If you’re feeling anxious or overwhelmed with your debt load these days – you are certainly not alone.  Although the economic outlook is rosier these days and you might be feeling more positive about your job security, your investments and the value of real estate, you might still be worried about how to get rid of that darned debt that just never seems to disappear!

You might be hoping that the debt problem will just resolve itself or that you should be able to find some solution yourself – after all, how hard can it be to figure out?

But in my experience most people need a shake up, a change of thinking, and a good dose of reality to make lasting changes to their financial situation. You really don’t have to struggle with the debt any longer – you have options, but you do need to started taking action.

Karin’s recent Financial Post Magazine article does a great job of summarizing your alternatives when it comes to resolving debt issues and is a good place to start educating yourself on the resources that are available to you.

Read – Debt on Overload? You have Alternatives

So, if you’ve been living with debt longer than you’d like, there is hope, but you need to take action as soon as possible.  Ask for help – even if you feel embarrased or ashamed that you have let things go on for so long. Do whatever you can to make sure that you bring your debt under control so you can avoid some of the more severe alternatives like bankruptcy or having creditors start knocking at your door.

Sheila’s Debt-Free Challenge
Here’s where I can help. In my program Sheila’s Debt-Free Challenge and in my work with individual clients, I give people the tools, guidance and expert advice to help them resolve debt issues once and for all. I have seen quick and dramatic changes that can happen almost overnight. In fact, I have had clients and students tell me that the stress relief starts the minute they sign up for a debt management program!

So if you see yourself heading down the road of debt overload – do yourself a big favor – get help sooner rather than later. Don’t suffer needlessly wishing for it to go away. Some simple changes to your financial habits early on can make a big difference and save you a lot of grief down the road.

Are you Ready to Take Control?
If you’re ready to take a step to getting your debt under control, join me on the Free Preview Call for the Debt-Free Challenge program. On the call, I will tell you more about the 12 week Debt Free Challenge program and give you some tips and techniques to get you started right away. – Sheila Walkington

SIGN UP FOR DEBT-FREE CHALLENGE
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Most Canadians think they have two choices when it comes to handling large debt loads – suffer endlessly or go bankrupt. It often comes as a surprise that there are numerous alternatives to get out of the debt quagmire. While all of these options will compel you to face up to your financial realities and will require action on your part, they can be far less onerous than outright bankruptcy.

With the recent recession still taking its toll, high consumer debt loads, low savings rates, and poor spending and credit habits, it is quite understandable that declaring bankruptcy sometimes seems like an attractive option. In some cases the stress and anxiety and financial restrictions are simply too much to handle and there is no other reasonable way out.

Every year in Canada about 100,000 individuals file for personal bankruptcy (or file a “consumer proposal”, one of the court-mandated alternatives to bankruptcy). Before you go this route, it’s a good idea to check out the following alternatives:

– Contact your Creditors Directly: Many creditors will be happy to discuss your debt problems and suggest solutions

– Debt Consolidation Loan: Talk to your bank about packaging all or most of your loans into one more manageable loan

– Personal Debt Management Program: Hire a money coach or take a course like Sheila’s Debt-Free Challenge to get you on back on track with your money

– Credit Counseling Agencies: Many “not-for-profit” agencies can help you re-negotiate your credit card loans and other debts, but you can generally expect to be charged fees. Not all creditors will cooperate with these agencies. Do your due diligence!

– Consolidation Order, also known as Orderly Payment of Debt: A court order that lets you pay off your debts over three years and frees you from creditor harassment and wage garnishment. (Available only in Alberta, Saskatchewan, PEI & Nova Scotia).

– Proposal(s): Under the Bankruptcy and Insolvency Act, a trustee or an administrator files a Proposal between you and your creditors to have you pay off only a portion of your debts or extend the repayment time

– Debtor’s Anonymous: A good resource for information & support

One of the main purposes of bankruptcy legislation is to “afford the opportunity to a person, who is hopelessly burdened with debt, to free himself of the debt and start fresh”. While having a new lease on life can sound appealing, bankruptcy also has serious consequences on both a financial and personal level. (More info on bankruptcy)

If you are feeling overwhelmed by your debt load, the first step is to figure out how much debt you have and whether you can realistically pay it off in a reasonable time frame. If you aren’t sure, then consult the resources above for some help – the sooner the better. – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.

CREDIT is like a looking-glass, which when once sullied by a breath, may be wiped clear again; but if once cracked can never be repaired. — Sir Walter Scott 1771-1832, British Novelist, Poet

Things have certainly changed in the world since the Victorian era when Sir Walter and his contemporary Charles Dickens plied their literary trade in the mean streets and grand salons of London. But it seems that credit and debt were major issues then too – just as they are today.

In the story The Old Curiosity Shop, Dickens graphically portrays some rather unsavoury scenes of British debtor prisons, and of the infamous system of indentured servitude, where people would work off their debts as virtual slaves. Today, fortunately, there are a few more options available to us when we start running into trouble with debts and credit!

WHAT ABOUT CANADA IN 2009?
Debt is a huge problem for Canadians, a problem that is only getting worse as the economic downturn continues to reverberate through the lives of ordinary working people. I definitely see this in my own practice, but this fact is also born out in recent studies across the country. The Ontario Association of Credit Counselling Services has reported a 25 to 30% jump in clients over the past three months.  It turns out that more than half a million Canadians are behind on their credit payments. British Columbians, for example, saw a 27% increase in average delinquency rates. More and more Canadians are using their credit cards and lines of credit to finance day-to-day expenditures… and the bills are starting to add up! The Certified General Accountants Association of Canada tells us that, as of May, the total national household debt in Canada is at an all-time high of, get this, $1.3 trillion.

YOU ARE NOT ALONE!
Short of signing up as an extra on a Charles Dickens movie, what can the average person do when faced with mounting personal debts and a sense that they are losing control?  The good news is that you don’t need to face this challenge alone. Help is available!  If you are finding there is more month than money at the end of the month, you are not alone. Many of my clients are surprised to find out just how much it costs to make ends meet – and that’s not even for any luxuries. People are finding their whole pay is going to cover the rent, bills, groceries and the occasional dinner out. What about holidays, retirement savings and paying down debt?

KNOW YOUR NUMBERS
So what can you do? Well, the first step is to get real about your numbers. What does it really cost you to live?  And how does that compare to your earnings? Is there anything left over for savings, goals or debt?  Many people dread the thought of tallying up all their expenses, but I say it’s where the magic begins to happen. Once you know your numbers you might be surprised and how easy it is to start to take charge.  I have seen people make amazing changes to their spending and their finances, once they are aware of their numbers.

THE SOLUTION
If you want to learn more and are serious about taking control of your money and handling your debts then let me offer you a simple solution — a solution that has already helped hundreds of other women. Take a few short minutes to check out the course that I offer called: Sheila’s Debt Free Challenge. Not only will it help you develop a spending and savings plan that works for you, it will also help you get out and stay out of debt!  The program is designed for women just like yourself. It is simple and effective – and it works!

THE OPPORTUNITY FOR YOU
If you are curious and want to learn more – check out Sheila’s Debt-Free Challenge for more information or to enroll.

STAY TUNED – I’ll be offering a Debt-Free Challenge Preview Teleclass on Monday October 5th.  Details to follow!

Using credit wisely is critical to building a solid credit history. Important? Absolutely! Your credit history is what banks and other creditors use to assess how risky it could be to lend you money — and how much interest to charge you. Considering the current economy and subsequent credit crunch, it is not only helpful, but crucial that you find out exactly what information is on your credit report.

In Canada, your credit history is tracked by two major credit tracking companies: Equifax Canada Inc. (www.equifax.ca) and TransUnion of Canada (www.transunion.ca). They keep close records of where you work, the loans you have, what credit cards you use, and if you have ever filed for bankruptcy.

Have you ever missed, or were simply late, making a credit card payment. Have you ever maxed out your line of credit? Was a long forgotten bill sent to collections? Has a family member, roommate, ex-spouse, or identify thief left you on the hook for something? All of these things can seriously affect your “credit score”.  Your credit score is a numeric snapshot of your credit risk at a particular point in time. The score is a three-digit number that lenders use to help them make decisions about whether or not to lend you money. A credit score of 700 or above is considered a good rating.

A company or individual needs your consent and a legitimate business reason to obtain a copy of your credit report. You can also request a copy of the information. There are various on-line reports available for a fee. You can also request a free copy by mailing an application to TransUnion or Equifax (see their websites for more details). If the information on your credit report is not accurate or up to date, immediately contact the credit reporting agencies to correct the information.

Ways to Improve Your Credit Rating

• Pay all of your bills on time. Paying late, or having your account sent to a collection agency will reflect negatively on your credit score

• Try not to run your balances up to your credit limit. Keeping your account balances below 75% of your available credit will also help your score.

• Avoid applying for credit unless you really need it. Too many inquiries in a short period of time might indicate that you are experiencing financial challenges

• Contact the credit agencies if you see anything on your credit report that is inaccurate.

If you are struggling with debts or credit problems, not-for-profit agencies are a good place to seek help. If you want to take more control of your debt, or improve your credit rating, you can also check out courses like “Debt-Free Challenge“, offered through the Women’s Financial Learning Centre.  Remember that you have a right to check on your credit rating. Above all, remember that if you have debt or credit problems you don’t have to struggle alone – help is available. – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-for-service financial planner with an MBA and a degree in psychology. She’s the co-founder of the Women’s Financial Learning Centre.

Using credit wisely is critical to building a solid credit history. Your credit history is what banks and other creditors use to assess how risky it could be to lend you money. The way you have handled your debts in the past will impact a lender’s decision to lend you money as well as the rate of interest they will charge. If you need a loan or a mortgage, or you want to renegotiate a loan, you want to be able to choose your lender and negotiate your lending rate. It’s helpful to know what information lenders have found out about your credit history from your credit report.

What is a Credit Report?
A credit report is a history of how consistently you pay your financial obligations and is created when you first borrow money or apply for credit. On a regular basis, the companies that lend money or issue credit cards to you (banks, finance companies, credit unions, retailers, etc.) send the credit reporting agencies information about their financial relationship with you. For instance; when you opened up your account, if you make your payments on time, if you miss a payment, or if you have gone over your credit limit, etc.

How is Information in my Credit Report used?
In Canada, your credit history is tracked by two major credit tracking companies: Equifax Canada Inc. (www.equifax.ca) and TransUnion of Canada (www.transunion.ca). They keep records of: where you work, how much debt you have, whether you’ve paid your debt on time, and also how much credit you have available.

You will be assigned a credit score which is a numeric “snapshot” of your credit risk at a particular point in time. The score is a three-digit number that lenders use to help them make decisions. A higher score indicates that you are a better credit risk to a lender.

Every time you apply for a loan or credit, the credit granting institution will request a credit history report from one of these companies. You can also request a copy of the information that they have on file for you.  There are various on-line reports available for a fee but you can also request a free copy by filling out a application and mailing it to TransUnion or Equifax. (see their websites for more details).

What to Look for on Your Credit Report?
When you get the report, make sure the information they have is accurate. If it’s not accurate or up to date, contact the credit reporting agencies to correct the information.

Below is a list of the major sections found in your credit report:

• Personal Identification – Includes key identification information, such as your name, address, date of birth and Social Insurance Number

• Consumer Statement – Allows you to add a brief comment about any information in your report

• Credit Information – Provides details of your credit accounts and transactions and shows if payments are being made on time

• Banking Information – Includes information on your bank account and NSF cheque history

• Public Record Information – Contains information about secured loans, bankruptcies and/or judgments

• Third-Party Collections – Contains information about any involvement with a collection agency trying to collect on a debt

• Inquiries – Includes all organizations or individuals that have requested a copy of your credit report in the past three years

Please note: Details about your existing mortgage(s) may appear in your credit report but since mortgage information is not reported by all lenders, it is not used to calculate your credit score.

Who can Access my Credit Report
There are laws regarding who can review your credit report and for what purpose. A company or individual needs your consent and a legitimite business reason to obtain a copy of your credit report.

Each time a member of the credit reporting agency requests your report, the request is noted on your report as an inquiry and kept for 3 years. You can therefore see a record of who has requested your credit report and when.

Ways to Improve Your Credit Rating

• Pay all of your bills on time. Paying late, or having your account sent to a collection agency will reflect negatively on your credit score.

• Try not to run your balances up to your credit limit. Keeping your account balances below 75% of your available credit will also help your score.

• Avoid applying for credit unless you really need it. Too many inquiries in a short period of time can sometimes be interpreted as a sign that you experiencing financial challenges, or that you are taking on more debt than you can actually repay.  However, it’s unlikely that your score will be affected if you are simply shopping for the best rate on your next mortgage or loan.

• Contact the credit agencies if you see anything on your credit report that is inaccurate.

Want to improve your credit rating by taking more control of your debt? Check out Sheila’s Debt-Free Challenge starting Monday April 27th.

Sheila Walkington is co-founder of the Women’s Financial Learning Centre.

Most people are worried about how the stock market will limit their ability to retire, but it’s even more likely that their debt load will be a bigger hindrance. Here’s why. Debt seriously affects how much money you will need to cover your expenses in retirement. The larger your debts are, the more you will need in pensions or savings to cover those payments – on top of your living expenses.

If you are at all concerned about how your debts will affect your retirement, you are faced with two choices. You can adjust your spending today, and redirect more of your cash flow toward “retiring your debts” — or you can plan to retire later yourself.

Target to be debt-free before retirement by setting a specific date to pay off each individual debt, one by one. If you want to retire in ten years, adjust your payments so that your mortgage, line of credit, credit cards, or car loans are paid off before those ten years are up. You can arrange to pay off debts like your mortgage more frequently than once a month which also speeds up repayment. Don’t count on making lump sum payments to pay off your debt before retirement – they simply might not happen. Adjusting your monthly payments, starting now, is much smarter and easier.

Coming up with a debt repayment schedule requires you to think more realistically about your retirement needs and then to make plans accordingly. (Think of it as your retirement training program.) Sure, you might have to make some difficult decisions today, but by taking action steps now you will feel more in control, confident and secure when it comes time to accept your proverbial gold watch. – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-for-service financial planner with an MBA and a degree in psychology. She’s the co-founder of the Women’s Financial Learning Centre.