Dreaming of having no debt?

Life would be great if we won the lotto and had no financial worries.  You dream of not worrying about money, living debt-free, buy the things your kids want, no fighting over money with your spouse and travel to places on your bucket list.  Plus, you sleep peacefully.  Oh, to dream.

Reality is many of us wake up each day and struggle with what life throws at us.  Everything costs money.  Your credit card balances prove it!  You juggle between family responsibilities of putting food on the table and demands of everyday life of kids wanting to be part of everything going on in town.  You feel like you are always saying “no” as you cannot afford it.  If you do say yes, then you are trying to figure out how to pay for it.  Overwhelmed is one word to describe how you are feeling.

You want to feel more positive and more in control of your life and finances.  This is what winning the lotto is all about.  Can you feel like this without winning the lotto?  Yes, you can!  It is possible to get this positive feeling by setting goals and making plans for you and your household.

Did you know: if you averaged $40,000/year annual salary over 30 years, it would be the same as winning $1.2 million.

A $5 lotto ticket has had a one in 28,633,528 chance at winning at least $15 million.  Reality is the $5 spent buying a lotto ticket is better spent on groceries or emergency savings.    Many of us have better odds of finding a job and regular income.  Gambling does not solve your financial problems, it only has great odds of creating more personal and financial problems.

It is always good to have goals to work towards, but reality is it is tough to reach your goals.  Also, once you reach them, you do need to still work at maintaining them.  That is a little myth about winning the lotto- life is not “poof” magically perfect.  You still must plan, make sound financial decisions and track your costs so you do not spend all your winnings.  So, winning the lotto, is not the fix- it’s a temporary relief.  You still need to do the work of setting a financial plan, living within your means and have savings available for unexpected events.  Reality is, you can do this!

We can help you design a financial plan to fit your family obligations while planning to be debt free and financially healthy.  We can help guide you to find ways to reduce household costs, plan for expenses and help you reach your goals.  It is possible.  Your paycheck is your lotto winnings- you just need to work at spending it the best way possible.

Remember “It takes two to tango”!  The key to financial success in your household is to have everyone in agreement and be willing to compromise.  So, when everyone agrees and understands the family financial plan, it is easier to say “No” as they understand.  They may also not ask as much either.

The first step must be yours!  Call Rita Anderson & Associates today to help you set a plan to achieve a happier financial life. Contact us

Planning for a Better Retirement

Grandchildren and Debt

Retirement is a funny thing to think about. Either you feel like you have plenty of time to consider retirement, or you feel like you’re late in the game and your target age to retire is just around the corner. As well, you may find yourself needing to start over after your situation has changed (divorce, for example). Regardless of your age, if you haven’t started saving for retirement, now is the time to start.
Here’s a little bit of sage advice to make you wiser as you get older:

Every little bit helps – It’s common to look at your income and not understand how you’d ever be able to put any additional funds towards a nest egg. The reality is, every dollar saved today is one less you need to worry about in the future. There are plenty of ways you can save small amounts of money that add up over time. Some banks will let you round up all of your purchases to the nearest dollar, putting the additional change in a savings account (for example if a coffee costs $1.75, you’ll be charged $2.00 with .25 cents going to a savings account.) If your bank doesn’t offer this option, commit to putting all of the change in your pocket or car at the end of the day into a jar. Try setting up an automatic bank transfer. Only $10 per week will net you over $500 per year, and you will barely notice it if it’s done automatically. Talk to your bank about options they have to help you save better.
Set a goal for these funds. Remember, your first goal for these is emergency savings and then you can focus on retirement.

Clean up your debt situation – It’s difficult to save anything if you do not have a realistic budget and financial plan. You need your debt to be managed with a plan if you want to start saving. The sooner you make a plan and follow it, the sooner you’ll be able to see significant savings towards your retirement.
Much like a savings plan, paying off your debt requires strategy. If you’re simply making minimum payments, or using new debt to pay old debt, it’s time to get on track and get yourself in the black. Quite literally, your future depends on it.

Invest your savings – Putting your money into a savings account is great if you’re saving up for in-the-near-future purchases, but if you’re saving for the long term, it’s best to invest your savings and let that egg see some growth. There are some great options available. Seek a financial professional with an accredited financial institution to help you choose the best savings option for your short term and long-term goals. There is no right or wrong solution, but be sure to do your research and try and consult with a professional to help determine what is best for your situation.
Apply your new found good habits to your retirement saving strategy – Retirement may seem daunting, but with a few changes and some dedication, it’s most certainly in reach. If you’re finding debt is getting in the way of saving for retirement, or if you need some advice on how to get your finances on track, meeting with a professional is a great solution to your problems.

Managing Relationships and Money

Money and Relationships- can they really mix?

Thank you for taking the time out of your busy day to read about money management and relationships.

Like many in relationships, the topic of money can be a very tough topic to discuss for various reasons. You would rather eat broccoli than talk about money! Plus, who has the time between getting the kids ready for school, work, mowing the lawn and driving the kids to all their soccer games? But as you know it is important that you and your partner have some key conversations about money.

We can help you with this conversation and help provide some financial tips to strengthen your relationship. It is important to have the conversation if any of the following warning signs of potential financial strains apply to your relationship:
• There is no plan with your money. As you earn it, you spend it;
• You have not set any goals on how you want to be living over the next 3, 5, 10 or 20 years;
• No emergency funds or any savings available;
• Items around the home need repairs but you cannot afford to do them;
• Spouse has no idea of your monthly payments and history with credit.
If any of these apply- you need to continue reading. Now is the time to try to address money and your relationship.

Make time to have the Conversation:
Money effects every aspect of your daily life to buying groceries, school activities, driving to work, vacations, family celebrations, etc. You need as a couple to decide what your household is about in ways you spend money. Meaning what are your priorities: helping pay for your kids’ post-secondary education, sports activities for the kids, retirement and living debt-free are some common examples. It is important you figure out a realistic lifestyle within your means and your goals.

Remember, life is also about being willing to compromise too. We cannot get what we want all the time, but if we are willing to compromise, then the major goals may be more within reach. For example, you may want to help your kids with their education and may want to retire early. You may need to compromise and decide to hold off on retirement to a later age so you can help your kids’ education costs. Another compromise may be if you want to be able to support your kids with their sporting activities which involve travel, you may elect to not do annual family vacations or not do a home renovation.

Make a Plan:
Once you decide on your goals and priorities with your money, you also need to review the money coming in and expenses each month. Track over a 3-month period what your costs are in your household. Be honest and realistic. Also- ask yourself is this typical for throughout the year or does your income and expenses change at certain times of the year. Can you truly afford all your priorities? Do you need to make any adjustments and cut back on anything? Make a plan on how your will spend your money. Remember to include everyone in the planning and to share the in responsibilities. It is important there is agreement by all, flexibility built in and regular conversations on how your household is being managed to make your plan successful.

It all sounds good:
Perhaps you have done all this before in trying to manage your money and things are still tight and life is very frustrating. You cannot seem to cut more corners and household priorities really cannot change. You are living an average life like your neighbors but are just barely making it. Arguments with your spouse about money are common. Life seems to be on a downward spiral and you are not able to control it anymore. If this is you, then please call us for help.

Your relationship is important. Do not let your finances put a strain on your relationship. Come in to see us today to help you put a plan together to be financially healthy.

3 Great Ways to Improve Financial Well Being

This January, millions of people set resolutions for the New Year to eat better, exercise more, and build healthier bodies. By the time February hits, many of those resolutions fall by the wayside.

One of the main reasons people fall short on their resolutions is due to not being realistic to their personal situation. Loosing 25lbs in 30 days or paying off all your credit cards in 12 months is not a reality for most people. Coincidentally, it’s one of the reasons people fall short on their financial goals.You end up feeling further stress and hopes deflated.

You do not need to wait until January to start a fresh set of financial goals. Why not set some financial resolutions of your own for the remainder of the year? Below are some great starter financial goals everyone needs to have in their financial plan.

Remember, when people are financially healthy, they stress less, sleep better, have stronger relationships, and generally live happier lives. Financial health is just as important for your well-being as exercise.

Try committing to at least one of these goals towards financial well-being:

Emergency Savings Account – Everyone needs emergency savings for items that do not fall into your regular monthly costs. This is a common reason for creating debt. This could be car repairs, medication, trips to visit family or a new pair of sneakers your kids are always losing. Review your finances over the past year and see what type of unexpected costs you had.Everyone is different on how much they need for emergencies. Now try to build up an account to cover these costs. Consider setting up an automatic transfer to a savings account and stick to that number throughout the year. For most households a$500-$1,000 emergency account covers most unexpected expenses. Part of your goal is to use this account and not a credit card for the expense.

Like with any goal, financial or otherwise, break it down into mini-goals. Look for creative ways to reach your targets, try new things, and keep it fresh.


Spend Less Money – The best way to reach this goal is to track your expenses- yes everything from a coffee to lunch money for the kids. It’s the only way to figure out where you can truly save money.Take a personal audit on your spending and choose things that you’re willing to either go without or have less of, such as coffee, alcohol, and eating out. Just make sure you’re thorough in your auditing; consider everything. How much are you paying in ATM fees? Are you going over in cell data?
You’ll be surprised at what you’ll be able to find when you take the time to review all your spending. From finding ways around your house to cut energy costs, to trimming cell phone or cable plans, all the way to putting in some effort to clip a few coupons or actively hunt for deals in the stores you shop in.



Pay off a Credit Card or Loan – Look at all your debt. Consider the monthly payment requirements, interest rate charged, and any terms applied to the loan. Is there a debt that would really help you financially if it was paid off? Remember you need to ensure all your debt is being paid their minimum payments.

If you want to focus on one debt to pay off quicker, you need to increase your payments. Remember to be aware of interest charges and not using any available credit you create.The first step is to take your balance and divide it up into smaller chunks. Try breaking it down into how many pay periods you have in the year; most people have 26 pays. For example, if you owe $1000, break that down into 26 payments of $39. Then make it your resolution to automatically pay $39 every pay cheque.

The next step to succeeding is preventing yourself from using that card for things you can’t afford. This is where your emergency savings and spend less goals will help you reach your goal of paying off your debt. Try to pay cash or interac for groceries, gas and your utility bills.Just remember, any new purchases on your card need to be paid off, and that $39 per pay doesn’t count towards new purchases.

Another great step to finding financial wellness would be to seek help from professionals. If you can’t envision committing to even just one of the above, it might be time to look into professional guidance. Gaining the coaching and counselling from a professional could not only set you up for a great year, but a financially healthy future for years to come.

The Consumer Proposal

Understanding Consumer Proposals

You have a great job, you have money coming in, but you’re having a hard time paying all of your debt back and paying it back on time. Is bankruptcy your only option?

The great news is there are other options. You should meet with a professional to know what options are out there to best deal with your creditors. Sometimes you need more than counselling to help restore your financial health.

Consumer Proposal

A Consumer Proposal is an option for those in debt to work with a Licenced Insolvency Trustee (LIT ) to negotiate a better personalized payment with your lenders. You should ensure you are working with a LIT as they are professionally certified, follow a professional code of ethics, and are properly trained.

The LIT works with you to create a proposal to creditors that is fair and reasonable to all parties. They’ll use your budget to tailor a plan and create payment arrangements that work for you, and most times have that broken down into equal payments over a period of time.

It’s Not Bankruptcy

Consumer Proposals have been increasing in popularity for several years.More people are choosing to settle debt using a Consumer Proposal instead of filing for bankruptcy.

Consumer Proposals are typically set up as payments over a period of time and can greatly reduce the overall amount of debt you must pay. The flexibility of a Consumer Proposal means that there is a range of terms that creditors may accept, which may benefit you as a consumer more than a bankruptcy would.

Sometimes, personal bankruptcy may be the best option for debt management. However, it is always best to meet and discuss your specific situation and needs in person before making a final decision.

Additional Benefits

If you have student loans or income tax as part of your debt load, your LIT will work with you on the best ways to manage this debt.

A proposal is accepted by all creditors if the majority of unsecured creditors accept it. And once accepted, your creditors are bound by it as long as you continue to make your payments.

A consumer proposal is a great option, but not the only option. Speaking to professionals about your situation is the best way to discover which path to financial wellness is appropriate for you. With free consultations, Rita Anderson & Associates is always available to help you make those first steps.

Signs You Could Need Financial Counselling

One of the most difficult parts of being in debt is you never really know when you should seek help. Most debt is acquired over a long period of time, meaning the signs that things have gotten out of control don’t show up overnight.

For many, solutions can be found in counselling from a professional; but how can you tell it is time to seek help?

Every Cent of Your Earnings is Spoken For
Does this sound familiar? You’re living paycheck to paycheck. You’re unable to put anything substantial towards paying off your loans and credit cards. All you can contribute are minimum payments, or less. Every new unexpected purchase adds to the debt pile. That debt pile is beginning to feel like quick sand.

It’s important to track all your money coming into your bank account. Not knowing how much money you make is a sign of financial difficulty.Having all of your income accounted for before it even arrives in your bank account – especially if you have more going out than coming in – is a surefire sign that you need to seek counselling. Minimum payments on your loans is bad. Less than minimum payments is the danger zone.

Creditors are Contacting You
It starts with letters in the mail and then the phone calls start.Phone calls start sometimes 15 days past due.If creditors are calling you – this is a red flag you are in financial difficulty. Every phone call gives you anxiety to the point where you stop answering. When the heat from collections agencies is on, the level of stress you can experience goes through the roof.

If creditors are calling, you need to seek a professional for guidance on making a plan to make things better, if not then things will only get worse.

You’re Looking for More Money That Isn’t Yours
If you’re seeking a cash advance from a money lender to help you pay for everyday items, or even worse, to pay off your debt, then you’re in serious trouble. Don’t get sucked in by the friendly marketing and “great deals” on money loans. When you peel back the layers on these companies, all you get is a high interest lender that reels you into another debt trap.

Debt cannot be cured by more debt. If you’re visiting these stores and seeking cash advances, it’s time to seek a professional about credit counselling.

So What Will a Professional Help me With?
A licensed and trained professional will help guide you on ways to rebuild your credit history. If it isn’t too late, financial counselling will help you avoid bankruptcy. Should bankruptcy be necessary, trusted professionals are there to assist with the process.

But financial counselling doesn’t only relieve debt. You need to consider the other areas of your life that are going to improve. You’ll also be relieved of stress which can lead to better sleep, stronger relationships, and the ability to focus positive energy into other areas of your life.

Overall, the main goal of a counselor is to resolve issues with your debt and help you identify other issues that are contributing to your financial difficulty.If you’re following the plan created with your professional, you will be on the road to financial recovery.

Is it time you reached out for financial help?

It’s Beginning to Look a Lot Like December

I know what you’re thinking, it’s the holidays and it’s a time for giving. Sadly, this mentality is a key contributor to overwhelming debt in too many people. Gifts, decorations, parties, wardrobes, and groceries are a few of the expenses that somehow sneak up on people every year. Not considering how expensive the month of December can be usually results in people going deep into debt so they can do everything they want to at this time of year.
Since there is nothing less festive than the pressures of debt, here are some steps to help you this year, and every year.

Start Saving Early: Regardless if it is February or October, the holidays are coming this year the same as they did last year. And like any large expense, be it a vacation, home renovations, whatever, if you know what’s on the horizon there is no reason why you shouldn’t be doing your best to save money for it.
The simplest solution is to shave a small bit off of each paycheck, and put it into a savings account. In the grand scheme of things, a few dollars here and there can result in a nice cushion when you start shopping in December. Only $20 per pay check will result in over $500 per year. The key is to plan ahead and start early. After a few weeks, you won’t even notice it leaving your bank account. Make sure it is an amount you can afford, and if you’re having trouble finding it, think of some changes you can make per day, week, or month in order to save. You’ll thank yourself later when you can afford everything you need to over the holidays without going into debt.

Start shopping early: The key to a financially successful holiday season is to avoid squeezing all of your purchases into one month. You’ll be less likely go into debt from over-spending if you divide your purchases up in the few months before the holiday season.
By now you should know what to expect from the holidays, and have the foresight to plan ahead. If there is an outfit you want for a work party, buy it in July. Keep your eyes peeled for sales and buy gifts months in advance. By keeping a list of everything you have planned, and everything you purchase, you’ll avoid buying too much and likely stick to your budget. The point is, the holiday season isn’t some financial problem that is suddenly sprung on you. You know what’s coming, so you can prepare.

Only buy gifts you can afford: If you can only afford to save $20 per pay check to spend on presents, spending $600 on a gift is not a good idea. Everyone loves that feeling of giving the perfect gift, but if it is going to set you back, just avoid it. Instead, write down everyone you want to send gifts to this year, break down your savings and assign an amount to each present. Be diligent and try your best not to spend more than you’ve planned. At the very least, this should keep you close to what you want to spend, or even keep you away from the higher priced items you’ve already determined you can’t splurge on this year.

Avoid Credit Cards unless you can pay them off the month you use them: avoiding debt during the holidays takes discipline. There’s going to be gifts, high grocery bills, unexpected expenses, plus all of your regular monthly bills. December can easily be one of the most expensive months of the year. If you’re going to enter the New Year without added debt, it’s smart to avoid using your credit card at all.
Credit cards give people a false sense of additional income. When using a credit card, for a short period of time you feel like you can manage. It isn’t long until that feeling of control is replaced by the pressure of heavy debt and high interest costs.
Treat your credit card the same in December the way you should year round. Only use your card for expenses you have the money to pay off, or at least will have in the near future. If you’re able to take advantage of rewards and points, definitely take advantage. Better yet, use those points to help make purchases over the holidays and save you even more.
Are you still paying off your holiday bill from last December? Perhaps it’s time to seek professional counselling. The team at Rita Anderson and Associates will not only help you climb out of your current situation, we’ll ensure you create great habits that keep you out of these situations in the future.

Preparing for a Large Life Purchase

Larger purchases such as homes, cars, renovations, or vacations can improve our lives in many ways. But too often, these life changing purchases end up causing people stress, grief, and buyer’s remorse. The cause? Unmanageable debt that is oftentimes unexpected and more than anticipated.

Like all other aspects of your finances, a little preparation goes a long way, and will most likely save you money. At the very least, it will allow you to manage your expectations before making the purchase.

Here are some simple steps to help you prepare for life’s large purchases:

Start With Savings

If you’re considering making a purchase that is going to have a big impact on your finances, the first step should always be a temperature check on where you currently are financially. If this is something you haven’t been saving for, now is the time to start putting money away. The more cash you have to put towards this up front, the less you’ll need to pay in interest, and the less likely you’ll fall into a situation you can’t get out of.

While you’re saving the money, take the time to consider how this purchase is going to affect not just your finances, but your lifestyle. Is the extra cost going to be worth it in the long run? If there are doubts about being able to cover future costs, or if you’re having a tough time saving enough money, perhaps you should reconsider. If you’re confident that you’re still living within your means, and were able to save some money to put towards your purchase, it’s time to look at some other great steps that will prepare you for maintaining that financial stability.

Secure the Best Interest Rates Available

If you’re like most people, you probably don’t have all of the cash available to make the large purchase you have in mind. That means you’ll be borrowing money, but that isn’t necessarily a bad thing. If you’re able to secure low interest rates on a loan, you’re one step closer to maintaining a debt that you can manage with ease.

Research rates with lenders for a home purchase is pretty simple by working with a mortgage broker, who can provide all the different types of mortgages available to you. Buying a car? Keep your eyes open for 0% interest as a buying incentive, or ask the dealer for a few different available options from lenders.

But, for big purchases that don’t come with the benefits of 0% interest or the low rates of a mortgage, don’t immediately jump to your credit card. If you need to remodel your kitchen, for example, paying for it with a credit card is going to cost you hundreds in unnecessary interest. Consider taking out a line of credit, or shopping around banks for loans with great interest rates. The point is, a big step to avoiding a pit hole of debt is doing whatever it takes to keep your interest rates down.

Understand all the Costs Involved

Big purchases are very rarely cut and dry when it comes to what you’ll be spending. When you’re purchasing a car, and you’re looking at price tags, keep in mind the additional costs that are going to be tacked on before you drive off the lot. There will be freight and taxes that can easily hike a $25,000 car to a $30,000 purchase. Add in a maintenance package, things such as undercoating, a set of winter tires, then car insurance,and you’re looking at about 25% more than what you originally expected to pay.

If you’re buying a home, you need to count on high closing costs in addition to your down payment, including lawyer fees ($1,000 – $1,500), deed transfer tax (1% of the purchase price), home inspections (about $500), and other commonly overlooked costs like life and disability insurance.

If you want to avoid going into debt due to unexpected costs, make sure you’re seeing the big picture of your purchase. If you only discover these costs near the closing of a sale, you’ll be less likely to back down from the purchase, even if you can’t afford it. Understanding the overall cost ahead of time will offer you the opportunity to avoid making a purchase you can’t afford.

Have a Plan

When you go into debt in order to make a large purchase, it doesn’t need to result in stress. Approach your purchase with a plan that goes beyond securing great interest rates and researching what your purchase is going to cost you.

Talk to people who have recently entered into similar large purchases. They’ll be able to help you understand all of the extra costs involved. Ask about any surprises, and what they would have done differently. Request advice on things they are glad they did, or other people who have helped them. You can’t have enough information before making a large purchase.

Map out how you’re going to afford your payments, and don’t forget additional monthly costs associated with your purchase. A car will require gas, maintenance, and insurance. A home will require furniture, upkeep, insurance, and property tax. Through thoughtful budgeting and smart planning, you may even be able to find ways to pay off your purchase sooner, saving you hundreds – even thousands – in interest payments.


A bucket list trip to another country, a new car, an addition onto your home, or any other life changing purchase can be extremely exciting. Let that excitement last, and most of all, let that excitement be worth it by keeping a handle on your debt. A few smart decisions will ensure paying your purchase off is painless, and keep you out of unmanageable situations.

If you find a major life purchase has put you in a tricky situation, we could be able to help get you back on track. Call us today.

Credit Cards: The Good, The Bad, and The Ugly

For some, credit cards cause grief and financial struggle. For others, credit cards help them in times of need or help them make large purchases. There are definitely some good, some bad, and some really ugly things about credit card ownership, and hopefully this guide will help you understand how to make them work for you while avoiding financial troubles.

The Good:

Building Credit: Credit cards can help establish a good credit score. Having an active credit card, paired with being responsible enough to make payments and eliminate balances will always look great in the eyes of creditors.

A high credit score can work in your favour in many different ways. You’ll have better negotiating power to get a lower interest rates on future loans, lower insurance rates and an easier time getting approved for a things such as a new car or home.

Rewards Programs: There are plenty of credit card companies competing with each other for your business. As a way to lure in new customers, they will provide perks such as travel rewards or cash back. And you should definitely take advantage of these rewards! Just make sure you understand annual fees associate with each card. Do your research and don’t immediately dismiss cards with higher annual fees. Instead, look at interest rates and consider your ability to pay off balances swiftly.In the end, ifIf you believe you can get more value from that card than you’re paying annually. Take advantage and pay the fee.

Rack up rewards by paying bills and making other purchases that you already have the money for. But remember the key word in this exchange: reward! If you’re paying hand over fist in interest rates and annual fees, the perks you receive aren’t rewards anymore, they’re purchases .

Ability to Make Big Purchases: One of the best things about having a credit card is having the ability to make big purchases from time to time. New furniture, car repairs, or vacations all become possible without needing immediate access to thousands of dollars in savings.

Understand how to properly use a credit card for big purchases, and make sure it makes sense. Consider that $2,000 paid off in 4 months at 19.99% costs $135 in interest, but the same purchase paid off in 2 years costs about $800 in interest. Paying 30% of your total purchase in interest doesn’t make financial sense. Need to make a big purchase but think you’ll need more time to pay it off? Consider a loan, line of credit, or avoid interest entirely buy saving up, taking advantage of a layaway program, or keep your eyes open for no interest/no payment deals.

The Bad:

Carrying a High Balance: let’s be clear, there is no better balance to carry on a credit card than $0. However, if you find yourself carrying a balance on your card for longer than you’ve anticipated, it’s important to understand what’s happening behind the scenes. Carrying a high balance on your credit card affects you negatively in the eyes of the Credit Bureau, and will impact your credit limit available to you in the future.

Avoid this by keeping a close eye on your balance so you’ll always know what purchases will put you outside of your comfort zone. Being proactive will allow you to cut back on the things you don’t necessarily need, and going into debt to have those things.

Only ever making minimum payments: Only making minimum payments could end up costing you thousands of dollars before your debt is paid off. And that’s only if you don’t make any more purchases or put yourself further into debt.

Let’s put it into perspective: If you had $10,000 in debt on your credit card, and had a minimum payment of 3% per month, while your monthly payment would shrink as your debt shrinks, you’ll be stuck making payments, not for months, but years! Not only that, but you’ll be paying thousands in interest rates over the course of that time.

Only ever making your minimum payments is a serious trap that you should avoid at all costs .

And the Ugly:

Credit Card Debt is Bad Debt: You’ll hear people discuss good debt and bad debt. Let’s be clear, CREDIT CARD DEBT IS BAD DEBT. I repeat, credit card debt is bad!

Unlike a mortgage or a car loan, which typically have interest rates between 1-4%, credit cards carry interest rates around 20%. That means for every $100 left on a credit card, you owe an extra $20 per year. Credit cards also have the ability to make a severe impact on your credit score. Due to the high interest, and the potential damage a balance can have on your credit score, a credit card should be paid off in full whenever possible.

Missing a Payment: Never miss a payment on your credit card.If you find yourself in a sticky situation and find you can’t pay off your credit card completely, at the bare minimum, make sure you’re at least making your minimum payments.

Getting in the habit of only ever making minimum payments may end up costing you more, and back you into a difficult corner to get out of, but missing a payment can turn that corner into a deep hole. Missing a payment can cost you upwards of 100 points on your credit score.

It’s simple, if you can’t afford to make the payments, don’t make the purchase. If you have a hard time properly planning how you’re going to use your credit card and make the payments to cover the balance, perhaps you might want to reconsider having one, or seek professional help in managing your finances.

Losing the Fear of Bankruptcy

For most people, a fear of one thing or another can draw focus and attention to the wrong things, mostly irrational beliefs that act as a safety mechanism to prevent them from potential harm. It’s easy to see why a fear of bankruptcy usually prevents people from looking at it as an option to help them solve their debt problems.
Fortunately, like other fears, gaining an understanding of bankruptcy can allow people to replace inaccurate beliefs with rational facts, and sooner help them take control of their finances.

Here are some common fears tied to bankruptcy, and the facts to help you face your fear and make better choices.

I won’t have access to credit ever again:

In the beginning, it’s true that you won’t have access to credit. This is where it is important to begin changing your perception. Not having access to credit is going to force you to discover new ways to afford the things you need and want. You’ll need to consider how to budget, save, and prioritize things into needs, wants, and stuff you can go without.
The fact that you claimed bankruptcy will stay on your credit report for six years, but you can start rebuilding your credit once you are discharged. In other words, once you are clear of your debt obligations, you can start over fresh.

If the idea of a clean slate scares you, don’t worry. Bankruptcy is going to come with professional financial counselling. Not only will you be guided through the steps of bankruptcy, but you’ll also get to work with a professional who will equip you with the knowledge to discover your own financial wellness.

I won’t be able to save money:

One common misconception about bankruptcy is the idea that you won’t be able to save money. While saving money is going to be a challenge, it is allowed. In fact, it is strongly encouraged to have emergency savings.

After you’ve paid your debts, continue making the same payments every month into a savings account. You’ve already proven that you can manage your finances. Now you can start building on that knowledge by making sure you don’t put yourself in that position again.

Bankruptcy means I’m a failure:

The fear of failure and damaging one’s reputation can often prevent people from even considering bankruptcy. Let’s step back and put the alternative under a microscope. Serious debt can cause years of suffering, resulting in sleepless nights, stress filled days, and major strain on your relationships and career. Combined with only ever being able to make minimum payments while your debt grows unmanageable, and you’re not quite going to consider your financial situation a success. Do you really have a solid plan on when the debt will be paid off? If not, then you will continue living with the stress of the debt.

Compare that to bankruptcy, a tool designed to help you, set you on the right track, and put you in front of some real professionals who are going to give you peace of mind and the ability to improve your finances going forward.

By understanding your options and redefining what you consider as ‘being a failure’, you’ll also be able to redefine what it means to successfully manage your finances.

Facing your fears of bankruptcy won’t only help you determine if it’s the right step for you, it will present you with options and resources designed to put your finances on track.

It’s important to get all of the necessary facts from a licensed insolvency trustee. Call Rita Anderson and Associates for a full financial assessment, and have your options outlined, questions answered, and fears dispelled.