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Chapter 12: Dealing with Debt

If you’re broke, stressed out about your financial situation or couldn't ever afford to miss a single paycheque – welcome to the club as you’re certainly not alone. It is just not something anyone really likes to admit or talk about. It’s sad but true that the last thing we ever want to say out loud is that we can’t afford something, isn’t it?

Debt creeps up on you little by little, here and there for one reason or another. The balances get higher, the minimum payment moves up, one account gets used to cover another, the car needs repairs, the vacation is important but goes on a credit card and so on. Savings become less, RRSP’s are delayed or reduced just this year, and sometimes savings are used just this once to pay some bills.

Debt is a silent killer that starts choking you, your lifestyle, and your ability to maneuver. It is something most people already realize. After all, an Ipsos-Reid survey some years ago showed that over 90 percent of Canadians listed paying down debt as their top financial goal. It stops savings and starts reversing years of hard work and discipline to build them up. The minimum payments creep up without notice until one day the juggling stops working..

…it’s just that every lender is making money off you except yourself. Around 30 percent off the top for tax, pay groceries, utilities and the likes then pretty much turn the rest over to payments. Yes, most of it is in interest, but treading water is better than sinking. When did that become living and not just coping?

Two statistics are worth knowing: 6000 - which is the approximate number of bankruptcies a year and $500 billion: The total amount consumer debt will reach in this country by the time you are reading this. How much of this is yours?

What’s happening for many people is that things are getting worse and not better. Credit counseling agencies are now just as busy in November and December. Unusual, since almost all consumers want their credit available at least through the Christmas shopping season.

Step-up debt repayment plan example:

The end result? You had $25,200 in debt – and were on track to pay for 15 ½ years at a cost of more than $10,000 interest. It’s taken you 47 months – less than four years - and you’ve saved over $5,400 interest. What has it cost you? A hundred bucks a month and a little determination!

Bad Debt traps

The definition of debt insanity is doing the same thing you’ve always done and expecting different results in the future – it won’t happen. You will have to do some different things to have some different results. Throughout this book were many tips, tools and tricks to reduce your interest or borrow smarter and shortcuts to saving interest. Here are the top 20 of them again in summary: