Rising consumer debt is a major issue in the Greater Toronto Area; not only have unprecedented real estate values combined with rising interest rates threatened the housing stability of thousands of families, costs like childcare, tuition, and even groceries have steadily increased while salaries have remained relatively flat. It’s a recipe for rising debt and for many families in Toronto, and as the pressure becomes too much, they may find themselves in need of help.
Getting out of debt requires more than just budgeting. If you’re receiving collection calls or creditors threaten to garnish your wages, a responsible repayment plan is however a great place to start. Follow these 7 tips to get your debt under control.
#1 Calculate Your Debt
It sounds obvious at first, but do you really know what your total debts are? Have you gone through all your bills, mortgage payments, car payments, taxes, and loan payments, and do you keep a running total with each new payment?
#2 Use a Calendar
Too often, you incur interest payments because you just miss the deadline to pay a bill, especially when it comes to credit cards and utilities. Using Google calendar or another calendar app in your phone will help you stay organized and pay on time.
#3 Credit Counselling
Anyone looking for debt counselling in Toronto should first look for a Licensed Insolvency Trustee. For example, Toronto Trustees David Sklar & Associates offer credit counselling services in addition to helping you with practical matters like filing a consumer proposal in Ontario. Credit counselling teaches you how to effectively use credit so that you can grow your financial health and credit rating, not damage it. You learn the consequences of late debt payments, how to save for a down payment, and how to plan in case of loss of income.
#4 Cut Spending
It can be difficult to trim an already-tight budget, but it’s possible. Cut down from two family cars to one, start making necessary purchases second hand, change your morning routine and get breakfast and coffee at home. That three or four dollars adds up quickly – coffee and a bagel with cream cheese every day comes to $90/month that you could use to pay down debt.
#5 Increase Income
Easier said than done, but taking a second job or freelancing on the side may also be a necessary step to covering your payments.
#6 Sell Unnecessary Stuff
Whether it’s furniture, collectibles, jewelry, or property, sell off things that you don’t truly need and put the money directly toward paying down debt.
#7 File a Consumer Proposal
Consumer proposals in Ontario are a smarter way to get out of debt than declaring bankruptcy. To understand the difference between bankruptcy vs consumer proposal talk to a Licensed Insolvency Trustee. Typically, a consumer proposal in Ontario is the better option, especially if you’ve sought help early on. When you declare bankruptcy, your assets could be sold off to settle unsecured debts. It’s considered a last-ditch effort to settle your debts, and often, your assets cannot cover everything, leaving some creditors out to dry. A consumer proposal in Ontario is an agreement with your unsecured creditors to pay a portion of your unsecured debts in a set period of time under 5 years. A Licensed Insolvency Trustee like Toronto’s David Sklar & Associates can help you file a consumer proposal in Ontario, help you keep your assets, and relieve you of a significant amount of debt. The difference makes the consumer proposal Ontario residents’ better option for working their way out of debt while maintaining their assets, credit, and dignity.