Credit Cards – Beware of the Minimum Payment Trap
While Canadian interest rates have fallen in the past few years, our per capita household debt has continued to rise. For every one dollar earned, we are spending almost $1.50. As a result, many households are only able to make minimum payments on credit cards on a monthly basis, which drastically increases the amount repaid. Creditors are making a profit and loving it. You may be shocked to know that if you have a $5,000 balance on your credit card and make only the minimum monthly payment (based on 18% interest), it will take you 38 years to pay off the balance! In the end, due to interest, you would have paid $17,674.00! Not junk change.
Unfortunately, most of us are not credit savvy. We don’t ask questions. We don’t read the fine print. We are too trusting. We take for granted that the credit industry is looking out for our best interest when, in fact, their main motivation is profit.
Most of the debtors I meet tell me the same story. It feels good when you get approved for credit. You feel worthy. The creditor has faith in you to repay the debt. Unfortunately, due to unforeseen circumstances the debt often escalates beyond a manageable point and you may feel overwhelmed. It’s never too late to attempt to fix the problem. Think of the Nike slogan: “Just do it”!
#1 Recognize that your debt problem may be a symptom of a greater issue: poor money management, spending beyond your means, assisting others financially, buying to fill a void, keeping up with the “Jones”, supporting addiction issues such as gambling or drugs. These issues must be addressed or you will just put a band-aid on the problem.
#2 Create a plan (or budget) to pay down the debt EACH pay period. If you can afford to do so, ALWAYS pay more than the minimum payment. Paying only the minimum payment does NOT reduce the principal.
#3 Remove the credit card from your wallet. If it’s not there, you can’t use it.
For more information regarding the wise use of credit, visit our Counselling Resources section of this website.
Salyzyn is Relocating!
We are pleased to announce that after 13 years in our Sackville Drive location, Salyzyn & Associates Limited is relocating to a new and expanded office space in Bedford Commons. Moving day is November 27, 2009, and the Sackville office will be closed. We will be re-opening in our new office as of November 30, at which time you can find us at:
30 Damascus Road, Suite 104
Bedford, NS B4A 1C0
(across from the new Wal-Mart; next to Summit Dentistry; next to the new Tim Hortons)
All phone numbers and other contact information will remain the same:
Phone: 865-5444
Toll-free: 1-877-216-5800
Information line: 865-5497
Fax: 865-2228
Website: www.mydebtsolution.net
Email: info@mydebtsolution.net
We look forward to seeing you at the new location in Bedford!
TIPS FOR SAVING $$ DURING THE HOLIDAYS!…
Now that the pumpkins have been set aside for another year, it is time to turn our thoughts to tinsel and “Jingle Bells”. With that comes the temptation to overspend and miss out on the joy that the holidays bring. Many plans need to be made – don’t forget to plan your spending and saving carefully so that the after-holiday bills don’t steal your joy. We are pleased to offer a few tips to help keep your “White Christmas” in the black.
• Take note of how many pay periods there will be between now and Christmas, and figure out how much will have to be saved during that period of time. Determine how much of your income you can put toward your holiday spending.
• Start early to get items on sale and to spread your spending out over the year.
• Make a list of who you want to buy for, and then cross off as many names as possible. Send cards or small items when you can.
• Set an overall limit on holiday spending, taking into account shopping, parties, travel, charitable donations, office get-togethers and the other incidentals that seem to crop up at this time of year. Stick to your budget!
• Make a list of ideas and set a budget for each person so you don’t end up spending your whole day browsing or making impulse purchases.
• Cross items and people off your list as you shop so you don’t buy for anyone twice.
• Plan to give gifts of your time to people who can use it (ie. free babysitting, car washes, offer to paint a room, cook dinner, etc.).
• Return to an “old-fashioned” Christmas: Use your skills and make hand-made gifts for as many people as possible.
• Ask the store clerks whether a sale will be starting soon before you make a purchase.
• Watch the flyers for sales and take advantage of the tax-free incentives that merchants and shopping malls offer.
• Get together with friends and family to give group gifts, or draw names instead of gifting to everyone.
• Give a donation to a charity or sponsor a child in the name of several people.
• Challenge your spouse to keep to a smaller budget and see who can be the most creative! (example: try to spend no more than $50, but each must purchase at least 3 items).
• Save money on gift wrapping by using items around your house (ie. comic pages, brown butcher paper, re-used gift bags, baby blankets), or shop at “dollar” stores.
• Take advantage of levees, free holiday breakfasts, etc. to help your celebrations.
• Plan for next year by contributing monthly to a savings account or Canada Savings Bonds.
• Quit shopping when you’ve bought the last gift on your list.
• Make the holidays about the giving and not about the gift.
Search the internet for more great ideas. Use keywords such as, “gifts from your kitchen”, “cheap Christmas”, etc.