When people are facing a tough financial situation, it’s common to want to hope for the best and think that circumstances will change, making the money troubles more manageable. Unfortunately, habitually postponing dealing with debts can have some unpleasant consequences – and while you’re waiting, the solutions could instead be underway. If you need some motivation to tackle your debts, read on for our top three reasons not to procrastinate when dealing with debt:
- Debt stress is real stress: We all know that stress can affect your physical self, and long-term health risks can be serious. Stress has also been linked to emotional ailments, including depression and anxiety.
A recent study undertaken by Sands & Associates asked respondents to note the impact that their debts had on them. Individuals overwhelmingly responded that their personal well-being, health, relationships and family all suffered as a result of being in debt.
If debt-stress is starting to show, it’s definitely time to tackle your debts!
- Issues (and interest) get compounded: If there have been unexpected expenses, or events such as a job loss, health problems, or a divorce, those dilemmas often cause secondary financial problems. Even once those immediate problems have passed it can be tricky to catch up and get back on track. While people may resolve the issue that caused the debt, the debt often becomes a long-term problem.
Delaying dealing with debts usually means that the debts grow, whether it’s through interest accruing, or by continuing to take on more debts. It’s not uncommon for someone to have a budget that will allow them to make sizable regular payments towards the debts, but not see the principle balance being reduced – even for years at a time. Many people are surprised to learn that at ‘normal’ credit card interest rates of approximately 19.9%, their debts will DOUBLE on their own in just 3.6 years, even if no further purchases are made.
If your debt payments are higher than roughly 10% of your monthly take-home pay contact a Licensed Insolvency Trustee such as Sands & Associates today to understand your restructuring options.
- Panic leads to hurried decisions: Whatever the catalyst for realizing that debts can no longer take a backseat, people often feel a sense of urgency when they decide they need to address their debts. Unfortunately this sense of panic can lead to decisions that can have negative effects. For example, hastily cashing in RRSPs can mean depleted savings at retirement or a tax bill to settle later; hurriedly signing into an unregulated debt settlement program can trigger paying unnecessary upfront fees.
If you feel pressed into action, stop and evaluate your choices beforehand with a reputable professional such as a Licensed Insolvency Trustee. It’s always free to meet and discuss how to turn around the situation and get you back on track.
Every day we meet with people who have postponed seeking professional assistance, sometimes for months and even years – until they’ve reached the point of crisis. The first step in a fresh financial start is often the most difficult, but the end goal might be easier to reach than you think!