How to Tell Whether Debt Consolidation is Right for You

It’s only a few days before the end of the month, and you’re going through the bills that need to be paid. As soon as you start doing the calculations, you start to feel a gnawing sense of anxiety in the pit of your stomach.

There’s no way you’re going to be able to pay down what you owe and still have enough to cover household expenses, but you know that if you don’t make at least some progress on your debts, things will just be worse next month.

If this sounds familiar, you’re not alone. Millions of families struggle with consumer debt, and covering even the minimal payments can often seem impossible. In many cases, debt consolidation is the only realistic way out. If you want to know whether or not debt consolidation can help you build toward a more stable financial future, here are three questions you should ask yourself.

Do You Have Multiple Unsecured Debts?

Most North Americans carry a significant amount of debt, but it is important to distinguish between secured and unsecured varieties. Things like mortgages are secured because they are held against an asset that has concrete value. Unsecured debts, on the other hand, have no collateral backing them, which is one of the reasons why they can be more problematic.

It’s easy to feel powerless if you are juggling your obligations to a number of different creditors and have multiple maxed-out credit cards and unpaid bank loans, especially if you’re on a fixed income.

With payments due every month, paying them down one at a time may simply not be an option, leaving you stuck making incremental progress month by month and seeing your hard-earned money mostly going to pay the interest — which is one of the reasons large numbers of Canadians still owe money into retirement.

Do Your Monthly Payments Total More Than 20% of Your Income?

One of the most insidious things about debt is the way it grows exponentially. If you have unsecured debt at high interest rates, you can find yourself in a situation where you’re spending a significant portion of your income simply paying off the interest, with no way of making any real dent in the principal.

The best thing to do is to get out your calculator, add up your expenses, and see just how much of your income is going to paying back the money you owe. If you’re spending more than a fifth of your income, you might need to consolidate your payments.

Are You Ready to Take Charge of Your Financial Future?

Ultimately, what matters most is your commitment to achieving a debt-free future. Do you want to be in a position to start saving for the future, investing in a better life, and working toward the kind of financial freedom you’ve always wanted? If so, debt consolidation can be the surest way to start making concrete progress toward your goals.

The good news is you don’t have to go it alone. Getting in touch with a certified Credit Counsellor from a non-profit credit counselling agency doesn’t just help you explore your debt consolidation options — it also gives you access to personalized financial counselling that can help you manage your resources more effectively (you can read more about how this works here: creditcanada.com/debt-consolidation-program or get in touch with Credit Canada’s certified Credit Counsellors directly).

As most financial experts will tell you, it is far easier to get your financial house in order if you nip incipient problems in the bud: if you’re concerned about how much you owe, it really is never too early to book an appointment with a certified Credit Counsellor to look into your credit rebuilding options.

But it’s also never too late, so if you’ve noticed the amount you owe your creditors never seems to go down, find out whether consolidation is the right solution for you today.

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