Online Financial Tools
By gaining a better understanding of your finances you can help yourself make more effective financial decisions. This will allow you to manage your debt and help you keep your credit intact.
Tools for Building Credit
Most people who run into financial problems are not intentionally avoiding their bills and are not trying to destroy their credit. Most times these individuals have been lured into a “limited time” low interest credit that over time has compounded making it only possible for the consumer to make minimum payments.
If you fall behind on your payments, your creditor will report the late payments to the credit bureau.
If you are three months in arrears for example, and then you pay your account up to date, your credit report will show that your account is up to date, but it will also indicate the month and date of past late payments. Late payments will remain on your credit report for 6 years from the date the late payment was made.
If a payment falls into arrears for 6 months or longer, the creditor can change your rating to an “R9” or “I9” which indicates that the account is a “Bad Debt” write off. At this point whether you pay the account in full or come to a settlement with your creditor – the defaulted rating will remain on your credit report for 6 years from the date of last activity.
Fast fact: It is a major myth that defaulted items magically disappear from your credit rating after 7 years. The Consumer Reporting Act states that a creditor may report a credit default for 6 years from the date of last activity. If that creditor writes off the debt and assigns it to a collection agency, the newly assigned creditor has the same ability to report the collection item for an additional 6 years from the date of last activity.
You can use debt calculators to estimate what your payments would be if you took out a consolidation loan. However, you should consider that any payment you calculate here will likely be much more than if you participated in one of the financial programs offered by DebtCare Canada. In many cases we are able to freeze the interest on our client’s credit products and offer a single monthly interest free payment.
How do I budget my monthly expenses effectively?
Many people make genuine attempts to set up a household budget and strive to be debt free, but often, these attempts fail.
DebtCare Canada suggests that you maintain a household budget every month to track your progress.
The budget should list what your take home income is every month followed by your monthly and daily expenses. Once you have your budget ready you can use it to balance your personal finances.
Here are the steps that DebtCare suggests when preparing your budget:
- At the top of the page, mark down what your take home pay is every month
- In one column below, list what your monthly expenses are EVERY month. These include: rent, cell phone, car payment, insurance etc.
- In a separate column list what your daily expenses are. For example, most people remember what their rent costs but forget about the morning coffee and muffin they purchase on the way to work. DebtCare suggest keeping a notepad and pen with you to write down everything you spend money on. Noting all of your expenses will make it easier for you to compile your monthly budget.
- Once you have compiled your monthly budget, make it balance by cutting down on unnecessary expenses. For example, many of our clients find that bringing their lunch to work cuts down on $50 per week of expenses which saves you over $215 per month or $2,600 per year! Now you’ve found the money for your next vacation.
To download a free sample budget template, right click on the image below and save the file to disk.
The beauty of living in Canada is that so many industries are regulated. If you have a dispute with a collection agency, a car dealer, the government or even a credit reporting agency, there is likely a Ministry that you can turn to for recourse. Here are some useful links:
- The Ministry of Consumer Services – Regulates Collection Agencies and Consumer Reporting Agencies as well as a number of other agencies
- The Financial Services Commission of Ontario – Regulates Mortgage Agents and Brokers
- The Superintendent of Bankruptcy – Regulates Bankruptcy Trustees
- OMVIC – Regulates the automotive industry