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Is Debt Consolidation The Right Solution for You?

  • October 13, 2021

 

Feeling a lot of pressure from your debts? You’re not alone. Carrying large amounts of consumer debt has become the “new normal,” but what happens if you start having trouble making your payments, or have so many different accounts that it’s hard to keep them organized and current? And, how do you feel about the high interest rates you may be paying on certain credit cards and payday loans? 

If you are a typical consumer, you acquired these debts when you purchased things you needed – and you told yourself, “I’ll have no trouble paying this off in ‘x’ months.” 

But life has a way of intervening in these plans.

Options for Lowering your Payments and/or Interest Rates 

Debt management has become an important topic for today’s consumer. From simple credit counselling and help with budgeting, to more comprehensive solutions such as consumer proposals and bankruptcy (available if you have become insolvent), there are options for every financial situation. Each one can put you on a better financial footing going forward. 

If you still have the resources to pay your bills, but it’s getting tight and/or too complicated, debt consolidation could be a good option.


Basics of Debt Consolidation Loans 

Debt consolidation in Canada is exactly what it sounds like: all your debts are merged into one account, using a loan from your bank. 

When you approach your bank about a debt consolidation loan, you’ll be invited to sit down with a loans officer and provide information about the credit accounts you would like to pay off with the loan – be they credit cards, payday loans, auto financing, or personal loans from friends or family. The loans officer can advise you on the likelihood of your qualifying for the loan, how quickly you would be required to pay it off, and its interest rate.

What’s good about debt consolidation? 

Life is much simpler when you have fewer bills to pay. If you qualify for a debt consolidation loan, you’ll trade in several payments for just one, and it will be easier not to forget it or neglect to pay it – which in turn will improve your credit rating if you’ve been late in the past.

Also, depending on what type of debts you pay off with the loan, your new interest rate may be lower – especially if you are paying off payday loans or other loans with high interest.

Drawbacks of debt consolidation

One of the drawbacks of debt consolidation in Canada – not a disadvantage, really, but a caution – is that it can be difficult for you to qualify for a debt consolidation loan. Many banks will look at your current financial situation – including amounts owed to creditors – and determine whether you can afford the new loan payments on top of your current payments. Yes, you intend to pay off those other accounts with the loan – but the bank won’t always calculate that way.

This leads to the next drawback: just as the bank fears, you may end up with too much debt. This is because even though you will pay your old accounts off, those accounts (especially if they are credit cards) are very easy to use again.

The final drawback is that, just like with other loans, the bank may require collateral before it can approve the loan. If you use your house or vehicle as collateral (security against the loan), then you could lose your house or car in the event you default on the loan. This is something to consider very seriously

The Bottom Line on Debt Consolidation Loans

If you would like information on other debt management options such as credit counselling, consumer proposal or bankruptcy, start with Bankruptcy Canada’s FAQ page. You can also meet with a Licensed Insolvency Trustee who can help you sort out your options.

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Here’s The Social Security Cost of Living Adjustment For 2022

  • October 13, 2021

elderly couple looking out their door holding coffee cups - social security cost of living adjustment

For those receiving Social Security benefits, you'll get a 5.9% Cost of Living Adjustment increase in 2022.

Learn more from Social Security's website.

Related Content to Social Security Cost of Living Adjustment:

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5 Deliciously Easy Slow Cooker Chicken Recipes For This Week

  • October 12, 2021

Deliciously Easy Slow Cooker Chicken Recipes

Looking for deliciously easy slow cooker chicken recipes to make for your family this week? Look no further!

My wife Anna loves the slow cooker. She swears by it. I'm not a cook myself, so I rely on her to make delicious meals (and she does).

What she enjoys most (as does her mother) is the ability to put all the ingredients in -- and be able to leave the house! If you have children, you know that it's difficult to put together any meal ... let alone a delicious family gourmet meal.

Seriously, who has time for that? Luckily, we put together this list of our top 5 deliciously easy slow cooker chicken recipes. We think you will really enjoy them.

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Six Ways To Ensure Your Family’s Financial Security

  • October 4, 2021

It is all too easy to get caught up with everyday life, especially if you have a family. However, if that family consists of individuals who zap money, time, and energy, it can be challenging to make ends meet. That said, you should take a moment to think about the future and your fam's financial security. If you don't act in time, old age may hit harder than you'd imagined.

That said, there are some expenses that every family has to incur to survive in today's world while maintaining social status. But, some individuals still think that protecting that family financially and making ends meet is enough. At the same time, some say that building a fortune is the only way to secure their family's financial future. While that is true, just investing and saving money might not be enough to do so. So, with that in mind, let us look at a few ways you can employ to ensure your family's financial security. Some of these ways are listed down below.

Plan your finances

The first step towards financial security for you and your family is to consider your financial goals. After all, not every child will get married or go to university. However, all children require a place to spend their adulthood.

While you might be able to buy them a house in the future, but will you be able to pay 100,000 dollars to help them with an advance for their home? So, if you want to save 100,000 dollars, ask yourself, how much money do you need to put aside and for how long? Well, this is where a financial plan will come in handy. It will allow you to track your savings, spending, family budget or create an emergency fund for dire economic times. That said, don't forget to talk to your partner when you make a financial plan for your family. After all, it would be best if you remember that this would affect them as well. 

Pay off your debts

Because of our aspirations, debt has become an ever-present aspect of our lives. Whether it is a credit card loan, a home loan, a personal loan, or a car lease, most individuals need to take some type of loan to meet their short-term goals and fulfill their dreams. However, while borrowing money will help you build wealth, obtain assets, or give your financial stability for the time being, debt isn't good for your family's long-term financial security. 

Taking on tons of debt through various loans can lead to immense stress while harming your financial stability in the process. Hence, before you decide to work on building your family's financial security, you must pay off your debts, especially credit cards and personal loans. If you don't, you're planning to get buried under interest payments.

Protect your income

As mentioned before, no job is safe in today's world. However, there are some expenses that every family has to incur to make ends meet. Therefore, individuals need to improve their income by constantly upgrading their skillset and develop an investment strategy that pays dividends in the long haul. Thankfully, there are tons of government-backed investment plans that you can go for to secure your income if you lose your job or retire early. So, depending on your future needs and requirements, you can choose a plan that suits you and your family the best. 

Consider life insurance

No one can predict the future. So while your income might be enough to provide for your family today, what will happen if you are no longer there to protect them and take care of them? Or will you have enough money saved for your children's education? Probably not! In such a situation, life insurance will come into play. 

So, if you want to keep your saving and security separate or recently got a job, opt for a comprehensive term insurance plan. This type of insurance policy is a little cheaper than others. Plus, you can use an online term calculator to determine the amount of money you need to pay monthly. Furthermore, besides life insurance, opt for health insurance for your entire family so that you don't strain your wallet when someone under your roof falls sick. 

Talk to your kids about money

If you haven't taught your kids about money, now is the time to do so. Because if you don't, someone out there will teach them the hard way. So, it is wise to provide them with a head start when they're in school. That said, a piggy bank with a few coins will be enough to teach them about saving money. Then, as they move into their teenage years, you can try some aggressive techniques such as paying them for completing household chores. 

Furthermore, don't forget to teach them the importance of being happy for what they have, sharing with others who don't have the same privileges, and most importantly, managing debt. After all, giving them the credit card lesson sooner than later will allow them to understand good and bad debt. You could also make them watch a few videos on personal finance.

Do some estate planning

Estate planning is the process of dealing with your belongings when you are gone from this world. So, proper estate planning is an excellent way to ensure that your family gets everything you own in an orderly and fair manner. That said, creating a Will is the perfect starting point and an excellent step to take when it comes to estate planning. After making one, you can rest assured that your family will receive your assets according to your wishes. So, get in touch with your family lawyer and ask them to create a Will for you. It won't cost too much money and will ensure your family's financial future when you pass. 

Conclusion

Ensuring your family's financial security should be your topmost priority. However, if you don't know where and how to start, the tips mentioned above will help you get a head start. Start by planning your long0term goals. Repay debt as soon as possible, protect your income, and consider purchasing life and health insurance. You should also give your kids some sound advice on money management. Last but not least, plan your Will before it's too late.

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How To Save Money This Thanksgiving

  • September 28, 2021

How To Save Money This Thanksgiving

Looking to save money this Thanksgiving hosting everyone in your home?

With Thanksgiving fast approaching this year you might still be feeling the after effects of the pandemic financially. So, anything you can do to save some money this fall will be warmly welcomed.

Here are some ideas to inspire you to be money savvy this Thanksgiving. 

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6 Tips For Buying Your First Car

  • September 28, 2021

6 Tips For Buying Your First Car

The excitement and high expectations that come from shopping for your first car needs to be properly managed for a great experience.  You should be ready to make important decisions in the face of many choices to ensure you end up with the best vehicle. Here are five important tips for buying your first car.

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What You Should (and Shouldn’t) Get Into Debt For

  • September 22, 2021

Debt is an important part of the financial world. It has many purposes and can be used to finance all sorts of different things. However, it should not be used for everything! That said, here are a few examples of what one can make some debt for, and what would be a less great idea if you were to get into debt for it.

Good Debt

#1 Buying a house

It is good to make debt for buying a house because you can buy it with 100% financing. This means making no money down and being able to have the same monthly payment as if you were renting but owning your own home! Also, if you get a fixed mortgage, your monthly payment will be the same for years and decades to come.

#2 Financing college tuition

It is also a good idea to make debt for financing college tuition because it can lead to more financial opportunities, such as better jobs. However, you do not want to take out an enormous amount of loans that will be impossible to pay back in the future! There are many different ways students can finance their education without going overboard with student loan debt, one example is utilizing compare credit, which can help students breathe a little easier each month financially.

Also, some colleges offer internships or work-study programs where they give money directly to the school, so they don't have any additional expenses while learning about themselves and new things. This allows them to earn what they need instead of taking on too much-unneeded debt caused by expensive cars or nonessential items like designer clothes which aren't required for success after graduation day rolls around.

#3 Starting your own business

It is also a good idea to make debt for starting your own business because it is something that can create an income for your should things work out. If you have started or plan on starting your own company, there are many different ways you can finance the startup costs and avoid going overboard with debts that will be impossible to pay off in the future!

Bad Debt

#1 Buying a car

It is usually better to save up your money and buy a car with all cash instead of going into debt. This is because, over time, cars lose value while housing prices usually go up in value. If you were to purchase a vehicle on credit or take out loans from the bank, it would mean having an extra monthly payment that could be used elsewhere! When people finance their vehicles, they end up paying two times more than what they bought it for after interest charges and other fees related to financing add up.

#2 Furnishing your home

While it can be nice to buy all the latest furniture, there are other ways you can decorate your new house or apartment without going into debt. For example, you could have a yard sale, ask family members if they have any old items lying around that they would give away for free, and/or shop at thrift stores! This allows them to earn what they need instead of taking on too much unnecessary debt caused by expensive cars or nonessential items like designer clothes that aren't required for success after finding out what type of style truly fits their personality best.

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What Are The Pros And Cons Of Debt Consolidation?

  • September 18, 2021

dollar bills rolled up

Exploring your debt consolidation options?

Falling into debt is never a nice situation to be in.

However, no matter how financially savvy you may be, there may be challenging times in life when it just seems like there’s no other recourse but to borrow money. Whatever the situation, there’s still a way out. And, it’s a good start that you made it here today, searching for means to get rid of your debt.

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4 Golden Rules That Will Take Your Investments To The Next Level

take your investments to the next level

Are you looking to take your investments to the next level?

Thinking about investing your money?

Good, you’ve already made a fantastic financial decision. There are almost too many things you can invest in these days, which makes things very confusing for a lot of people. Everyone is looking for the ‘best’ investment, but I’m here to tell you that all things can be good investments if you play your cards right.

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How To Avoid Financial Troubles The Smart Way

  • September 17, 2021

calculator, paper, and pen

Should you ever experience financial issues such as needing to pay off debt or being close to bankruptcy, then it important to take the necessary steps to stabilize your finances. Stable finances can aid a stable life. Thus, here are the smart ways to avoid financial troubles that could impact your quality of life. 

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