What You Need To Know About Paying Off Debt
When I decide to start paying my debt amounting to $38,000 five years ago, I thought I have wide knowledge about debt management. All I knew is that acquiring student loans and car loans might be normal as most Canadians hold a certain amount of debt. Moreover, I am aware that paying my debt might be a difficult journey. After all, I realized that if it’s easy everyone would have started doing it. Now, even if I researched it by reading financial blogs, and made my personal spreadsheet, I am still in doubt by the principles of four aspects.
It Is Easier to Pay Down $5,000 than $500
If you perceive your path towards paying your debt is a lifelong journey, you might find it impossible to start. I myself felt weakened as I try to picture out on how can I carry such load and sustain the long-term payments. Once you have started though, it might not b easy to cope up with the changes. At some point, you need to recreate your social life and trim your expenses to sustain your needs.
Though it can be easier to get a one-time big-time loan to pay such a huge debt rather than facing the smaller amounts, which most of us ignored. In most cases, we take for granted our debts amounting to $500 and later on carry the burden as we acquire a total of $5000. Sometimes we overlooked the figures as it might not be significant. We tend to forget that as time goes by, the debt you ignore might create a deeper hole as time goes by.
Your Family Won’t Find Your Actions Justifiable
Just imagine yourself buying your first home and getting a car. As you proudly verbalize what you have recently acquired, knowing that you owe to several creditors and family members, might not be justifiable. This will be perceived positively as usual if you keep on ignoring your other obligation. This means that while you are paying off your debt, you should avoid getting new debts. As much as possible you should focus on how you can earn more money and increase your income to pay down your debt once and for all.
The Game You’re Working is Rigged
Getting rid of your debt and avoiding it is not impossible. The fact is that most of us find it easy to swipe our credit card and make big purchases without even thinking if we can afford to pay for it. Most people easily get into the debt trap as they jump into the idea of leisure, extravagance in spending. This is not a good habit as it may draw you from a pile of debt that you cannot tackle. This is the very reason why you must be aware of whether you’re making a smart financial move. The same as in any game, you must be equipped with the mechanics and must foresee the result of every move you make.
Debt Freedom Is Fulfilling
Once you have become debt-free, you might find yourself gaining freedom on your finances. You wouldn’t have to hand over your hard-earned dollar each month to your creditors. Instead, you can set it to automate your savings which either be intended for your retirement or emergency fund. Now, you can plan for your dream travels and destinations without being worried about ripping your finances. Besides, with your contribution and savings in place, you can setback and imagine fruitful retirement years.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.