You need savings if you’re going to invest, and before you can save, you need to get out of debt. Given the high interest rates on credit cards and other types of revolving credit, you should almost always pay debt before saving or investing, unless interest rates are atypically low. But how do you get to a place where you can save when you’re facing large debts already?
Investing can be the key to reaching your financial goals: a house, a vacation property, an early retirement. But with the widespread availability of easy credit and a lack of financial literacy, it’s much easier to owe money than save it. If you find yourself facing overwhelming debt, not only are you not alone, but there are solutions, one of which is debt management.
How Debt Management Can Help
Are you asking what is debt management and how can it help? It’s a way to look at all of your debt relief options and get help putting your finances back together. There are many different solutions on the table and working with a certified Credit Counsellor from a not-for-profit credit counselling agency is a good way to get answers for free.
When you start with debt management, a Credit Counsellor evaluates your financial situation. They can tell you which options are feasible, whether that’s a debt consolidation loan, a Debt Consolidation Program, a consumer proposal, or the last resort, bankruptcy.
Is It Hard to Get a Debt Consolidation Loan?
When you go to a bank or another lender for a debt consolidation loan, they treat it like any other. They’ll look at your income, the size of your debts, and your credit score. If you’re in a position where you’re looking for this type of loan, the odds are that at least one of those factors will be working against you.
If your loan application gets rejected, you still have the option of a Debt Consolidation Program. A Credit Counsellor will do several things as part of the program to help you get out of debt, including:
- Negotiate with your creditors for lower or zero interest rates;
- Allow to you make one simple monthly payment for all of your unsecured debts;
- Create a personalized budget for you.
Signs You Need Debt Help
The earlier you seek debt help, the better off you’re likely to be. Waiting longer, missing payments, and getting deeper into debt can limit your options. If you find yourself struggling with any of these debt danger signs, it’s time to seek assistance:
- You’re only making minimum payments or you’re missing payments altogether;
- You’re putting off one creditor to pay another;
- You’re charging more on your credit cards each month than you pay back;
- You’re applying for multiple credit cards at different branches;
- You’re using cash advances from one card to pay another.
All of these are signs that you’re in a precarious balance – and tripping is going to be inevitable. Get help while you still have lots of options. You can start saving; first, you need to clear your debts.
Disclaimer: This content does not necessarily represent the views of IWB.