Debt

[charly]

i'm having a bit of hard time dealing with debt at the moment too.

i'm not working a whole lot, so i don't make much (i'm working my way towards serving and changing that though). i'm managing to get by, and still trying to pay off my credit cards. but it gets hard whenever i pay rent or anything, and knowing that it's all just contributing to more debt (student loans!)

i hate that i have student loans, but at the same time i appreciate them because without them, i'd never be able be in school. i'm trying to get a hold on my spending but it's hard. (the latte factor really opens your eyes to how much money you waste though.. wow). i try not to waste money, but it's such a bad habit. i'm still trying to get into the mindframe of being "broke", and not having money like i used to when i was working full time. it's bad, but it's a hard habit to break.

:( boo to debt.

Originally Posted by charly

i'm having a bit of hard time dealing with debt at the moment too.

i'm not working a whole lot, so i don't make much (i'm working my way towards serving and changing that though). i'm managing to get by, and still trying to pay off my credit cards. but it gets hard whenever i pay rent or anything, and knowing that it's all just contributing to more debt (student loans!)

i hate that i have student loans, but at the same time i appreciate them because without them, i'd never be able be in school. i'm trying to get a hold on my spending but it's hard. (the latte factor really opens your eyes to how much money you waste though.. wow). i try not to waste money, but it's such a bad habit. i'm still trying to get into the mindframe of being "broke", and not having money like i used to when i was working full time. it's bad, but it's a hard habit to break.

:( boo to debt.

Try starting with the allowance thing. Figure out how much you can afford realistically each week.

Get someone who is strong-willed to hang onto your credit and debit cards. Make them come with you to the bank when you take out your allowance.

And once again, start an RSP. Even if you are only putting away $25 a month. Creditors see that you are making an effort.

Also, if you are working part time, you can request a 6 month stay from your student loans.

[charly]

Originally Posted by Avana

Try starting with the allowance thing. Figure out how much you can afford realistically each week.

Get someone who is strong-willed to hang onto your credit and debit cards. Make them come with you to the bank when you take out your allowance.

And once again, start an RSP. Even if you are only putting away $25 a month. Creditors see that you are making an effort.

Also, if you are working part time, you can request a 6 month stay from your student loans.

I actually have an RRSP. I just need to get it transferred to my bank, but I've been having troubles doing that as I apparently need to go to my home branch, and I don't have the time for that at the moment. I'm looking to do that after my finals though when I've got more time. I'd like to put money away, but I have no idea how to do it with the current situation. (I didn't start it, it was started by one of my previous jobs for me).

I think the allowance thing would be good. Now's the hard part of figuring out how much I can give myself. :/

I'm not paying off my student loans at the moment, I've only just returned to school. (which is why i'm only working part time. i try to work as much as i can without it taking a toll on my studying) It's just hard when I go to pay rent, and I know that money is just from my student loans, and I'll have to repay it later. And I think about how much I'm going to end up owing, and I hate it. I try to remind myself that I'm going to school so I can get a better job and it won't be such a problem, but it's still not fun to deal with.

[thechix0r]

Student loans are tough, I have about 7000 hanging over my head right now. You should contact the governemnt, they sometimes give grants to low income people. I got 1,250 knocked off my student loan.

It is tough working and going to school... balancing it all is one of the biggest challenges... but you seem to be doing alright, my suggestion is is to not worry too much about it, you don't get an education unless you're putting in th emoney and it will be well worth it in the end.

[Jingles]

Beware of credit cards nnot associated with major banks - in this country (on your credit score) they are actually viewed as more of a negative than a positive. balance transfering from one credit card to another may seem smart, but it shows on your credit bureau inquiry, so limit the amount of times you do it and make sure that the card you are choosing to transfer is not MBNA, or Citifinancial or whatever other card is out there not from one of the major 6 or American Express.
DO not have more than 2 cards - it becomes hard to juggle and you spend more than you think.

Students loans are actually good debt, provided you are making payments - they contribute to a healthy credit bureau score - I know they weigh heavy on you, but really - many people have them, they are low interest and they get you through school. Don't worry about them until all your credit card debt is taken care of.

When you call a company to go onto a repayment plan - your credit is again negatively effected, so make that last resport. If you need to consolidate your credit debts (again leave the student loan open if you can) call your bank for a consollidation - Usually, in these cases going through a major band rather than credit union can help because major banks have the money to take greater risks than the credit unions (just a matter of size and profit).

I worked for a bank and I know most of the ins and outs, many a student makes many a poor choices and it haunts them (7 years on your bureau before it clears)
RSP even a small amount!!

[charly]

^ i had no idea that credit cards not associated with major banks weren't a good thing. i have one from mbna (but it's rather small, and my major one is from BMO). why are they seen as a bad thing, and so different from the others?

i'll pay off my credit cards.. i just have to keep reminding myself it takes time, and to not get discouraged about it. :P

[Seany G]

There is some great advice on here!

Before I get into a motivation rant since I used to be in the same position, let me give you guys some facts:


-You do not want to fuck up your credit. A very close friend (who is a lot older) went into the bank to see if we could get our business Visa extended and so they called up his credit history. He has been on track for the last 6 years but 7 years ago he got in a divorce and got screwed financially. He missed some payments and guess what came up when the banker lady looked up his credit in the computer? Payments that he missed on credit cards from 7 years ago (one payment that was only 2 days late!!!!) that he cancled 5 years ago! This little blip in his financial past almost cost us to not get our limit exctended.

The bottom line is that you don't want to mess up your credit becuse what you do now will affect you SEVEN years from now when you want to get a morgage for a house, a loan for a car or a visa to survive during a tough time on.

Want to know how not to screw your credit up?

- Credit cards aren't a bad thing at all (regardless of which bank it comes from ) as long as you make the minimum payment and don't have more than 2 on the go. Set your bank up to make automatic payments to cover the minimum + a few dollars every month if you can't currently pay them off. This won't hurt your credit. Missing these payments will fuck your credit.

- Store credit cards. These Future Shop and The Brick (or wheverever) credit cards have rediculous interest rates and even if they don't, they come up as a red flag on your credit info. These can mess your credit up. Don't get them (even for the pay 0 down, 0 interest deals). The credit bureau doesn't like them.

-Credit doesn't care how much money you have in your bank or you have comign to you. You could have recently made $100,000 and could have that sitting in your bank. But if your credit stinks the bank still won't give you a $2000 credit card let alone a morgage for a house!

- Having available credit is bad. If you have a card that is half-available, this is bad for credit. Once you pay off a card, cancle it.

- Unpaid parking tickets, phone bills and other debts are sent to collections agencies. These agencies report your lack of payment to the credit bureau. This messes up your credit big time!

-Live off of cash. Cut up your cards. That way you CANT over-spend.

-Your credit is tracked for 7 years. You have to pay these things. If you have a bad credit history, the only way to improve it is to start today by making your payments. Eventually your good track record will overlook your bad one. Its all about time and persistance...

Now, my rant:

I hear people with debt always talking about how they can't do this and they can't do that. I used to be in this position too.

The fact is that there is always a way to do anything you want. There are ways that you can move out and still be able to afford to pay for school and pay the minimum payments or even pay down your debt. You just have to want it bad.

Focus on you want and not the things that you don't want. Right now you are saying "i have all of this debt, I can't get out of it while I'm going to school, I can't work..." etc. You're focusing on all of the things that you don't want. So whats going to happen? You're going to get more of what you don't want.

Start financially planning (budgeting) your life out better and then start really focusing on what you want and oppertunities will come to make that money for living on your own or whatever. :)

Just watch your spending habbits, be more positive, laugh more, have more fun, continially think about what you want (and don't acknowledge what you dont want - debt- once you are on a repayment program) and what you want will be attracted to you!

Hope I've helped...

[Seany G]

Originally Posted by neoh

If you have poor credit, you can call your creditors for a payment plan, sometimes they can lower your interest and payments to a fixed amount, they have 2 year, 3 year plans, etc. Call each individual creditor and find out your options.

If you have good credit, and are just having a hard time paying it off - find yourself another credit card company with a balance transfer deal (usually fixed 3.99%) - and transfer your balance to the credit card and cut it up, even with a $3000 balance, your only paying $5-10/mo of interest as opposed to 18.99% interest and getting interest fee's of $30-$60 on a $3000 balance, balance transfers help you budget and save money.

Now that you've done a balance transfer, your saving yourself $80-$100 on interest fee's alone that can go towards paying off other things.
Just an option.

Hey Neoh,

Don't these balance transfers look bad on your credit rating?

For some reason I have this voice in the back of my head that says that balance transfers are bad and that those considation offers you get in the mail with your statemens are somehow going to end up costing me more in the end.

Your expertice is appriceated!

[neoh]

Originally Posted by Seany G

Hey Neoh,

Don't these balance transfers look bad on your credit rating?

For some reason I have this voice in the back of my head that says that balance transfers are bad and that those considation offers you get in the mail with your statemens are somehow going to end up costing me more in the end.

Your expertice is appriceated!

I have perfect credit, balance transfers have never caused problems in getting a credit card, because when you transfer a balance to another card it doesen't say "Balance transfer" it says "PAID"

Here is what the credit bureu looks at:

R0 Too new to rate; approved but not used
R1 Pays within 30 days of billing, or pays as agreed
R2 Pays in more than 30 days but less than 60 or one payment past due
R3 Pays in more than 60 days but less than 90 or two payments past due
R4 Pays in more than 90 days but less than 120 or three or more payments past due
R5 Account is at least 120 days past due but is not yet rated R9
R6 No rating exists
R7 Paid through a consolidation order, consumer proposal or credit counselling debt management program
R8 Repossession
R9 Bad debt or placed for collection or bankruptcy

Another thing people fail to mention is DEBT CONSOLIDATION! Bad idea! (notice R7) You also get an R7 if you do a settlement on credit in collections.
(Or if you make a deal with your credit card company to pay off your debt, to lower the interest and get fixed payments - a tip I gave earlier but didin't tell you what affect it has - but then again, if your already in collections it's better to have an R7 then an R9)

And another thing, that some people don't realise is that having a balance on a credit card is a *good* thing. If you make a bank money long enough, they probably won't hesitate to up your limit or give you a line of credit or something else.

I have over 60k in credit cards/lines of credit with TD, CapitalOne, Amex, PC and CIBC, I even got 20k of that while I was unemployed!

Credit is the most important thing you can have, always make paying on time a priority. If your bill is due on the 20th, and you don't pay it on the 20th, don't fret, there is a cycle date. You won't go into R2 until at least the 27th, sometimes it's 10 days - you can call your credit card company and ask them.

Hope this answers your question, Sean.

[Infidel]

Surprised to see all this sound financial advice on this board, but its good to see.

The one thing that someone mentioned briefly that is very important is Net Worth (what you are worth!!). In order to build Net Worth, there are 2 things you need to focus on.

1)Debt reduction
-since this is the main topic and there has been a lot of good advice, no need to say more, except that you all need to remember debt is a good thing. If used properly, debt can help you buiild you net worth at a much faster rate then you could do without any debt. Its all about investing the money u get from the debt to make a higher return then you pay the lender, this way, the money u earn from the debt is really free money, because you didn't use your own money to get the return.

2) Build your assets!!!
-often ignored by young people because it is hard to do when you make little and, as discussed, have debt to pay off, this step can make the biggest differences in the long run.

Putting away as little as $10 a month will add up, and if you leave that money alone and fight the urge to use it (unless it is to invest - not spend!!) the power of compounding will work to your benefit and that little bit of cash saved each month, starts to become meaningful after a few years.
**This is not just into RRSPs, but also into non-registered investments/accounts, that way you can use the money for something other then retirement (such as investing to build net worth and wealth).

A very usefull tool to do this is to use any share ownership plans or RRSP savings plans through your work. Having the deduction taken from your paycheck makes it so you don't even realize the money is gone. Through my work share ownership plan, I have managed to accumulate almost $6k in less then 2 years (thanks to the excellent performance of bank stocks)

Remember this simple equation: total assets - total debt = net worth

Building your net worth makes you a more attractive to lenders and can be used as leverage to get your rates reduced.


If you are serious about getting out of debt and controlling your financial future, use these simple steps that have already been touch on in this thread.

Step 1 - make a budget
-this helps you see where your money is going and can help you find areas to save (as mentioned by Avana). Here is the pitfall for most people, they under/over state certain items. What was usefull for me was to track all my spending for 1 full month. You learn surprising things about where your money goes when you do this.

Step 2 - Make a plan (and stick to it)
-this involves using all the advice mentioned in this thread such as making plans for debt reduction and setting up savings plans.

Step 3 - Review, reasses, adjust
-This is a very important step and should be taken once or twice a year and whenever there are any significant changes in your life such as a new job, marriage, graduation, etc...

These 3 steps are the basics of financial planning, and you can do them yourself if you take the time. For those of you in more complex situations, or if you just want some help, go to your bank and ask if they offer free financial reviews with financial planners. All banks that I know of offer this free service and they can give you advice to reduce your debt and build net worth.

Sorry about the long post, but if this helps even one person, it was worth it.

[esoter1c]

The Law of Attraction.

If you worry about debt you attract it.

http://video.google.ca/videoplay?doc...+of+attraction

[Seany G]

Originally Posted by 3507321C

The Law of Attraction.

If you worry about debt you attract it.

http://video.google.ca/videoplay?doc...+of+attraction

That video is like my bible! I've used it for a good 6 months. Great things have come from it!

Thats why above I rambled on and on about how too many people focus on things they don't want.

Even with using the secret, if you are in debt, you have to setup a debt repayment program and get things on track becuase you can't manifset moeny (by having a rich mindset) when you have creditors calling you all the time.

David Schrimer (from the video - the guy who gets the good parking spots) told me that personally...

[Jingles]

Originally Posted by Seany G

- Credit cards aren't a bad thing at all (regardless of which bank it comes from ) as long as you make the minimum payment and don't have more than 2 on the go. Set your bank up to make automatic payments to cover the minimum + a few dollars every month if you can't currently pay them off. This won't hurt your credit. Missing these payments will fuck your credit.

Minimum payments get you nowhere, they simply cover interest charges. May people make min. payments and continue to spend - they will never get ahead this way.

- Having available credit is bad. If you have a card that is half-available, this is bad for credit. Once you pay off a card, cancle it.

This is wrong. Unless you have a problem managing your cards when they are paid down, do not cancel them. Credit cards in good standing (with available balances) report to your credit bureau score. You want and need things to be reporting toward your credit. There is no need to cancel a card once it is paid out (unless the bank asks that you do that in order to have service a loan or mortgage) What banks look at when lending to you is called a debt servicing ratio, you r income vs. your expenses. A paid off credit card is not an expense and is good for emergencies. Have a credit card for emergencies (don't have 3)

- Store credit cards. These Future Shop and The Brick (or wheverever) credit cards have rediculous interest rates and even if they don't, they come up as a red flag on your credit info. These can mess your credit up. Don't get them (even for the pay 0 down, 0 interest deals). The credit bureau doesn't like them.

These along with non-chartered bank cards can get you because they come with appealing introductory offers and very scary consequences down the line when balances are not paid in full. My mom works in credit approval and loans for BMO, I worked at the bank for 7 years -- these cards are best avoided by anyone who has a debt problem (and sadly are the easiest to get!) That being said, if you have NO credit and need to build some and a bank will not give you a card - an HBC credit card or Sears card can help you if you are responsible with it and DO NOT carry a balance.

Another thing people fail to mention is DEBT CONSOLIDATION! Bad idea! (notice R7) You also get an R7 if you do a settlement on credit in collections.
(Or if you make a deal with your credit card company to pay off your debt, to lower the interest and get fixed payments - a tip I gave earlier but didin't tell you what affect it has - but then again, if your already in collections it's better to have an R7 then an R9)

You can get a personal loan from your bank to consolidate your debt and it will not negatively effect your credit score - this would usually be done with a co-signer. I already mentioned that debt consolidation companies will hurt you in the short term - think major bank if you need to

Hey Neoh,
Don't these balance transfers look bad on your credit rating?

Neoh is right, it simply shows as balance paid BUT many people transfer and transfer and transfer - so while it may not harm the credit rating per say it will raise a lender's eyebrow - there was recently an Olsen on your side report on the news about this -- how constantly transfering credit balances can hurt you long run http://www.ctv9.ca/olsen.jsp?id=/ols...n-20060427.htm
You'll see onthe bootom of the article what I was saying Charly earlier - these non chartered- bank cards come with all sort of frills and in many cases are deemed as 'high risk' by lenders and simply applying for one of those cards can harm your credit score overall

Every time you apply for credit it SHOWS
All too often people apply and apply til they get something and all too often it is these types of cards that are TEMPTING, you may get a card, but it may have cost you in the long run.
Check out Canada's consumer Affairs (government) report of Canadain debt and note the section on credit cards and balance carried
http://strategis.ic.gc.ca/epic/inter.../ca02111e.html

[galaxie]

Originally Posted by Jingles

You can get a personal loan from your bank to consolidate your debt and it will not negatively effect your credit score - this would usually be done with a co-signer. I already mentioned that debt consolidation companies will hurt you in the short term - think major bank if you need to

Wow, just breathed a sigh of relief.
I was reading this post yesterday and I was like "bbbbb-but the bank said it wouldn't affect my credit..."