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When you’re in debt, it can feel like time is never on your side. There’s always another phone or electricity bill around the corner, and your paycheque never seems to stretch far enough. It can be tough making progress on your debt when there’s only so much money to go around and never enough time.
Feeling that scramble to meet all of your due dates and make sure you have enough in your account to make a minimum payment is not a sustainable way to live. The strain will take a big toll on your mental health, leaving you feeling in a constant state of stress, burned out, anxious, and like it’s impossible to take a day off.
These are warning signs that you need to explore your options for debt relief. When you need to extend the time you have to pay debt, there are options that can get you some breathing room.
#1 Find a Better Debt Payment Strategy
When your goal is to get out of debt fast, you have to make more than the minimum payment. When you don’t have the extra funds to do so, you may need to explore debt relief options below. However, if you can find extra money in your budget, you can get more out of your money by making minimum payments on all of your debts except one.
You then put all of your extra income toward that target debt until it’s paid off, and you move on to the next one. This way, you can start eliminating due dates and save on interest charges as you make progress. Choose your smallest debt if you need motivation or your most expensive debt to save more money in the long run.
#2 Explore Debt Consolidation Loans and Balance Transfers
When you need more time to pay off debt, interest charges are the biggest challenge. It costs money to carry debt in the form of interest. It grows your debt every month, and you have to pay off the interest before making any progress on the principle. It’s what keeps people stuck in a debt cycle.
Debt consolidation loans or balance transfers can give you a lower interest rate on your debt. Some balance transfer cards offer 0% APR for a limited period of time (6 months to 2 years). These options are worth exploring if you can make the most of that grace period and as long as the interest rates aren’t higher than they originally were when that grace period expires.
#3 Get Real Debt Relief with a Consumer Proposal
In some cases, relief on interest rates isn’t enough, and you need to reduce the amount that you owe. A consumer proposal will do four things to give you more breathing room to pay off debt:
- Reduce the principal that you owe (the original amount that you borrowed, without interest).
- Stop interest charges from accumulating on your debt.
- Stop collection actions like wage garnishments that can take control away from your finances.
- Give you up to five years to pay off your debts in single monthly payments.
When you need more time, a Licensed Insolvency Trustee can walk you through your options for debt relief.
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