Finally, the weather is warmer and we can come out of our winter hibernation. We feel the urge to spring clean our residences and our yards. Spending time outside also allows you to avoid those never-ending phone calls from collection agencies. Now is not the time to avoid your debt – spring clean it – just as you would your house and gardens. Here is a debt spring cleaning checklist to get you started:
- Gather all your statements and make a list of everyone you owe money to – credit cards, lines of credit, bank loans, bank account overdrafts, old cell phone bills, etc.
- If you think you are missing any creditors, request a copy of your credit report from Trans Union and Equifax
- Total up the amount of debt – don’t quit now just because you think the number is unmanageable
- Record the interest rate charged on each of the above debts
- Record the minimum monthly payment required on each debt
- Prepare a monthly budget of your income and expenses – rent, heat, hydro, food, car payment, gas, etc and determine how much is left over at the end of the month to make payments against your debt
- Review your expenses in detail – can you reduce your grocery bill by using coupons or cut back on entertainment expenses – try and free up some additional funds to pay down your debt
- Determine if you are able to make the minimum monthly payments on all of your debts and additional payments to start paying down your debt. If you are, make additional payments towards the highest interest bearing debt first.
- If you are unable to make more than the minimum monthly payment, then you should consider contacting a professional to review your options
- Calculate how long it will take to pay off your debt in full – a five year plan is probably reasonable- any longer and you should consult with a professional on your options
- Make a list of your assets – investments, bonds, savings – if you are earning 1% in interest and paying 29% on your credit card, it may make sense to cash in investments and pay down your debt
- Do you have equity in your house? The mortgage laws have changed significantly and you may want to investigate if you can obtain a second mortgage at a significantly reduced interest rate than what you are paying on a credit card
We at Taylor Leibow Inc. would be happy to help you with your financial spring cleaning. We can review your financial situation in detail and provide you with options in dealing with your debt, whether it is better budgeting, a consolidation loan, credit counselling, a consumer proposal or bankruptcy. The initial assessment is free of charge and will provide you the relief to enjoy the nice weather.