Do your credit card bills just keep growing? Shopping on credit is a major contribution to rising household debt levels. Every time you carry a credit card balance, it costs you more money.
Using a credit card is not always a bad idea, but it can encourage you to overspend. Shopping with a credit card can help you build a credit rating or keep track of your purchases at the end of the month, but only if you pay the full amount when it comes due. Carrying a balance is a quick way to make your Black Friday bargains more expensive.
Take this example: you find a deluxe, 4K Smart TV that’s 50% off for only $1,000 – except you’ve already spent your holiday budget, so it’s all going on credit for now. You make the minimum $30 payment on your first bill, but by the next bill, you’ve generated $16 in interest. Now you have to pay that plus your minimum payment on the principal. At that rate, it will take you years to pay for the TV, and interest will double the cost.
Keeping up with interest payments eats away at your ability to save for the future. Add mortgage payments, car payments, and emergency expenses, and you can find yourself drowning in debt. That’s when it’s time to get help from David Sklar & Associates.
Before you start holiday shopping, make a budget using the money you already have, not money you plan to have in the future. But what do you do if you’ve already overspent in the past? It may be time to ask, what is a consumer proposal and how can it provide debt relief. When you’re not sure how to stop the cycle of debt, a bankruptcy trustee, now known as a Licensed Insolvency Trustee, can help.
As bankruptcy trustees, we file consumer proposals and bankruptcies. In Canada, there’s usually no need to involve a lawyer. A consumer proposal provides debt relief to people who are insolvent. When you’re unable to pay your existing debt, an appointment with a bankruptcy trustee at David Sklar & Associates is an opportunity to have your questions answered.
At your first, no-charge appointment, a bankruptcy trustee will help you find out:
- Whether or not you are insolvent and qualify for a bankruptcy or a consumer proposal.
- How a bankruptcy vs consumer proposal fits your financial situation.
- How much you might be able to reduce your debt in either a bankruptcy or a consumer proposal.
- How the consumer proposal process or a bankruptcy will affect your credit score in the future.
- How you can afford to pay off your debt.
Shopping debt can quickly spiral out of control. Once they’re debt-free, many people do things like avoiding the mall completely. Smart financial planning and trimming your expenses (such as going to more affordable grocery stores) can all help reduce shopping debt. When it’s too much to find a way out, contact a bankruptcy trustee.