Are you in debt? You might think the answer is an obvious yes or no, but the reality isn’t that simple. And even if you’re currently not in debt, you might be headed toward it.
There are warning signs that indicate you might be headed toward debt. Are you having trouble adhering to your budget and paying bills on time? Do you borrow money from family and friends?
Fortunately, there are ways you can avoid falling into debt. And, if you are in debt, there are ways you can escape:
The Impact that Debt has on Your Health
When you avoid or escape debt, you improve your health. Debt is dangerous for your finances and future, of course, but it can also be dangerous to your physical and mental wellbeing.
Debt can cause stress and anxiety, which can cause physical health problems like high blood pressure and weight gain or loss.
Debt-related stress and anxiety can also lead to interpersonal troubles. When you’re stressed or anxious, you may be more likely to argue with your friends, family, and spouse, for instance.
How to Pay Off Debt on Your Own
Fortunately, there are things you can do on your own to repay your debt.
Adhering to a budget and maintaining healthy financial habits are two ways to chip away at your debt. There are also more strategic approaches to debt repayment that can help.
For instance, you can put as much money as possible toward paying off your smallest debt and, at the same time, consistently pay off the minimums on your other debts. This method is called the “snowball,” and, depending on your financial situation, it could benefit you in both the short and long term.
Other Debt-Relief Options
There are other debt-relief options that you may not know about. If you qualify for a debt relief program such as a debt consolidation program (DCP), it can help you pay off two or more of your unsecured debt. DCPs are available to anyone who has unsecured debt they would like to pay off.
Another option is obtaining a debt consolidation loan. Keep in mind, however, that to qualify for a debt consolidation loan, you need to have good credit, whereas you don’t need good credit for a DCP.
Other debt-relief options include a consumer proposal, filing for bankruptcy, and registering with a debt settlement service, although the latter has a shady reputation; you should be wary.
DCPs stand apart from the other debt repayment options because when you enroll in a DCP through a non-profit credit counselling agency, you will work with a certified Credit Counsellor.
The job of a certified Credit Counsellor is to offer you an unbiased, confidential assessment of your finances and negotiate with your creditors to consolidate two or more of your unsecured debts into one lower monthly payment. They will also negotiate to stop or significantly reduce the interest on your debts.
Credit Counsellors help their customers develop healthy financial habits, plan for the future near and far, and better understand how money works.
A Certified Credit counsellor is there to guide you through every step of the debt repayment process.
Which Debt Repayment Option is Right for You?
Adhering to a financial budget and maintaining other healthy financial habits can benefit anyone financially, but whether a DCP, a consumer proposal, a debt consolidation loan, or another debt-relief option is right for you depends on your specific financial situation and goals.
What types of debt do you have? Where do you want to be in five years, ten, twenty years? What’s your credit score? Would you like to improve it?
These are some of the questions it’s important you ask yourself when deciding which debt relief option is right for you.
And the right debt relief program won’t just benefit you financially; it may also benefit your health and relationships.