14/11/2019 0 Comments
Pros and Cons: 4 Debt Management Options to Consider
If you are reading this, chances are you are struggling with debt. Financial distress can be extremely draining, particularly if creditors and debt collection agencies are calling.
Interest charges keep piling up, making the situation feel hopeless. The licensed insolvency trustees and debt counsellors at Fox-Miles & Associates Inc. want you to know that debt does not have to be a hopeless situation. We specialize in relieving financial distress by offering debt help solutions in Edmonton and the surrounding areas. Let’s talk about some debt management options and weigh the pros and cons of each.
Option #1: Make the minimum payments
Our bankruptcy trustees have noticed that in some situations, people don’t even make the minimum debt payments each month (e.g., on a credit card, overdraft, or line of credit). This is often because the person in debt feels like there is no point – the amounts owing seem so large, and the minimum payments seem so small. While the minimum payment may seem insignificant, failing to make it can have a significant consequence – missing the minimum payment can negatively impact your credit score. As such, at the very least, you should be making the minimum payment each month. The pros of this option are that it is relatively easy, it will protect your credit score, and it will keep you in good stead with creditors. The con is that it will take a long time to pay down your debt if you only make the minimum payment. The other major con of this option is that it is expensive, as interest will continue accumulating on your debt each month.
Option #2: Pay more than the minimum
The pros of this option are the same as for Option #1, but Option #2 will get you out of debt somewhat faster and save you some money. If you are able to pay more than the minimum each month, it will reduce the principle balance owing, even if just by a little bit each month. Chipping away at the principle balance will decrease the length of time it takes to pay down your debt, which in turn can save you a lot in interest charges. Any extra you pay each month will help. Our Edmonton debt counsellors can help you calculate how much you owe, how long it will take you to pay it off, and how much time and money you can save if you pay more than the minimum each month – give us a call today at 780-444-3939 to schedule your free consultation.
Option #3: Prioritize your debts
If you have several credit cards, lines of credit, or loans, a helpful debt management option is to prioritize the debts in terms of the interest rates applicable to each. The most expensive debts (i.e. the debts with high-interest rates) should be paid down first while making the minimum payment on all other debts. Once your most expensive debt is paid off, focus on the next most expensive debt. Continue in this manner until you have paid down each of your debts. This option is faster than the options discussed above and can also be very motivating when you see progress in clearing one debt after another.
Option #4: Explore other debt solutions
There are other debt management options such as debt consolidation or consumer proposal. There are key differences between debt consolidation and consumer proposals, which our debt counsellors will be happy to explain. To find out which option is best for you, contact us today. We can discuss the options for reducing and restructuring your outstanding debt load and can submit a consumer proposal on your behalf if that is the best option for your unique situation.
Our Edmonton Debt Counsellors Are Here To Help You
The compassionate, qualified debt counsellors at Fox-Miles & Associates Inc. provide helpful financial advice and debt help in Edmonton and to clients in the surrounding areas including Sherwood Park, Fort Saskatchewan, St. Albert, Spruce Grove, Stony Plain, Leduc, Hinton and Edson. Your first consultation is free, so you have nothing to lose except the feeling of being overwhelmed by debt! Call our offices today at 780-444-3939 to schedule your free consultation.