Debt management canada

Why are we in debt? Why do the majority of people live beyond their means?. All of us have debt, this seems to be the nature of life, but we have to ask ourselves why our debt usually equals or exceeds what we can afford?

The answer is pretty simple. The creditors make it easy to obtain debt and this is how lending companies become profitable. Sadly they actually love for us to fall behind.

Everybody likes to get paid in a timely manner, but lending companies actually want the opposite. They want you to be late!

Now mind you they don't want you to be very late or to not make payments at all, but a a few weeks is ideal for them. Let's take a look at what late payments on your account means to the credit card companies. You still meet your monthly obligation, but you are a week or two late. Their penalty for late payments is $30. your creditors just made thirty dollars for doing absolutely nothing! You're already maxed out, so essentially the charge puts you over your max. Basically giving them another $30 for, again, doing nothing!

At some point you are able to make your minimum payment of twenty dollars. basically this doesn't work well for you. Let's just pretend that you have fifteen dollars in interest for the this reporting period. Your total costs are; fifteen dollars in interest + thirty dollar late charge + thirty dollar over limit charge, equiling $75 added to your account. You pay twenty dollars on the account, essentially leaving you fifty five dollars more then when you the reporting period began and you have zip to show for it.

This proves that credit cards are bad and we should learn to do without your creditors!

In order for you to start in the process is to collect all of your credit cards and shred them. If you absolutely need a card save one, but shred the others. If you are going to keep one just pick the card with the least amount of interest and hopefully one with no annual fee. Store your card in a safe place that is not easily accessible.

This sounds like a drastic move, but most people do not have the self control to essentially not use the credit card. Most people look at their credit card statement, see $50 or one hundred dollars in accessable funds and look at it as free money. We all know that there is nothing free in this world.

If you do not bring yourself to cancelling your credit cards, you should gather them all up and hide them in a place that would not be easy to access. A safety deposit box is absolutely a great idea. Also, you may want to have someboby that you trust hold on to them or hide them.

The best thing is not to have them accessible for those un-nessasary purchases that we come across on a regular basis. Once we pass the circumstance that would see us use the card, chances are we'll realize that we don't need to purchase that product or probably forgot about it completely. This methode will help us get even closer to eliminating our debt.

You need to get rid of the credit cards that you are no longer going to use. Most accounts have an annual fee, which could be anywhere from $30 to one hundred dollars. This is an un-nessasary expense that you should use towards the principal.

usually cards may charge you a penalty to make you think abbout staying with them. At this point you should consider the impact. I recently cancelled a card that is charging $3.50 a month in closed account penalties. Lets say your annual charge is $59, twelve months at $3.50 is $42. You are still ahead of the game by seventeen dollars, or more, if we pay it off within twelve months. The most important thing to consider is that there is no way that I can use that card again and worsen this situation.

Now that the temptation is out of the way you can start paying them off. Just remember to pay at least the monthly minimums, pay all accounts on time, and stop using the accounts. Now step back and enjoy the road to financial freedom.