditor at a time, so is not a wholesale solution.

Factors to Consider

When deciding whether bankruptcy should be a last resort, it’s essential to step back and consider the known variables. There are also the unknown variables. Things like getting a raise, overtime, vacation pay, bonuses, and even the potential of obtaining an inheritance, (and many more variables), can all make bankruptcy more expensive and longer.

Assess your current financial situation and stability. If you have a reliable income and the ability to make reasonable debt payments, alternatives to bankruptcy may be more suitable and might even cost you less overall, than a bankruptcy. Consider the assets you want to protect. If you have valuable assets you wish to keep, exploring alternatives is essential, as it may involve asset liquidation.

Examine the potential impact on your credit. While all debt relief solutions may have consequences for your credit score, bankruptcy typically has the most significant and long-lasting impact.

The post Should Bankruptcy be a Last Resort for Debt Relief? appeared first on Get Me Debt Free.

Interest Rates are Climbing – Now’s the Time to Pay off High-Interest Debt

Adeel Adeel — Wed, 20 Sep 2023 08:53:37 +0000

While paying off your debts should always be a priority, the urgency is heightened as interest rates and the cost of living in Canada continue to climb. If you have high-interest debt, you need a strategy to lock in a manageable rate and make timely payments. If rates continue to increase, your monthly minimum payment may be far more, down the road.

In this post, we’ll discuss the detrimental effects of high-interest debt. In addition, we provide strategies that allow you to manage your debt now, so you aren’t overwhelmed in the future.

Interest Rates in Canada

While the Bank of Canada recently decided to hold interest rates at 5%, it’s very likely we will see rates rise again soon. The rate freeze is excellent news if you have a variable rate, as your mortgage payments won’t increase. However, the continued rise in interest rates affects the cost of living and can even increase the rates on high-interest credit cards, especially if you aren’t making your payment.

The Effect of High-Interest Debt

Regardless of the status of interest rates, high-interest accounts have a negative effect on your finances. For example, when you make a $1,000 payment on an account with 25% interest, it may be that only $200 goes toward the balance. Then, when you miss a payment, additional fees get tacked on the principal, with future payments going toward even less of the initial amount you borrowed.

A high-interest account, especially one that isn’t being paid off, damages your credit, reduces your savings and retirement, and lengthens your time in debt. In addition, being drowned in debt has a negative effect on your mental health. Financial insecurity creates a spiral effect, leading to depression and anxiety. According to a Money and Mental Health survey, 86% of the 5,500 participants with mental health issues said their financial situation worsened their mental problems.

As interest rates increase, the stakes become higher. In some cases, if you aren’t making your monthly payment on time, your interest rates can increase. So, you want to act as soon as possible to get on the repayment path.

Debt Management Strategies

Even if you aren’t financially capable of making your minimum payments on high-interest debt, you still have options.

Debt Restructure Plans

One of the most common ways to begin your path toward paying off high-interest debt is by restructuring your accounts. Depending on your situation, you can move forward with various restructuring plans.

Debt consolidation loans – Converting multiple debts into one loan payment simplifies your repayment process.
Home Equity Line of Credit – Borrowing money against your home so you can pay off high-interest debt.
Balance Transfer – Moving an existing debt to another provider, ideally with a lower interest rate.
Debt Settlement Plan – Settling with your creditor and agreeing on a lower payment and repayment schedule.

Understanding each type of restructuring plan is essential in finding the right plan for your situation. Taking out more loans can further damage your credit and continue the debt spiral even more, especially if you can’t make future payments.

Negotiating with Creditors

Creditors are motivated to settle debts when they believe it’s the only way they will get paid. Especially when your accounts are past due, negotiating a lower amount can reduce the time it takes you to pay off your debt.

Consumer Proposals

In Canada, you are at an advantage when getting out of high-interest or unmanageable debt. You have access to what is called a consumer proposal. This formal agreement between you and your creditors, administered by a licensed insolvency trustee (LIT) and who is an officer of the court, could greatly reduce your balance owing. The process requires the LIT to investigate your affairs, assess your debt, and obtain the best possible return for the creditors. The trustee is paid a percentage of what they recover on behalf of the creditors.

The most significant advantage of a consumer proposal is you will stop interest accumulation. Once the proposal is accepted, your debts will stop accumulating, making them far easier to manage.

A consumer proposal is quite often the best way to to get out of debt quickly, while also returning to positive cash flow living, almost immediately.

Hiring a Debt Relief Company

When you have high-interest debt, the most important thing to do is take action. However, making the right debt management strategy can save you years and thousands of dollars. Therefore, hiring a professional debt relief company could be the most effective way to tackle your debt.

At Get Me Debt Free, we look at a variety of debt management strategies and we specialize in tailored solutions for each and every client. There are no proverbial cookie cutters in our toolbox. We believe this is the most efficient way for Canadians with unmanageable debt to overcome their financial situation. If you want to learn more, please contact us for a free consultation.

The post Interest Rates are Climbing – Now’s the Time to Pay off High-Interest Debt appeared first on Get Me Debt Free.

6 Common Practices that Harm Your Credit Score

Adeel Adeel — Mon, 04 Sep 2023 17:37:13 +0000

Your credit score is a fundamental financial metric essential to securing loans and lines of credit. Getting out of debt and building your credit is challenging, so the best way to achieve excellent credit is by avoiding common mistakes that will impact your FICO score, also known as a Beacon.

In this article, we cover 6 of the most common ways you can harm your credit. Avoiding these not only keeps your credit score from going down but will improve your score along the way.

1. Late or Missed Payments

Your payment history is among the most impactful factors credit bureaus use to assess your credit score. One late payment can tank your score by as much as 180 points and can even continue showing up on credit reports for up to 6 years! Continuous late and missed payments will completely destroy your credit.

Do everything you can to avoid missing a scheduled credit payment date. Auto-paying your minimum balance is the best way to keep on top of your payments.

2. High Credit Card Balances

Maxing out lines of credit regularly also significantly affects your score. If you are continuously hitting a limit, that signals financial stress and will likely lower your score.

We recommend keeping your credit card balances below 30% of your available credit.

3. Frequently Applying for New Lines of Credit

Another red flag for lenders is the frequency of applying for new lines of credit. When you apply for a loan or new credit card, a hard inquiry is made on your credit report. Multiple hard inquiries in a short period can lower your score.

Creditors view these requests as a sign of financial instability. Applying for a loan, a credit card, or shopping for credit when looking to buy a car or a house, should be a calculated decision that doesn’t happen on a regular basis.

If you are considering taking on a new line of credit, seek insight or guidance to ensure you aren’t harming your credit score.

4. Unresolved Collections

Accounts deemed uncollectible can significantly damage your credit. Not only will they hurt your score when unresolved, but they will also stay with you for years even after it’s been paid off.

If possible, don’t allow any account to go to collections. Do whatever you can to avoid the creditor turning the balance over by requesting more time or a payment plan. However, if you have 3rd party agencies looking to collect on your overdue accounts, pay them off as soon as possible. Some collectors will even accept a lower payment than the original amount. The worst thing you can do is ignore them because these accounts will be reported to credit bureaus. *Tip – If a collector is willing to accept a lower amount than the stated balance, make sure you get the agreement in writing before sending them any money.

5. Closing a Credit Card

Credit history length is another determining factor to keep in mind. Closing out a credit card in a short amount of time, especially with positive payment history, can harm your score. We suggest keeping the account open even if you aren’t using a credit card. This shows creditors that you have a long credit history and, as a result, will help your score. Be sure, however, to use that card at least once per year for a small purchase and pay it in full before the due date. This ensures an active rating to continue reporting on that credit product.

6. Co-Signing Loans

There’s a reason why a bank requests an applicant to obtain a co-signer – because they are at risk and could be financially unstable. As a result, you need to be very careful when you agree to co-sign a loan. If the borrower defaults on the loan, your credit score will likely be affected, and you will be responsible for paying off the entire loan if the other party fails to meet their obligation. Further to this, by cosigning on a loan, even if the primary signor makes perfect payments, the loan still counts against your debt service ratio (DSR), which comes into play should you be looking for a mortgage or a credit product of your own. In other words, that co-signed loan may show up on your credit bureau and be looked at by your lender as though you yourself are carrying that loan, even though you only co-signed. As a result, you may not be able to qualify for the credit product you are seeking.

Get Financial Consulting from Get Me Debt Free

Once you have a viable credit score, you can leverage it to acquire assets that build financial stability. At Get Me Debt Free, we help our clients get out from under the burden of overwhelming debt and offer them tools to maintain a positive credit score. Contact us today for a free consultation!

The post 6 Common Practices that Harm Your Credit Score appeared first on Get Me Debt Free.

Creating a Debt Repayment Strategy – Steps to get out of debt

Adeel Adeel — Tue, 29 Aug 2023 18:33:23 +0000

Getting out of debt can seem like an impossible task. However, if you break down the steps and create a strategy, your journey to becoming debt free is far more attainable.

In this article, we’ve created a 6-step process to help you take a step back and create an actionable, personalized debt repayment plan. By simplifying debt relief, you can set realistic goals and make progress in becoming financially free.

Please understand, a debt repayment strategy based on your current debt levels, interest rates, and cost of living, can indeed work if you have excess cash flow. We all know how life in Canada has become very expensive in the last few years. If you do not have excess cash flow, and are not able to create additional cash flow, it might be time to look for more aggressive options. However, this article covers several practical steps that do work, if you have the cash flow available.

Step 1: Assess Your Debt Situation

The first step on your road to becoming debt-free is assessing all your balances, interest rates, and minimum payments. This will determine your total debt load and allow you to create an attainable repayment strategy.

Step 2: Prioritize Your Debts

Now you need to decide which accounts to allocate extra funds. The Avalanche and Snowball Methods are two of the most popular strategies for paying off debt. Each strategy shares the same basic principle:

· List your debt
· Arrange your debts
· Make minimum payments
· Allocate extra funds

In the Snowball Method, your debts are arranged in descending order based on interest rate. This is the more financially efficient method. Any extra funds will go toward the debt that is costing you the most in interest.

In the Avalanche Method, your debts are arranged by the smallest to the largest amount owed. Once a debt is paid off, the dollar amount you pay is allocated to the next highest debt, creating a snowball effect. While this method isn’t as efficient in the long run, it offers psychological support as you will start to close out accounts faster.

Step 3: Set Achievable Debt Repayment Goals

Next, you need to set short and long-term goals for your debt repayment. You must be realistic in assessing what you can pay back. Don’t expect to pay off 100K in two years if you make 50k annually. Set a reasonable goal determining where you need to be on your total debt in the next year and 5-10 years down the road.

Unless you win the lottery or get a significant pay increase in the near future, you should be able to calculate what you can afford each month to put aside beyond your minimum payments.

Step 4: Analyze Your Budget

Unfortunately, creating a repayment strategy typically means you must make some sacrifices. Whether it’s saving on groceries, downgrading your car, or staying home for your next vacation.

Take a deep dive into your monthly expenses and see where to save. Hopefully, canceling a couple of unused services will get you close to putting enough money aside each month to get ahead on payments.

Step 5: Negotiate with Creditors

In many cases, creditors or collection agencies will agree to take less than the amount owed if you pay in a lump sum or schedule automatic monthly payments. Saying that, this step is not as easy as it sounds. In fact, people can often put themselves in a compromised position when going this route. You may need to seek professional advice if you choose this step. Remember, the creditor is not your friend. It is their job to collect money from you.

Step 6: Monitor Your Progress and Make Adjustments

When you assess your total debt owed, understand what you can afford, and set goals, you are in a position to monitor your journey to becoming debt free. Every couple of months, check where you are at on your account. This will keep you focused and motivated to continue chipping away at your total debt.

Unfortunately, unexpected expenses happen. If you have a medical bill, car accident, or other expenditure you didn’t plan for, make the adjustment, then get back on track as soon as possible.

Seek Professional Financial Assistance

While breaking debt repayment down into a 6-step process makes the situation less painful, sometimes you need professional help. Our team at GetMeDebtFree have helped thousands of people find debt solutions. Schedule a free consultation today and begin your journey with the help of one of our consultants.

The post Creating a Debt Repayment Strategy – Steps to get out of debt appeared first on Get Me Debt Free.

The Rule of 72 – How it Works Against You

Ryan — Thu, 05 Aug 2021 13:39:33 +0000

Perhaps you have already heard of it, or perhaps you haven’t heard of it yet. The rule of 72 is the most powerful rule in all of personal finance. It is a simple formula that has helped the rich get richer. A tool that has helped Canadians build their wealth. At the same time, it is also a very powerful tool used by creditors, banks, and high-interest loan products to keep people in debt. Collecting interest on that debt, of course, is their business.

The rule of 72 is a simple formula to help you increase your wealth. However, what many finance specialists might not tell you, is that it is also a tool that can be used against you to keep you in debt. In this article, we will review what the rule of 72 is, how it works, and how it impacts your debt.

What is the rule of 72?

In short, the rule of 72 is a formula to help you estimate how long it will take for an investment you have made to double. By dividing 72 by the annual rate of return, you’ll get an estimate of how many years it will take for your investment to duplicate itself. This reveals the positive effect that compound interest can have on your future ability to buy a house, take a vacation, or retire in comfort.

The rule of 72 looks a little something like this:

Years to Double = 72/Investment rate

Let’s say you invest $1,000 in a GIC. Your rate of return is 4% interest. 72 divided by 4 equals 18. In 18 years, your investment will double to $2,000. It will also continue to double every 18 years.

Or, as another example, let’s say you receive an inheritance of $15,000. Instead of spending it, you decide to invest your money. Your financial advisor says they can get you a 6% annual return on your investment.

So, 72/6 = 12. Therefore, in 12 years, your $15,000 will double to $30,000.

Now for the darker side of the rule of 72

As Albert Einstein once said, the rule of 72 “is the greatest mathematical discovery of all time. He who understands it earns it. He who doesn’t pay it.”

While the rule of 72 sounds amazing to wealth seekers, we have seen firsthand how the rule of 72 can also be used to increase your debt. Where instead of working for you, your compound interest is actually working against you.

Instead of you investing $15,000, let’s turn the tables around and say you have $15,000 of credit card debt. The average interest rate for credit cards in Canada is roughly 18%.

72/18 = 4. This means that in only four years, your debt will double to $30,000 if you only make the minimum payments. In eight years, that debt will double again to $60,000.

This is one way that banks make huge profits.

This is why banks want to keep their clients in debt.

And this is why bank tellers would prefer to offer you a credit card or a loan rather than a mutual fund.

Why is the rule of 72 important?

Not only does the rule of 72 help you determine how to invest your money, but it also determines what will happen to your debt. Before you make any investments or take on additional debt, the rule of 72 can help you decide whether you’re making the best decision with your money. Understanding this rule could help you avoid putting yourself further into debt. It also helps to explain why even though you’ve never missed a payment and consistently make ends meet, you never get off the hamster wheel of debt.

At GetMeDebtFree, we have seen firsthand how the rule of 72 is used against the consumer to keep them in debt. If you are tired of the hamster wheel life of debt, we just might be able to help. With our years of industry knowledge and client experience, we have had the fortunate opportunity of seeing many families and individuals pass through to much brighter financial days.

If you are looking for the best advice on how to consolidate your debt, fill out our contact form, and we will be in touch. Rest assured you will not get any pressure nor judgement from us. Our job is to help, not hinder.

Everyone’s reason for being in debt is different. Don’t be the victim of a shark looking to soak you with a less-than-ideal solution. Contact us today as we have already navigated the shark-infested waters so that you don’t have to.

The post The Rule of 72 – How it Works Against You appeared first on Get Me Debt Free.

What To Know Before Hiring A Debt Relief Company

Ryan — Mon, 21 Jun 2021 13:25:40 +0000

When you visit the Government of Canada website, this is the first thing they say about using debt consolidation companies:

“Consumer alert: Some companies offering help to pay off debt or repair credit are misleading consumers.”

Unfortunately, there are many companies out there claiming to help those who are financially struggling, only to mislead their “clients,” intentionally or not.

However, there are companies out there who are genuinely there to help you consolidate your debt in the most cost-effective way. It may take some time, but in the end, doing that research will save you more money in the long run. When looking for the right debt consolidation company to help you with your debt, there are a few key things you need to look for.

Look for a company that is willing to go the extra mile when needed.

The biggest problem with most consolidation companies is that they can’t solely represent a debtor. Their statutory duties do not allow this as it would conflict with their duties to the creditors. In addition, the larger the settlement, the more they get paid. So what is the solution? Who can you trust? After all, we are not talking about acquiring a basic service or product.

Review client testimonials.

When was the last time you made a financial decision without turning to Google to look at a company’s reviews? When choosing the right debt consolidation company, it’s best to look at testimonials to see what others have said about their experience. Anything less than an overwhelming number of 5-star reviews should be avoided. If you want real results, read the stories in the client testimonials. Are they genuine accounts of what people have experienced, or are they all generic responses? It’s always good to see what others say before making a final decision.

Ask the right questions.

If you want to learn more about a debt consolidation company or you want to compare services, reach out to the company, and ask questions such as:

How long have you been in business?
What is your approach to debt consolidation?
Can you guarantee that lenders will stop calling me?
What can I expect my financial situation to look like 1 year from now? 5 years? 10 years?

It is important to ask these questions to determine how knowledgeable a company’s debt-relief specialists are. If they are able to provide you with real information and helpful answers to your questions, that’s a good sign. If a company can’t provide you with an answer or an honest response to these questions, you should continue your search.

See what the company is promising and ask yourself if it is realistic.

Watch out for companies claiming or promising any outrageous or unrealistic results. If anyone claims they can eliminate your debt in weeks or something along those lines, those companies should be avoided.

Everyone’s financial situation is different. There is no way a company can promise that all your debt will be gone in a certain time frame. For some, their debt can be paid off in a few weeks. For others, it can take months or years to pay off. When looking for the right debt consolidation company, work with someone who states they will assist you in creating a plan to eliminate your debt. Someone who will provide you with real advice to help you relieve your debt. Moreover get you on the right track to debt freedom, not someone who will do it all for you.

Consider the fees.

For the services they provide, most consolidation companies will charge a fee. Every company has to pay their bills, and every employee has to earn a living for their work, let’s be honest. But how do they earn their living, that’s the big question. With some companies, as mentioned above, the more you pay – the more they earn. If a company says, they don’t charge a fee, that usually means they have built the fee into your repayment plan. Most credit counselors charge a fee, even if they say they are not-for-profit. Again, it’s good to call a few different companies and compare prices alongside the services they offer.

Don’t be pressured.

When you call different consolidation companies, a big thing to consider is who makes you the most comfortable. Now, by comfortable we don’t mean who gives you the emotional warm and fuzzies. Those can be misleading of course. By comfortable we mean that you do not feel like you are being sold something, talked into something, or even guilted into something. Your finances are not something you want to take a flyer on. So, make sure you work with someone who is knowledgeable and who can patiently provide you with more than enough information to help you eliminate your debt. You should never feel pressured or pushed into making a decision.

Start with us at GetMeDebtFree today.

At Get Me Debt Free, we look at a variety of debt management strategies and we specialize in tailored solutions for each and every client. There are no proverbial cookie cutters in our toolbox. We believe this approach provides the most efficient way for Canadians with unmanageable debt to overcome their financial challenge. If you want to learn more, please contact us for a free consultation.

You have nothing to lose and much to gain, so fill out our contact form and take that first step to a debt-free future.

The post What To Know Before Hiring A Debt Relief Company appeared first on Get Me Debt Free.

What you need to pay off your debt, besides money

Ryan — Mon, 14 Jun 2021 20:30:38 +0000

Is debt constantly on your mind? Owing money can be extremely overwhelming. Especially when you’re not sure where the money is going to come from to pay it off. You work hard, but your bills just keep piling up. When it gets to a certain point, your debt relief can feel as though it’s taking control of your entire life. But there is a way to take back that control, and it doesn’t necessarily mean you need to have all the money upfront to pay off your debt.

That’s right. Having the funds to pay off your debt is important. However, there are other more important components you need to understand so you can effectively pay off your debt. In fact, you can even save yourself money in the process.

What do you need, aside from money, to eliminate your debt?

You need an understanding of your debt.

Before we jump in, the first thing you need to do is understand your debt. It’s time to put your finances under the microscope and come face-to-face with your debt. Ask yourself the tough questions you’ve been avoiding like:

Where is your debt coming from?
How did you get into debt?
How much debt do I have in total?

Regardless of how or how much debt you are in, don’t let it overwhelm you. Instead of focusing on what is wrong, think about how you are going to fix the problem. It’s important to do this step before your debt becomes completely unmanageable. The earlier you take action against your debt, the better. Debt isn’t one of those problems that you sweep under the rug and expect to disappear.

Start by writing down a list of all your debt. Where your debt is coming from, how much you owe, and the minimum payments you make each month. Then, change your perspective. Don’t view your list of debt as something you should avoid and ignore. Make it your primary financial goal to pay it off and eliminate it for good.

You need a budget.

Once you have a deeper understanding of your debt, it’s time to evaluate where your income or rather your money is going. Start by looking at your monthly bank statements and what your money is being spent on. A great way of doing this is by sorting your expenses into a few different categories. For example, yours may look something like this:

Debt payments
Monthly bills
Groceries
Gifts
Restaurants
Recreational expenses

For each charge on your statement, ask yourself if the purchase was necessary. If you’re calling yourself ‘broke’ after spending your income on nonessential purchases, then you’re not actually broke.

On average, about 50% of your income should be going towards the necessities. If more than 30% of your income goes towards your ‘wants’ or more recreational purchases, you must create a budget for yourself. You’ll need to carefully review where you are spending your money and how you can cut down on your expenses. Until you can lower your debts, try to keep your nonessential purchases to a minimum and use that money towards your debt instead of buying things you don’t need.

Remember, you’re not just cutting expenses for the heck of it. You’re doing this to free up more money to go towards your debt. Even the smallest budget cuts can add up, so be mindful of how you spend your money. In this case, every penny does count. If you’re deciding between going out for a fancy dinner or making something at home, choose the latter.

More importantly, you need to stop adding to your debt as well. Seems obvious enough, but it can be harder than you think. If you continually add to your credit card balances, you will never get out of debt. For example, if you have high credit card bills but you continue using your credit cards. Stop using your credit cards where you can and focus on paying down the balances you owe before spending more.

A great method you can use to help you budget is the 50/30/20 rule. 50% of your expenses should go toward your needs, 30% towards your wants and 20% should go towards paying down your debts.

You need a plan.

Now that we have an understanding of our debt and we’ve set a budget for ourselves. The next step is to create a plan. No matter how much you owe, how much of an income you have, or how much you have saved, you need to come up with a plan to eliminate your debt.

One way you can start is by organizing your debts in order of priority. For instance, you can arrange them from the highest to lowest interest rate. Or you can order them from the highest amount owed to the lowest. The plan is to pay off as much as you can afford on one account while paying the minimum on all the other accounts. Overall, you want to make sure that whatever plan you come up with, you are not missing payments, and you’re meeting all your financial obligations without any strain.

There are many different methods you can use to pay off your debt and get debt relief. Depending on how much debt you owe, your options may vary. You can opt for a debt restructuring plan as well, which you can learn more about by clicking here.

Help you decide

To help you decide what option works best for your specific situation, we have searched out who we believe to be the best companies to help Canadians deal with their debt. How are we qualified to determine this? With over a decade of experience and working with thousands of past clients, we think that we may have some insight.

If the company does not pass our gold standard test, then we will not recommend their services. If you are looking for the best advice on how to consolidate your debt, fill out our contact form, and we will be sure to refer you to a company that we approve of. Let it be clear, we do not mine your data nor sell your information to all kinds of companies. We are simply looking to connect people who are serious about dealing with their debt to a professional who is best suited to help make that happen.

Whatever your debt-free journey looks like, remember to take it one step at a time and that you are not alone. Debt repayment doesn’t happen overnight, but it can happen faster with the support of the right team on your side.

The post What you need to pay off your debt, besides money appeared first on Get Me Debt Free.