This article is by Trevor Glasser, a debt consolidation expert in Oshawa, Ontario. Trevor Glasser has over 7 years of experience helping Oshawa families and businesses get out of debt.
Many consumers struggle with trying to figure out if they are in trouble or not. How do you objectively determine what your financial health is and whether you need help with your debt?
Not everyone has time to sit down and review complicated budgets, create cash flow charts and figure out their financial situation.
Surely there has to be an easier way.
I have good news, there is, but it will require you to be honest with yourself. I am going to give you 5 questions (remember to be honest) and if you answer yes to any of them you are probably in financial trouble. The more yes’s you get the more in trouble you are.
Let’s get started on the questions, here we go:
1) Have you ever used credit to pay credit?
This is probably the biggest warning sign of them all. If you are using borrowed money (i.e. overdraft, line of credit) to pay borrowed money (i.e. credit cards) you are just creating more debt despite the fact you have met your monthly obligation. And this isn’t as obvious as it seems. Many people will churn their credit like this for months or even years. It’s not until all of the credit runs out that you realize you’re in a big mess. If you are doing this on a consistent basis you need to seek help to deal with your current debt load before it gets out of control.
2) Are you only making the monthly minimum payments?
Believe it or not, banks are in the business of making money. So when they send you your monthly statement for your credit card typically the monthly payment is based on paying off less than 10% of the principle meaning that 90% or more of your payment is interest only. You can see how many years it’s going to take for you to pay it off based on the monthly minimum payments. For many people the number can be shocking but it is a good dose of reality. If you don’t want 90% of your money going to interest only and taking 61 years (as an example) to pay off your debt seek professional help.
3) Are you getting collections calls?
This might seem obvious but some people get so used to them they think they are just part of paying debt. Your debt should be paid on time every month. Letting it get behind and worse, getting collection calls is damaging your credit rating which have long term implications. Also, if you are missing your payment date the creditor will often increase the interest rate. If you are consistently getting collection calls get help.
4) Are your financial troubles having a negative effect on your family life or marriage?
Fighting over money is a sign that your finances have gotten out of control. The stress from this makes it difficult to focus on anything like family, work, vacations, or managing your finances. Ultimately if you can step back and realize that the stress you are experiencing is caused by money, it’s time to seek outside help. No one said you have to deal with it on your own. No one said you had to solve all your problems. Seeking professional help means taking a huge burden off your shoulders whiling helping you and your family get life back on track.
5) Has the bank turned you down for a consolidation loan?
If you have applied for a consolidation loan and been declined this is a key sign you are probably in financial trouble. You want the loan to improve your cash flow but the banks think you are too risky based on your current financial situation. If the bank has declined you for a loan they are saying they don’t believe that you can pay back the money.
What they are really saying is that you are in financial trouble but of course they don’t actually like to say that, they just tell you your score isn’t high enough. At this point your current situation isn’t working and the bank won’t help you, you need professional help to resolve the problems.
Sometimes you can use this as a measuring stick; what I mean is to total your debt and ask the bank if they can help you, if they say “no” then you know you are in trouble.
If you answered no:
Okay, so you’ve read this list and said no to every question, good for you! Keep taking care of your finances and minimize the interest you pay in life.
If you answered yes:
If you have answered yes to one or more of these questions you need to seek professional advice.
There are a number of solutions available to you.
What are your options:
The most drastic being a bankruptcy but you want to make sure that you understand your other options first and also have good representation if bankruptcy is the best option for you. You could also be in a position to do a consumer proposal. I have helped thousands clients with filing consumer proposals.
What exactly is a consumer proposal?
Well, I’ll leave the nitty gritty details for another blog but in short it is a formal agreement with your creditors to pay them only a portion of what you owe, over a specific time period with zero interest for the term and the ability to pay all or part of it early (open).
If you are feeling a monthly cash flow crunch it is always a good idea to get a professional to look at your situation and let you know what your options are. I offer to do this for free.
To learn more visit Trevor Glasser at his Oshawa office
This article is by Trevor Glasser, a debt consolidation expert in Oshawa, Ontario. Trevor Glasser has over 7 years of experience helping Oshawa families and businesses get out of debt.
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