Pay Off Debt

Though the recent financial crisis began in the United States and Europe without directly affecting the balance sheets of most Canadian financial firms, it nevertheless managed to wreak havoc on the country’s economy. It did so by sapping global demand for the raw materials and finished products that major Canadian firms produce on a massive scale, forcing significant layoffs and disrupting thousands of Canadians’ livelihoods.

Even if you were lucky enough to keep your job through the recent recession, your take-home pay likely stagnated or decreased over the past five years as prices for staples continued to rise. Unless you live in a still-booming area like northern Alberta or have been able to accumulate ample savings over the course of your career, you’ve probably had to make some tough financial decisions recently.

If you’ve shouldered a massive burden of debt in order to keep food on your family’s table and maintain a decent standard of living, you’re not alone. Millions of Canadians are running credit card balances at or near their maximum spending limits. Many can barely afford to make the minimum monthly payments on these balances and can barely even conceive of paying off their debt in a meaningful way.

Worse, thousands choose to devastate their credit scores for years to come by declaring bankruptcy in an effort to run off their increasingly aggressive creditors. If you feel like you’re waging a losing battle against your credit cards, make a concerted effort to pay off your debt before it’s too late.

Whether you’re from Nova Scotia or Saskatchewan, the interest rates on your past-due loan balances probably exceed 20 percent. On an outstanding balance of $10,000, this translates to $2,000 in annual interest payments.

Credit card companies have an obvious incentive for keeping your balances high: The longer you take to pay off your debt in full, the more interest it will generate. Many issuers set their monthly payments as low as 3 percent of the balance plus accrued interest, which translates to a seemingly manageable $350 per month on a $10,000 balance.

Of course, your balance will continue to grow if you charge more than $350 per month on that same card. To pay off your debt on a reasonable timescale, you’ll clearly have to stop using any credit card on which you’re running a balance.

If you’re struggling with multiple past-due loan balances, it may seem intuitive to try to pay them down simultaneously. In practice, this is unwise. If you’re not putting much more than the minimum payment toward each of your balances, you’re not really cutting into the amount of interest that they generate.

Instead, take an approach that requires foresight and discipline. Stop using all of your credit cards save one and hide the rest in a safe place. Keep your lone remaining card on your person in case of a serious emergency like a breakdown or unforeseen medical expense.

Next, take out your monthly budget and tighten it until you’ve freed up a significant proportion of your monthly income to pay off your debt. Put this entire amount toward your most expensive loan or credit card until you’ve paid it off in full. You’ll save years’ worth of interest charges on that particular balance.

Repeat this process until you’ve zeroed out the balance on your least expensive obligation. While it might take years and suck up thousands of dollars of supposedly disposable income, you’ll be able to enjoy a debt-free life once it’s done.

No two debt situations are alike. If you’ve tried to dig yourself out of debt by paying down your balances one at a time and enjoyed only limited success, don’t panic. You’re by no means at the end of your rope.

Debt settlement offers you another way to pay off your debt and save thousands of dollars in the process. Once a debt settlement provider agrees to take your case, they’ll begin negotiating with your creditors to reduce the total amount that you owe on your outstanding obligations. Unlike credit counselors and debt consolidation loan issuers, debt settlement professionals may be able to slash 40 to 60 percent from your loans’ principal balances.

Depending on the size of your debt, you may be able to exit the debt settlement process in anywhere from 12 to 48 months. Compared to the five-year term of the average debt consolidation loan and the five or six years required to complete the credit counseling process, debt settlement offers a quick, clear path to debt relief.

Don’t wait to deal with your debt problem until you’re forced to make tough choices at your family’s expense. If paying off your debts one at a time isn’t working, talk to a debt settlement provider today and begin the process of rebuilding your finances.