Financial Freedom

Debt, in my opinion, is a form of slavery. When you owe a bank money you become a slave to the bank because most of your earnings will go towards the payment of your debt.

If you owe the bank $10,000 on a credit card with an annual interest rate of 19.99% ( this is technically 20% per year). This is a form of slavery.

If you pay a minimum 2% of a monthly balance that is $200, it will take you over 9 years to pay off a $10,000 credit card, and you will pay $11,660.67 in  interest. By the end of this 9-year term. your total payment would add up to $21,660.67. You have paid double the amount that was initially  charged to your credit card. Can you imagine if you currently owe $50,000 or more in credit card fees? How much will you have to pay back, and how long will it take you to pay back what you owe to the bank or credit card company?

This is why I say debt is a form of financial slavery. You can work 8 hours a day, 38 hours a week and still not be able to save a single cent if you're in debt.

How People Get Into Debt

1.      Accepting Credit You Don't Need

If a bank approves a $20,000 credit card for someone who makes less than $10,000 a year, how will the person pay all of it back?

Sometimes, you will walk into a bank to pay a utility bill and you will be told that you have been pre-approved for a $10,000 line of credit and income verification is not need. No income verification can compel people to accept the line of credit because there is no hassle of proving income. You can easily get into debt if you don't say no to offers from banks and credit card companies.  

1.      Spending Money You Don't Have

You can get easily into debt by spending money without a plan. If you are a person who likes to buy things on sale, you have to take some time to reevaluate your purchases.

My advice is only to buy what you need when you need it. This way, you will be able to keep to your budgeting routine. Cultivate the habit of using your debit card for purchases. If you happen to have a points credit card or one with a  cash back reward, you can use your it for purchases as long as you have enough funds in you chequing account to pay it off immediately. You can also pay it off before your card's days grace period. A grace period is the amount of time that you have before your card's interest rate kicks in. Different cards have a different grace period length.

How to stay out of debt

If you are already in debt, don't be discouraged  because you're not alone. According to an article done by The Globe and Mail on March 11^th, 2016, Canadian households are spending $1.65 for every one dollar earned.

It is sometimes difficult to admit that your debt is more than you can handle. The realization that you might not be able to pay back what you owe can also be overwhelming but you can do something about it now by putting a plan in place. 

Start by adding up all your debt, who you owe and the terms of your loan such as interest rate.

Then look into the possibility of getting a consolidation loan to pay off everything at once. Make sure that all credit cards except one are cancelled.

If you want to go for a vacation that will cost your family $3000, it is advisable to save $250 per month for 1 years or $125 per month for 2 years. If you put the vacation of a credit card and you pay a minimum payment of 2% which is $60 per month, with  18% in annual interest, it will take you 8 years to make the payment and you will pay almost $6000 back to the bank. Always save for your upcoming expenditures.

If you're having trouble doing this by yourself, Please go to my blog for more information or contact me directly via email.

Signs that you are in trouble with debt

·         New bills arrive when the old bills aren't paid yet

·         You always have late fees or over-limit charges on your utility or credit card statement

·         You are getting NSF charges from the bank

1-TAKE ACTION

2-MAKE A PLAN

3-BECOME DEBT FREE

Self-awareness is key and the earlier you do something about it, the better it will get. I have helped many people and I can help you too.

Feel free to email me at margmortgages@gmail.com or call 780 901 8060 for 30 minutes free consultation.