Is The Spectre Of Debt Haunting You?

Credit is somewhat of an enchanted thing. It allows us the flexibility to make purchases ahead of when we would otherwise be able to afford them. Unfortunately for many when it comes to credit, the ‘trick’ often follows the ‘treat’. While bank interest rates have been at historic lows in the past few years, credit card, secondary lender and payday loan offerings often come with astronomical interest rates attached. These charges can quickly creep up on us and choke our ability to pay off our debts, leaving us in the lurch of financial distress. When high interest rates have you juggling from one payment to the next, that message on your credit card bill saying it will take you 13 years to pay off your balance if you only make the minimum payment each month can be truly horrifying.

​There are many ways to be tricked by debt. Take for instance “interest-free” periods which become full (and high) interest periods if the debt is not fully paid by a certain date,interest rates that seem reasonable when expressed as a monthly amount, but are in fact “to the moon” when calculated as an annual rate or additional ‘fine print’ fees that make the true cost of borrowing even more spine-chilling.

Fear not! You don’t need the help of spells or potions to fight debt. You simply need to manage your debt differently. First, don’t be left in the dark. Take the time to sit down with a calculator and ensure you understand exactly how much it will cost you to borrow so you can make a fully informed decision surrounding whether or not you can both accept and afford the costs. Second, flee from high interest debt. Try to move your debt to the lowest interest lender you can find. This should reduce your monthly debt payments and allow you to pay off your debts faster. Along with that, avoid returning to the high interest ‘well’ of credit you used before. That may mean slashing those credit cards. Of course, resisting the evil of temptation is an important part of the mix. Create and follow a comprehensive budget that helps you steer clear of impulse buys. Finally, while it feels good to save money for a rainy-day, it’s important to consider whether your investments are actually making money faster than what you are paying in interest on your debts. If not, perhaps it would make more sense to cash out your investments and pay off your debt. Then every dollar that previously went to servicing debt can be used to in turn to replenish your savings – and someone will be paying you for the use of your money, instead of the other way around.

Of course, there are times when the debt demon is just too strong to defeat alone. At those times you may need to seek out the help of a debt professional. While Licensed Insolvency Trustees don’t have magic wands, they can help you explore your options and find the best route forward given your unique financial situation. Don’t be afraid to reach out for help. Finding the right path will lead you out of your debt woes and back to feeling alive. No bones about it.