As of summer 2017, the average Canadian had more than $22,000 in non-mortgage debt. If you're wondering whether you're among the many who are facing this type of situation, this is your first step to securing a more secure financial future.
Knowing whether you owe money to credit card companies, banks, or other lenders should be easy, but it might actually be harder than ever before to know if, or how much, you owe to various lenders. Thankfully, there are some clear steps you can take to highlight and know the true reality of your situation.
1. Check Your Credit History
The first step to checking how much debt you owe is to take a look at your credit history, which is outlined in your your credit report. You can get a free credit report from each of the reporting agencies or credit bureaus, such as Equifax or TransUnion Canada. Your credit report will have a line item for each account you've opened, and it will include the following information:
- Date the account was opened
- Type of account (car loan, credit card, etc.)
- Credit limit or total loan amount
- Account balance
- Payment history, including any delinquencies
This information is important for both evaluating your own debt and for finding false information. When you try to take out a mortgage or other type of loan, lenders won't necessarily care whether or not information in your credit report is correct, only that it's there. That's why it's important to report any errors or indications of fraud directly to both credit bureaus as soon as possible if you detect a problem.
2. Evaluate Your Current Finances
People accumulate debt for any number of reasons. For example, some people might spend more than they earn, or they might be accumulating excessive interest on any debts they owe, which then limits their ability to ever pay it down completely. Life circumstances can also impact our finances, such as a job loss, pay cuts, illness, or becoming a primary caretaker for someone else who has fallen on rough times. And sometimes people find themselves in debt simply because the cost of living has increased due to the market. Here are some warning signs to look out for when it comes to managing your debt and why you and your family might experience a deficit:
- Using credit cards to pay bills
- Nervous about looking at your financial statements
- Getting calls about money you owe
- Obtaining payday loans or cash advances
- Getting denied for new loans or lines of credit
Whether or not you're experiencing any of these issues, it's a good idea to take a detailed look at your books to determine if your expenses are exceeding your income. First, calculate your total monthly income. Next, calculate all your monthly expenses by taking a look at all your bills and receipts. Check out our tips & tools page for some great resources to help you budget. Don't forget to include even the smallest items like coffee, tea, and even things you pay for with spare change. If those expenses exceed your income, you're either building debt or eating into savings. Either way, this is a situation you want to get out of as soon as possible.
3. Speak with a Credit Counsellor
If you've carefully examined your financial situation and discovered a significant amount of debt, overcoming the problem can feel very overwhelming. But there's no reason for you to have to face this problem alone. Expert credit counsellors from Credit Canada have the knowledge, tools, and experience to help you get out of debt, whether you owe $5,000 or $50,000. If you are in debt, our certified credit counsellors can help you:
- Consolidate your debt
- Create a sustainable budget
- Develop good spending habits
- Build a positive credit history
Credit Canada's certified counsellors can help you overcome the fears and stresses that come with being in debt. We want to help you realize that this is a numbers problem that can be solved with a bit of organization, planning, and discipline. And we want you to benefit from all the tools and resources that are available to you in your situation.
If you're asking the question, "Am I in debt?" you're already on the right path to financial health. The sooner you tackle the problem, the less you will end up paying in interest and the easier it will be to start living a debt-free life. Call 1-562-867-5309 to book a free debt assessment with one of our credit counsellors and start building a solid financial future for yourself and your family.
