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Many consumers across Canada struggle with debt; it is a nation-wide concern. Even in areas where the cost of living is comparatively lower than other major cities (such as Saskatoon), people are still spending a lot of money and accruing a lot of debt. For example, according to the CMHC, the average family in both Saskatoon and Regina spend $1.69 for every $1 they earn.
As you could imagine, this has the potential to cause a lot of problems for individuals and families down the road. If interest rates rise, families could feel the effects of this overspending. While rates are relatively low now, there is no guarantee that they won’t rise in the near future. While mortgages are largely to blame for this large amount of debt, other types of debt definitely play their part as well. Chief among them is credit card debt, which can be easy to create when credit is not used responsibly.
While many people will have a high enough income to handle this large amount of debt and pay it off appropriately, many do not. This can lead to months or years of financial struggle that drains your resources. If this is all sounds familiar to you, you may benefit from seeking the help of debt consolidation in Saskatoon.
Avoid these common debt consolidation traps, click here.
In general, there are two different kinds of debt consolidation in Saskatoon, Saskatchewan. There are debt consolidation loans and debt consolidation programs. Each has its own unique benefits and may be the right solution for your needs. We will now take a closer look at each solution to help you learn the differences and similarities between the two.
Will a debt consolidation loan look back on your credit report? Find out here.
A debt consolidation loan is when someone takes out one large loan to cover all of their smaller loan and/or credit payments. Many people need to make several small payments to different lenders every month, and it can be a lot to keep track of. A debt consolidation loan simplifies your finances by giving you a single loan payment to worry about every month, not multiple.
Also, in addition to simplifying your finances, a debt consolidation loan can also help you get a better interest rate, which can save you a lot of money in the long run. A debt consolidation loan is a good option for someone who has been able to keep up on their payments but wants to simplify their finances or save money on interest.
You can consider going with a debt consolidation program. A debt consolidation program has a similar goal (simplifying your payments) but goes about it in a different way. Instead of taking out a new loan to cover all of your smaller debts, you simply provide a lump sum to your credit counsellor and they will send the appropriate amounts to the appropriate lenders. So this essentially does the same thing, without having to borrow any additional funds.
Also, there is a chance you could get a debt reduction and some of your penalties or extra fees could also be eliminated. Of course, this varies from person to person and situation to situation. This type of debt consolidation is good for those who have been having trouble paying down their debts on their own. It is also great for people with bad credit or those who have not been able to get approved for a debt consolidation loan (for more information about being rejected for a debt consolidation loan, click here). Bad credit debt consolidation in Saskatoon and other cities can be a lifesaver and should be considered if managing and/or paying your debts on time is becoming too much to handle on your own.
So we know that debt consolidation in Saskatoon is a great solution that can work for a number of different people, but how do people find themselves in debt in the first place? Of course, one of the most common ways is simply being irresponsible with your spending. If you spend more than you make, abuse credit cards, or simply buy things you don’t need, you could find yourself in debt sooner rather than later.
Other bad financial habits such as keeping up with the Joneses, not looking for deals, and borrowing money you can’t afford to pay back can also contribute to the accumulation of debt. However, it is important to remember that not everyone who is struggling with a lot of debt got there because of bad financial decisions. There are many other reasons people can find themselves with debt troubles, including:
So as you can see, there are plenty of reasons and situations why people may find themselves struggling with a lot of debt, and not all of them are as a result of bad habits.
Learn how to conquer your finances and manage all types of debt, check this out.
While nearly everyone is in debt at one time or another, is being in debt always a bad thing? Well, it depends. This is because there are essentially two types of debt, good debt, and bad debt. It can be argued that certain types of debt are worth the cost associated with them, while others cause too much financial strain.
Bad debt is debt that doesn’t provide you anything, at least in terms of growth but is simply an expense. Bad debt doesn’t help you build your future or help pay for an asset. Examples of bad debt include credit card debt typically caused by spending above your means and often times car loans.
On the other hand, there exist some kinds of debt that are considered good. These debts contribute to either your future or the building of an asset. This includes student loans, business investment loans, or a mortgage. Of course, not ever having any kind of debt is the most ideal scenario, but that simply isn’t realistic for most Canadians.
However, it is important to note that what is considered good and bad debt can also be subjective. While a mortgage is considered good debt, if you purchase a home that leaves you house poor or is too expensive that you cannot afford anything else, it could be considered bad debt.
While debt consolidation in Saskatoon might seem like a great solution, it doesn’t always make sense for every consumer. This is because there are some debts that can’t be included. If you simply opt to go with a debt consolidation loan to relieve your debt troubles, only to find out your debt cannot be consolidated, it can lead to a lot of stress and force you back to square one.
The types of debt that can be consolidated are most unsecured loans or types of debt. This includes:
While that covers a large gamut and there is a chance your type of debt is included above, there are also a large number of debts that cannot be included in a consolidation program or loan. These include:
As you can see, most of the types of debt that cannot be included in debt consolidation are secured in nature. So if you own something and are paying it off (such as a home or a car), you may not be able to include those debts in debt consolidation.
Interested in learning more about debt consolidation in Saskatoon or feel it is right for you? If so, don’t hesitate to reach out to Loans Canada for assistance. We are confident we can help you with all of your debt consolidation questions and concerns.
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