Helping Canadians Get Out of Debt
The New Year is fast approaching – and it’s a great opportunity to take some time to think about what you would like to accomplish in 2014. If getting your finances back on track is on your list for the year, take this opportunity to drop by and see one of our counsellors.
We are available today and tomorrow –
Monday December 30th 9:00 am – 5:00 pm
Tuesday December 31st 8:00 am – 3:00 pm
Have a wonderful holiday season!
Are you afraid to check the mail for fear of seeing your credit card bills? Especially during this time of the year, we understand how credit card balances can be overwhelming. Give us a call and we will help you, every step of the way to becoming debt free.
You are 18 and all your friends are going to university so you follow the pack and sign up for some courses too. You intend to work part time so you only borrow $8000 in provincial and federal government student loans for the first year to help pay for your expenses.
In September you move out and put a deposit on an apartment. But now you need furniture so you buy some. You dip into your student loan money for both. You reason that since that you have a roommate- you can afford it.
After going to Mexico for spring break, your money runs out in late February. But you still need to get through two months of school! You increase the number of hours you work but then your marks suffer. You don’t finish your first year with straight A’s like you imagined.
Year 2- You still want to go to school but are not sure what field you want to go into. You decide to take more general arts or science course. You don’t want to run out of money again so you borrow $12,000 in student loans this time.
Year 3- Because your marks aren’t high enough to be accepted into law school, you decide to stay in university and declare history as your major and psychology as your minor. Or you dream of being a doctor and continue with your general science courses. You borrow another $12,000 in student loans.
Year 4- Ditto, and another $12,000 borrowed.
At the end of four years did you get into medical school? Or law school? Or another high paid profession?
If not, you could be in serious financial trouble. Even if you graduate with a B.A. or B.Sc., where are you going to find a job paying you enough money to be able to pay rent, your living expenses, make a car payment, PLUS your student loan re-payments. You now owe $44,000. The interest has been calculating since your last day of school and your payments are set at $444 per month. You are likely to have this payment for approximately 10 years. Unless you now have a high paying career as a result of your 4 years of education, you may struggle to pay your rent, car payment, and other living expenses for the next 15 years! What about being able to buy a house or starting a family?
Here are some tips to avoid the above scenario:
By all means choose a career that you think you will enjoy as you will be spending up to 1/3 of your life working at it. But be realistic. Ask yourself these questions:
1) Am I smart enough and do I have what it takes to successfully finish the schooling for this?
2) How much does this career pay? Some careers pay a higher salary in relation to others that required the same amount of education: 4 year Bachelor of Nursing degree, Pharmacy or Engineering degree vs. 4 year general arts or sciences degrees. If you graduate as a nurse, pharmacist or engineer your salary would likely be over $70,000 per year. With a general arts or science degree you might be lucky to find a job paying $35,000.
3) What are the job prospects in the province I want to live in? If you want to become a marine biologist but continue to live in Manitoba, find out what the job prospects truly are. In order to find work, maybe you need to become an aquatic biologist instead.
4) Choose a career where you are actually trained for a career that is in demand. Don’t study arts or science courses unless you intend to go into education or graduate with a master’s degree in that field of study.
5) Consider alternatives to university or college. You could join the military (Department of Defence). Because they require all sorts of professionals such as dentists, doctors, pharmacists, nurses, lawyers, etc., you may qualify for a program in which they pay for your schooling.
6) Reduce your expectations. If you had your heart set on becoming a doctor but your marks are not high enough, consider another medical related career such as a cardiology technician, sonographer or respiratory therapist. Or if you want to become a lawyer but your LSAT mark is too low, consider alternative career choices as a parole officer, government policy analyst or a career in human resources which deals with employment law.
7) HERE IS THE MOST IMPORTANT TIP: Don’t make the mistake of overlooking a career as a tradesperson. It has been estimated that by the year 2020, Canada will have 1,000,000 vacant positions. The apprenticeship system usually involves six months of schooling followed by six months of practical paid work (for a four year period) which can drastically reduce the need for student loans. There are many trades that pay six figure incomes. Don’t make the mistake of thinking that a university education will pay you more as this is simply not true.
Here are some general tips to avoid the student loan trap:
1) Buy everything USED. Second hand school books, clothing, furniture, equipment (including refurbished phones and computers) can save you thousands of dollars during your school years.
2) Make a monthly budget and keep track of your expenses. Be disciplined. If you struggle, instead of telling yourself ‘No’ and feeling sorry for yourself, tell yourself you can buy it once you are working full time.
3) Do not USE your student loan money to buy a car or go on a spring break trip. It should only be used for tuition and books. Do everything in your power to reduce your expenses while you are in school.
4) You are finally an adult and want to be on your own but it is in your best interest to live at home until you are finished school and working. Even if you have to pay ‘rent’ at home, it will likely be far less than if you move out. Then you’ll be paying rent, utilities, groceries, tenant insurance, cable and internet expenses, etc.
5) Do not ask (or let your parents) co-sign your student loans. As an adult you need to be
responsible for your own debt. Someday, if you are not able to repay your student loan
payments your parents will be forced to. If they are not able to make your payments their credit rating could be affected. It is also possible that their wages could be garnished.
6) If you move- always update the student loans departments with your new address. Don’t make the mistake of thinking ‘If the government can’t find me, they can’t make me pay’. If you do, two things will happen. The first is that your wages will be garnished. (They can track you through your social insurance number). You will lose up to 1/3 of your pay cheque until the debt is paid in full. The second is- you will now have a negative rating on your credit report. You may not be able to purchase a house or a car because of this. In order to rebuild your credit you will have to repay the entire student loan debt, plus the accumulated interest. It could take many years to rebuild your credit so that you qualify to buy a house or car. Don’t make the mistake of thinking that you can outrun your student loan debt no matter how many years have gone by.
Written by Creditaid Credit Counsellor, Laurie Boudreau. Whether you’re a current student dealing with student loans or a recent graduate trying to make ends meet, speak to one of our counsellors today. We have many tips to help you manage your debt.
November is Financial Literacy Month in Canada! If you haven’t heard of this campaign before, it is a national initiative aimed at helping Canadians increase their financial knowledge. This is something we firmly believe in, here at Creditaid. We believe that when people are better educated on how the credit system works, they will be able to make better and more informed decisions when it comes to their personal finances.
If you are interested in participating in Financial Literacy Month – start by picking up or downloading a copy of the 2014 “Money Matters” calendar! The calendar will feature information and valuable money-saving resources for young people, families and individuals nearing retirement, including tips on managing debt, reducing the cost and length of a mortgage, talking to children about money and recognizing personal investment scams.
To download your copy – visit the Manitoba Securities Commission online at msc.gov.mb.ca.
Divorce is never easy, especially when it comes to splitting up assets and debts. In most cases, the married parties must agree on how to divide the martial belongings, both what is owned and what is owed. While assets are easily divided, debt is a little more tricky. Most martial debt that is in both of the couple’s names can affect both people for as long as the debt exists, regardless who the divorce papers say is in charge of paying it back. Before filing for divorce, couples should take in to consideration how it will affect their debt and credit situation.
Divorce decrees are not recognized by most lenders. If a marital debt is in both names of the couple, then it is still considered owed by both regardless of what the divorce court or papers have declared. For example, if the couple bought a boat together and the wife is awarded the boat and the loan that goes with it, the husband is still responsible if the payments are not made. Unless the wife is able and willing to refinance the boat in only her name, the husbands is still expected to make the payments if she does not.
Since many marital loans and debts may take years or even decades to pay off, as long as they exist, the couple is still tied to each other. One way to handle this is to separate debts into one or the others name only before the divorce. Another is to pay off the debts together before the divorce. For large ticket debts like homes or vehicles, it may be best to sell the property versus having one person take over the payments while the other person’s name is still attached to the debt. By dealing with the debt issue ahead of time, both people can go their separate ways without having a financial tie for years to come.
There is nothing like a spending hangover to take the wind out of a good spending spree. Once you are done congratulating yourself on the great gifts that you purchased for friends and family, the reality begins to set in. You have stretched your budget beyond all recognition, and have no idea how you are going to pay for all this. It is time to stop thinking in the moment and start planning ahead.
When you look at it, most of what you spend can be anticipated. Holidays, birthdays and seasoning spending are good examples of constants in every person’s life. So why wait until the last minute to generate the income that you need for special occasions? Instead, save throughout the year so that you have disposable income set aside for gifts, holidays and clothes.
Take advantage of sales throughout the year, too. Just because a birthday is a few months away, it doesn’t mean you can’t pick up a great early deal. If you are in a month where you have some spare cash in your budget, take full advantage by getting ahead of the game and purchasing gifts or paying off a holiday early.
You don’t have to spend a fortune every time you take out your credit card or visit an ATM, either. There is much more pleasure to be derived from being creative with your budget. Retro and thrift shores are treasure troths, where you can buy a whole wardrobe of items for the price of two or three. Alternatively, if you have a creative talent you can make your own gifts for little to no cost, which adds a personal touch, too.
It’s the little things that matter, and when it comes to a budget, it’s the little things that often break the bank. You can avoid these last minute expenses by planning carefully for every eventuality. Make sure you don’t end up with a list of things you need to buy, with no room in your budget to pay for them. Make a list for every event, from your daily expense to your next holiday.
Did you know that the month of November is Financial Literacy Month?
This initiative is a nationwide campaign aimed at helping Canadians increase their financial knowledge so that they can make more informed decisions when it comes to their personal finances. Understanding basic financial principles and practices is an essential ingredient to every household’s financial stability.
At Creditaid, one of our highest priorities is helping families understand how the credit system works and how to manage their finances wisely. Many people fall into financial crisis without being fully aware of how they got there in the first place. We believe a clear understanding of the credit system and available financial tools can help people turn their situations around before they find themselves too far in debt. Financial management is key and we are happy to provide you with the tools and information you need to get there.
Creditaid is committed to helping Canadians and we’re here to help. With the Creditaid Budget Bootcamp, we have taken this commitment one step further. Our Budget Bootcamp will take you step by step through a comprehensive budgeting plan, aided by many of the tools we use to help our clients on a daily basis.
Loan payments in arrears, creditors calling and angry letters in the mail – does this sound like a familiar situation? When you are experiencing debt problems, it can feel like you are descending into a downward spiral at full speed as finance charges, interest and penalties keep adding up. Before you hit rock bottom, know that you are not alone. Many Winnipeg families are also feeling the full impact of the economic downturn.
If you feel you are in that place now or want to bring you debt problems under control before they become a full-blown financial crisis, Creditaid can help. Our credit counsellors are compassionate and caring individuals who are dedicated to helping you build financial stability and security. We work closely with you to develop a solution that works for you – one that complements your lifestyle while letting you achieve the goals you have in mind. We have successfully helped many Winnipeg families and individuals overcome their debt problems. With careful planning, commitment and discipline, you too can achieve financial freedom, no matter how serious your situation is now.
Your initial consultation with Creditaid is always free. Let us help you get back on track – contact us today to get the help you need.