Four indicators that you are in debt
Are you constantly making payments every month and finding you’re getting nowhere? If so, you’re trapped in debt. You could have sunk into debt for a number of reasons including losing a job, dealing with a divorce or perhaps you simply made some bad choices.
“Eventually, your debt will catch up to you and you will become insolvent”, Ed Porteli, president of OCCA Consumer Debt Relief warns. “Ninety-nine percent of people [in debt] just don’t know what they’re getting into”, he explains.
Ed goes on to say, “the indicator of being in debt for most people is when they are no longer able to make payments [on credit card or loan payments], and by that time it’s way too late. Everyone is surprised that they cannot make payments anymore”.
Here are some good indicators of being in debt:
You can only afford to make the minimum payment on your credit card. If you’re paying the least possible amount, it could take you decades to pay off a single item. During that time you will have paid back not only the principal amount of the loan, but also a fairly large amount of interest. Take for example a loan amount of $5000 at an interest rate of 19% (the interest norm for most credit cards). By paying only the minimum payment of $150 each month, it will take you 18 years to pay off the loan and a total amount of $10,245. That amount includes your interest in the amount of $5,245. By extending the payment of such credit card loans by making minimum payments, we’re only hurting ourselves in the long run.
You’re borrowing from one credit card to pay another. You won’t get any further ahead this way. Instead of paying one interest rate you’re paying two. Essentially you’re “circling your payments around” like a dog trying to chase its tail.
You’ve maxed out all of your credit cards. If you’re looking in the mail for more credit card offers from banks in order to source more funds to pay off your debts, you’re likely spending much more than you make. Concentrate on paying off the credit cards with the highest interest rates first and continue until all debts are paid.
You’ve already taken out a Home Equity Line of Credit and are just getting by with payments. Since you tried to solve your financial pickle with consolidating your debts and tying them to your mortgage, it would be wise to pay off your debts as quickly as possible. If you’re still just scraping by, any increase in interest rates will put you over the edge. What’s worse is if you default on any of your payments you could stand to lose your home.
Once you recognize that you are in too deep the next important move is to GET OUT OF DEBT. You can try to negotiate with your creditors but that will only go so far. Creditors are happy to accept your minimum payments as the interest they collect is their cash cow. There are professional debt management companies that are experienced and skilled at negotiating reduced loan payments that can help you. Do your research to make sure they are reputable; Canadian based and work in the CONSUMER’S interests, NOT the creditors. There are countless laws put in place to protect consumers from the repercussions of debt. You should be made aware of these laws.
For more information about how to get out of debt, call OCCA Consumer Debt Relief. For over twelve years OCCA has helped thousands of Canadians get out of debt successfully. They can help you too.
Visit OCCA Consumer Debt Relief at www.occa.ca or call us 1-855-873-6222. Call today for a debt free future.