Debt

On the surface, it seems simple: Pay off your debt and keep it paid off. For anyone mired or wallowing in a debt hole though, such advice sounds trite, almost laughable and easily dismissed.

There are a number of ways people get stuck in this murk. Put aside for a minute that a huge amount of revolving credit is made readily available to virtually every member of society (it's not all that difficult to find stories about companies accidentally issuing platinum credit cards to babies, deceased grandmothers and the family dog). Sometimes it's the simple and unfortunate life events, those which can happen to just about anyone, that drive a lot of people into positions where they need help.

Given how widespread the problem is, it's not all that surprising to see a whole industry of debt settlement specialists springing up online, on the airways and in advertising just about everywhere you turn.

Some of these companies are legit but a lot of them are predatory too, promising to dispense with a would-be clients' debt in a very short time, usually for a fraction of what's owed.

Liked this article? Don't miss another one. Follow us on Twitter or Facebook.

Maybe you've picked up the phone recently to hear the following recording or something like it:

"Are you more than $10,000 in debt? We can help! Press #1 now to get connected with one of our agents and they can help cut you're debt in half for only a quarter of the cost."

Well, unfortunately a lot of these debt reduction agencies are nowhere near who they claim to be and most end up costing you money instead of waiving your debts. This is why The Financial Consumer Agency of Canada has issued a consumer warning against those telemarketing calls and advertisements claiming to come from debt reduction agencies or anyone who claims to provide "debt reduction," "debt relief," "debt settlement" or "debt renegotiation."

"Unfortunately, people do not always see the benefits that debt reduction companies lead them to expect-and some people wind up even deeper in debt than they were before," says FCAC Commissioner Ursula Menke. "If an offer to reduce your debts seems too good to be true, it probably is."

The usual setup promises that the company can work out a deal with your creditors so that you're able to pay back only a small percentage of what you actually owe for "pennies on the dollar." It's quite the offer, but it may actually turn into a Faustian bargain.

Related Links:

• Debt Settlement or Credit Counseling?
• What is Debt Settlement?
• It's Never Too Late to Get On Top of Your Debt
• Debt Reduction: Five Steps to Freedom

Liked this article? Don't miss another one. Follow us on Twitter or Facebook.

There may be a lot of economic uncertainty out there but it appears quite a few Canadians are sure of one thing -- they're still expecting to get their annual bonus.
A recent poll by BMO suggests that one third of Canadians in the workforce expect to get their year-end bonus which usually arrives between now and the end of February. It seems that those anticipating the reward also have high expectations when it comes to how much they'll receive -- 79 per cent of respondents who said they think they'll get a bonus said they expect it to be the same amount as last year or higher.

Here's a list of dos and don'ts to follow when you've got yourself in debt. It comes your way courtesy the Financial Consumer Agency.

Here's where to start: create a list of all your current debts, including the minimum payments required and the interest rate for each loan.

And remember, there are two ways to pay off your debts.

It's nearing the end of the month and you've either received your credit card statement from Christmas or the dreaded mail is about to arrive. Have you taken a deep breath and braved opening the envelope, or are you resigned to letting it collect dust for now and deal with it later?

If you have the courage to open your credit card statement up, you'll notice something new - a measure the government forced companies to report a few months ago. And, if you carry a balance on your card, it might be a scary number to look at. There's a little box either on the side or back of your statement that now has to tell you how long it will take for you to pay off your credit card balance if you only make the minimum payment. This month's mini money make-over features Jeffrey, who's looking at a whopping 134 years and 7 months to pay off his credit card. Yes, you read that right. He's currently 37 years old, and if he doesn't learn a simple trick to financial freedom, his debt will outlive him by decades.

The new year means a lot of things for a lot of people. For me, it's an opportunity to reevaluate my personal financial habits, see what needs to be improved and then make an effort to change them.

Overall, it's not too bad. Like most Canadians, I'm concerned about paying down my debt - a mortgage - and saving for my retirement. As much as I would love a financial windfall, say, via lottery, that's not going to happen; so the alternative is to see where I can save some money without feeling completely deprived.

Realistic cost-cutting is what I'm talking about.

I must preface that if you have any high interest credit card debt, that should be the first focus. With those rates hovering around 11-29% interest, it always makes more sense to get rid of that debt first.

Let's assume that you doesn't have any other debt and are simply wondering if the RRSP is the better way to go or, should you fast track paying down your mortgage?

Read on to find out which is the better option, or, if you should opt for a blend of both.

Budgeting doesn't have to be a horrible experience.

So says Lynnette Khalfani-Cox, The Money Coach®, a personal finance expert, television and radio personality, and the author of numerous books, including the New York Times bestseller Zero Debt: The Ultimate Guide to Financial Freedom.

"Unfortunately, most people have a total misconception of what a budget is," says Khalfani-Cox, who once had $100,000 in credit card debt, before paying it all off in three years and turning her financial life around. "Millionaires know that a budget is really a spending plan of action. It's a way to help you manage cash flow and achieve your financial goals."


In addition to being a regular contributor to WalletPop, Khalfani-Cox has appeared on such national TV programs as The Oprah Winfrey Show and Dr. Phil.


"The reason most people can't stick to their budgets is because they blow their money month after month on LIFE," explains Khalfani-Cox, an acronym that she breaks down in the video below.

The number one question I get from home owners is the never ending, "fixed vs. variable" rate debate. And although it depends on a number of factors (your personal preference along with the accuracy of your crystal ball to predict where interest rates are headed), real estate expert Don Campbell, and president of the Real Estate Investment Network has a unique twist on the old argument.

Campbell touts opting for a variable rate mortgage, but being disciplined enough to make the payment that a five year fixed would offer thus paying more on your principal and paying off your mortgage sooner and less interest over time.

Here's the numbers he crunched based on a $300,000 mortgage over a 35 year amortization:

We don't know when, but interest rates are almost certainly going up this year.

I hate to foist yet one more January goal-setting article on you, but what if you could position things so you wouldn't find yourself in a post-holiday debt hole again at this time next year? (Higher rates mean all of your post holiday debt will be that much more expensive to carry.)

"Many people do not plan for their holiday spending in their budgets, even though it is a major annual expense," says Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada. "As a result, these expenses often end up on credit cards that can take well into the New Year to pay off."

If you've overspent at the holidays, he offers the following tips to help get back on track.