How the Debt Snowball Method Works

Snowball Debt Management Method

If you have a lot of high-interest consumer debt, it is important to pay it off quickly. The high-interest rates are an opportunity cost for savings and investing in your future. In addition, the faster you pay your high-interest debts off, the more money you will have for other priorities.

It can seem overwhelming to pay off your debts, but at Creditaid, we are here to help make it easier.

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Simplify the Holidays by Narrowing your Christmas List

Holiday Budgeting

Does your Christmas usually look like frantic shopping sprees, high credit card bills, and wondering how you’ll get it all done?

That’s not what the holidays should be about, and it’s time to consider simplifying things so you can enjoy the season with your loved ones.

One of the easiest ways to simplify the holidays is to narrow your Christmas list. This doesn’t mean you can’t give gifts, but give fewer gifts that mean more, and don’t worry about being ‘better’ than anyone else.

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Christmas is a Time to Focus on Family

Christmas quickly became a time of frantic shopping, overspending, and thousands of dollars in credit card debt, but the pandemic changed things for many people.

Without the ability to spend time with loved ones over the holidays over the last few years, we’ve all learned how precious life can be.

This year, why not make Christmas about focusing on your family rather than spending money?

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Financial Literacy is an Investment in your Future

Financial literacy is the key to successfully reaching your personal finance goals. It doesn’t matter how much you make; it comes down to how you manage it. This is why financial literacy is one of the most important topics you should learn.

Unfortunately, most Canadians aren’t well-versed in financial literacy, most importantly, building a solid credit foundation and managing debt.

Financial literacy not only helps you now but, in the future, too. For example, when you learn how to save to spend, you’ll reach a level of financial security that most think is unachievable.

How can you learn? Try our Build Learn Save Program.

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How to Stay Motivated when Getting out of Debt

Starting a plan to get out of debt and keeping that plan are often two different things. It’s a lot like starting a diet when the New Year starts. You start off good, but then a week or two into it, you quickly fizzle and go back to your old habits.

So how do you stop this from happening when you’re trying to get out of debt?

Here are many ways to stay motivated to get out of debt.

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You can Conquer your Debt

Conquer Your Debt

If you’re sitting on a lot of debt right now, first know that you aren’t alone. The pandemic wreaked havoc on most people’s finances. Now that we’re seeing life get back to somewhat normal, you may wonder what you should do with your debt or if it will just hound you the rest of your life.

The good news is there are ways to conquer it. Here’s what you can do.

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Warning Signs you May Have too Much Debt

Warning Signs of Debt

How much debt is too much? It can feel impossible to tell, especially since any debt can feel burdensome. But there are a few ways to tell that you have too much debt and that it’s time to do something about it.

Before you use a credit card or take out a loan, it’s important to determine if you can afford the payment. If it will put you over the edge, it’s too much. Here are some other ways to tell if you have too much debt.

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How Social Media Affects our Spending

Social Media Increases Debt

Social media is a way of life for most of us, but did you know it could affect your spending? You may not even realize the direct connection, but we’ll show you ways that you might be spending more than you intended all because of your Instagram or Facebook feeds.

Comparing Yourself

How often do you watch someone’s feed and think poorly of yourself? Maybe they have something you don’t, or you want to be just like them. What do you do?

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Drowning in Debt Is the New Canadian Norm

Drowning in Debt

Debt used to be for the ‘deadbeats’ or people who didn’t care about their finances. Today, though, it’s the new norm.

Why?

Mostly because we live in a world of instant gratification. Millennials, and younger generations especially, want everything now. Technology, the internet, and the advancement of most services today are to blame but that doesn’t make it okay.

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Will I Owe Income Taxes and Have to Pay Back CERB?

Cerb and Income Taxes

If you received CERB during the pandemic, your tax liability may increase because you didn’t pay taxes at the time you received it – no one did.

Like any income, CERB is taxable, but there’s good news.

There aren’t special tax rates you must pay on any CERB you received. The tax rates are the same rates you pay on your employment income. This makes filing your taxes much less overwhelming than most people thought, but it’s still money you will owe.

How Much Tax will you Owe?

No two people will owe the same amount of taxes. Your tax rate depends on your total income and this year your total income includes all employment income plus any CERB you received. You can check your tax brackets here.

How do you Pay your CERB Tax Debt?

Like any tax debt, to figure out how much you owe, you must first file your taxes. It’s always important to file your taxes on time even if you think you can’t afford the tax debt. Get your taxes in and then take additional steps to manage the debt.

If you can’t pay your tax debt on time, contact the CRA. In most cases, they’ll offer a repayment plan or payment arrangement, but only if you ask. You must be proactive in your request, so you don’t fall behind.

Options if you can’t Pay your CERB Tax Debt

If you can’t pay your CERB tax debt, here are your options:

Apply for Taxpayer Relief

Taxpayer relief is available for those who have extenuating circumstances including unemployment, chronic illness, or a natural disaster. It has to be something outside of your control that stops you from paying the taxes.

File a Consumer Proposal

If you are in over your head in debt, you may consider a consumer proposal. This is a formal request for relief of your debts including your CERB tax debt. A proposal doesn’t eliminate the debt, but it may lower the amount you owe making it easier to afford.

Work with a Credit Counselor

If you’re in over your head in debt and now face tax debt too, get with a credit counsellor. If you free up some of your money by negotiating lower rates or consolidating debt, you may have more money available to pay your tax debt.

The key is not to ignore your debt. If you can’t pay it, work with professionals to find a way to make arrangements. Ignoring the debt only leads to more penalties and interest.

Final Thoughts

Don’t let the thought of tax debt put you over the edge. Yes, it’s another debt and if you’re already struggling it can feel like too much, but there are ways around it.

Contact our credit counselors today for your free consultation to find out how we can help make your tax debt more affordable. Sometimes it just means you need to free up some money by lowering your interest rates on other debts or negotiating other payment arrangements.