Sometimes the best way to picture something is with a comparison. We compare the stages of debt struggles with a simple swimming analogy in the infographic below to help you see how at risk you are of drowning in too much debt. Scroll down to the bottom for some additional links and resources.
Stage 1: Going for a Swim
At this level you have some unsecured debt. You may carry a small credit card balance, have a car loan and may not always pay off your credit card debt each month. You overspend here & there or have hit an unexpected wave like a car repair or paid for a vacation or furniture on credit.
The solution: Create a household budget, get your spending back under control and pay off high interest debt before the debt waters rise even further.
Stage 2: Treading Water
Your credit card debt has increased making it harder to pay down the balance. You are only making partial or minimum payments each month and are spending a larger portion of your income on debt repayment. You’ve continued to live beyond your means and used credit to make up the difference.
The solution: If you still have good credit, refinance and consolidate your debt to a lower cost loan options. If you have only one or two small debts, consider a debt management plan. Both can offer a life jacket to help you tread water while you repay your debts in full.
Stage 3: Drowning In Debt
You now have more debt than you can repay. You’ve maxed out your credit cards and may be turning to high-cost forms of credit like payday loans. You continue to use credit, and likely have multiple credit cards. You can’t afford to repay all of your debts any longer.
The solution: If you have assets and a good income a consumer proposal may help you get out of the deep waters. As a final option, consider whether you should declaring personal bankruptcy.
If you are struggling in an ocean of debt, contact us for a free debt assessment. We can help you determine what stage you are at and what options will work best for you to get your feet back on dry land.