by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
You must save more and spend less for a stable and secure financial future for both you and your loved ones” Few of us may not have heard of this well meaning advice given to us by our elders. Yet hardly anyone tends to follow these ancient words of wisdom. Of course, we do tend to give casual lip service to it every now and than, but following this advice is not an easy task per se. That is not to say we don’t ‘try’ to do so every time we are in a jam.
The following few pointers may help launch you on the part to financial solvency.
· If you must use credit cards use the least expensive ones
When procuring a credit card for yourself, shop around first and see which one has the least interest rate. Always remember, that some cards may be more expensive than others since some banks may prove costlier than others depending on the basket of services they provide. Don’t ‘buy’ into the advertising hype but check tariff rates first before acquiring and using a credit card.
· Use credit cards to ‘save’ money
You may also check out the discounts available with your preferred choice of credit card and use the ones that offer you the most discounts. If you use the discounts available with your card to shop at your favourite outlets and pay within the month, you may actually save money even as you are spending it.
· Live a balanced life
Balance is crucial for just about any type of reasonably good lifestyle. From eating to sleeping to working, every thing you do must be in harmony with your inner self and be in balance,. The same holds true for your finances as well. It is always important to save at least some of your earnings every month for the proverbial ‘rainy day.’ The amount may not be very large to begin with, but you have to make sure that your savings are as consistent as they can be and the amount saved is done so month after month. Year after year. Over the years you would have a sizable nest egg that you may be able to invest and so be able to earn from your hard earned savings.
· Debs should be paid of with your earnings
It is always better to buy from your own earnings rather than though credit, but if you have done so, try and tighten your belt and restrict your monthly expenses and pay from your running cash rather than dipping into your savings. This way your ‘nest egg’ remains secure and you would be able to live a relatively stress free life since you would always have more money in your account while remaining debt free.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
Not all of us have what it takes to spend within our means, and therefore before we know it, we are head over heels in debt.
However, there is a way around this problem. And, that is ’budgeting’, i.e. allocating budgets to all your important needs as well as those that are not on the top of the priority list. This way you would be able to make sure that all of your wants and desires are taken care of in order of their priority and nothing is ignored in the long run.
However, budgeting requires a certain amount of discipline and finesse. These are a few tips to help you learn this art:
1. Track your Spending Habits
This step is a sort of ‘prequel’ to budgeting. Before you commence making a budget try and track where all your hard earned money is actually going, remember every single dollar spent has to be clearly noted down, because in the long run, every individual penny eventually adds up. An innate understanding of your day to day expenditures would help you come up with a budget that is based on optimizing your spending patterns. Make sure that before making a budget, you track your expenditures for at least a four week period.
2. Set Realistic goals
When preparing a budget, think along the lines of a diet and exercise regimen. It is easy to make‘plans’regarding healthier eating habits and jogging four miles every day, but executing those plans means a harsh reality check. Even if you manage to do it for a few days, the chances are you will eventually stop. The same goes for your budget. If you curtail the expenses you incur on your hobbies and entertainment almost completely, the odds are you will succumb to your original spending habits in a big way. Try and cut down on your leisure spending by around ten percent per month (instead of going to the cinema three times a week, makes it twice).
Once you have successfully managed that, then make another cut of around the same percentage, and then don’t go below that for at least a few months.
3. Say no to Credit Card Spending
The thing about credit cards is that they allow you to spend money that you don’t really have. Use them often enough, and they are a sure fire recipe for landing you into debt or worse and before you know it, you are more concerned with making minimum payments than with taking care of your actual day to day needs in an attempt to keep the collection agents at bay.
The simplest means of avoiding credit card debt is to refrain from using them in the first place. However, they are indeed handy things to have in case of emergencies. If that is what has happened, make the payment of these cards a first line priority so that you would not be caught in a vicious debt trap.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
Sometimes things happen that we have not planned for, (such as medical emergencies, loss of overall household income, excessive credit spending etc.) all of which lead to very high expenses and we have no idea how to stem the tide. Month after month, our bills become steadily bigger even as our income remains static.
This is truly a worrying development, and therefore before we know it, we are deeply in debt and there seems no way out of the quagmire.
But, there is light at the end of the tunnel. With a bit of fiscal discipline you just might be able to cope with those troublesome runaway expenses. Here are a few ideas:
· The ‘top three expense’ method
Runaway expenses are an acquired trait that, given time, can be dealt with effectively. It is simply a matter of finding out just what you biggest money drains may be.
As a rule, few people include basic necessities as their biggest expenses. Mostly the money is spent on leisure items and entertainment such as eating out, clubbing, and buying extra clothes, electronic appliances and the list goes on. Once you have figured out which categories are unimportant and yet a big drain on your resources, simply curb spending in those categories and before you know it, your runaway expenses would be firmly in control.
· Understand the importance of savings
Runaway expenses exist when we spend all (or even more than what we earn) on what ever we deem necessary.
The opposite of spending is saving i.e. spending less than we earn so as to create a ‘nest egg’ for any future eventualities. However, saving is easier said than done. If you think that you would be able to save any residual leftover amount from your monthly income, think again. If you are truly serious about saving your earnings, then deduct a certain amount at the ‘beginning’ of the month rather than waiting for the month to end. This savings amount should be separated from your regular expense money and preferably invested.
· Involve other people in your game plan
Many times curtailing excessive spending is a collective rather than an individual effort. If you feel that you cannot do it alone, it is always better to involve your friends, family and other people you trust into this initiative. Talk to your kids and explain to them why it is not possible to go out for outings as much as before. Take your spouse into confidence. And, if you are part of a free wheeling overspending crowd that laughs at budgets and savings plans, may be you should consider spending less time with them.
· Be wise – prioritise
This age old adage is still as refreshingly applicable today, as it ever was before. You simply have to set your priorities straight if you are ever going to get the better of your runaway expenses. Your hard money would continue to bleed if you decide that you simply must have that brand new smart phone that has been recently launched into the market. Such spending habits, when your financial means are clearly not enough to support them, could spell disaster in the long run.
by admin | Bankruptcy, Consumer Proposal, Uncategorized
Credit and specially credit cards are often touted as the best possible means of achieving your life’s goals. They are often considered a means of ‘empowerment’ that allow you a degree of financial freedom that would hitherto not be possible if you were to spend entirely within your earnings.
However, nothing could be further form the truth since excessive usage of credit cards is a sure fire route to penury. The reason being that financial institutions that offer you credit lines and cards do not do so out of a sense of altruism but hard business sense.
Remember, everything that you purchase has to be paid back, with interest (in the literal sense.) When you are buying that latest LCD (liquid crystal display) TV or brand new car on your credit card, you may not remember that the money that you have spent was not yours to be begin with, but rather a loan that has been given to you so that the lender can make a profit off you in the long run.
If you are not careful, your bills will steadily accumulate and the net result would be incessant calls from your creditors who would be hounding you day in day out so that they could recover their dues. Slowly and gradually, the quality of your life would erode and you would be faced with the difficult prospect of placing your credit card debts as your most important priority. This will make everything else, even basic day-to-day expenses that are necessary to run your household such as food, energy bills, home lease payments, school books etc. end up being on a lower priority level. If this state of affairs continues long enough, you just might end up facing insolvency and may even have to file for bankruptcy.
This means that you would end up forfeiting almost all your property as well as having to face a steep downfall in your overall credit ratings.
Of course, it does not have to be this way. All you need to do is to say no to those glitzy adverts that try and make you believe that credit cards and loans are the panacea of all your financial woes and the short cut to your dreams coming true. If you were to believe that, then there is a very strong probability that the dreams may turn out to be veritable nightmares.
Though it may not be easy at first, but for your financial health it is very important that you get rid of your debts first and foremost. But even more important than that is getting rid of the ‘mindset’ that might lead to a debt trap i.e. using credit in any form as a means of ‘supplementing’ your monthly income. Remember, nothing can be further from the truth since credit is not a supplement but a burden on your existing financial resources.
If you find that your income is not enough for your expenses, then learn to budget your resources till each and every item in your priority list has been catered to and moreover, it has happened without you taking any unnecessary loans.
by admin | Uncategorized
Before we try to understand how to deal with our debtors, let us see what debt is all about and how we can avoid being in this situation in the first place.
What is debt
Debt (in the financial context) means any amount of money that is either owed and/or due. In a financial contract, the parties to any debt are referred to as ‘lenders’ i.e. those who actually give the amount of money and ‘borrowers’ are the people who take the money loaned by the lenders. A typical financial contract that involves borrowing any sum of money, generally envisages a return of the full amount (principal) at a later date along with a certain amount (interest) that is over and above the original figure that was borrowed. The borrower usually has to pay both the principal and the interest in staggered payments called ‘instalments’.
The trouble arises only when the borrower is not able to not meet his regular minimum instalment payments. This usually happens when the borrower is not able to earn an amount sufficient to make those payments while trying to earn a living for himself as well as his loved ones.
How to deal with debtors
However, there are many cases where the individual concerned is not paying even though he is ostensibly well-off. Under these circumstances there are various ways to deal with this problem.
What ‘not’ to do
Many provinces in Canada have laws that do not allow debt collection firms to harass their debtors. As a general rule, credit collection agents are not allowed to call on people between the hours of 9 pm and 7 am in many parts of the country. Also Sundays and statutory holidays are considered partially prohibited days in most provinces in Canada. Calling people or banging on their doors at 3 am is not a good idea (as many collection agents have found to their detriment after they were reported for harassment)
The law in Ontario province states that collection agents are not allowed to email, or speak with a debtor or even send him or her voice messages, more than three times in a seven day period after the first conversation. Collection agents are allowed only one means of communication and that is ‘regular’ mail.
What you can do to recover your loan
Any debt given to an individual is an investment and just because a debtor is not paying you does not mean it is a ‘sunk cost.’ This is what you can do to recover your hard earned money.
o Focus on the problem at hand
The borrower (debtor) might try to distract you with a barrage of personal tragedy stories as well as excuses till you completely lose the original point that you were trying to make. This is why you must not allow yourself to be distracted and make sure the discussion hovers around only one point, “How soon can you expect your payments to be cleared?”
o Be thoroughly professional irrespective of provocation
The sundry debtor just might try to make you lose your temper. Under no account should you do that and must not raise your voice or try and strike the debtor. If you indulge in physical and or verbal abuse, you might end up being hauled up on criminal charges. That is why it is imperative that your demeanour must be completely professional at all times.
by admin | Bankruptcy, Consumer Proposal, Uncategorized
Not all of us are born with the financial acumen to remain debt free for life. Sometimes we simply want more than we earn or just want to ‘keep up with the joneses’ or try to impress our spouse or other people close to us and before we know it, we have accumulated debts that we are quite simply not able to pay back.
Alternately, there may be a medical emergency or bad business decisions that just might lead to looming insolvency.
Bankruptcy in Canada
Stripped of all the hyperbole, the core idea behind personal bankruptcy in Canada is that you essentially have to surrender all your property to a ‘licensed insolvency trustee.’ This is done to get rid of all your debts. The trustee would help to ensure that your property is sold off and its proceeds are used to help your creditors recover their investments. Depending on which province you live in, certain bare essentials may be left to you so that you are able to continue living a reasonably normal life. The trustee will be responsible for making sure that neither you nor your creditors are treated unfairly.
Legal Aspects
If you were to go bankrupt in Canada, it is good to know that it will not have any direct financial repercussions on your loved ones such as husband, wife or common law partner etc. This is because your loans and your property are your very own (unless any loan is jointly owned or a close family member is a guarantor of your loan). This is why only ‘your’ personal property would be taken into consideration when you file for personal bankruptcy.
The Surrendering of Property
This is perhaps one of the worst things about bankruptcy. Most of your property may well be confiscated and sold off and its proceeds given to the creditors. To see your life’s hard work and assets being handed over to others is not an easy pill to swallow. But, look at the bright side. Your creditors will not continue to hound you anymore.
Credit Rating
It is unwise to think that bankruptcy would not affect your credit ratings. However, it is not the end of the world when it comes to applying for fresh credit. In fact, you will continue to receive credit card and loan offers in your mail (however, the fine print would have changed and they would be charging you more interest than ever before).
Yes, bankruptcy has a severely negative impact on credit ratings, however, if the alterative is that you are being mercilessly hounded by creditors and you are lagging behind on almost all your monthly payments, then it is an axiomatic assumption to realize that your credit ratings are going through a downward spiral in any case.
Remember, bankruptcy is not the end of the road at all. Hundreds of thousands of Canadians go through it every year and simply restart their lives all over again. In time, both your credit ratings as well as your property will be back to the position they were before.
