This is a guest post by Risha Ellison, a freelance finance blogger specializing in the bad credit and debt industry.
A teacher by day, a mother of three all day, the last five years had been a financial nightmare for me.
With cash tied up in auto expenses and home renovations, I found myself facing a debt of $130,000, something that would take years to pay on a teacher’s salary.
Self-help books didn’t help and conflicting advice from family and friends only fuelled the desperation of my situation. Having borrowed so much, and unable to make payments, my credit score started dwindling.
I could no longer qualify for any additional funds that required a credit check. In fact, turning to payday loans out of hopelessness only plunged me further into debt and I found myself in the middle of a never-ending cycle.
All this changed when I consulted with a representative from Affirm Financial, a company that believes in second chances. The firm not only offered financial aid, but provided information to best be financially responsible that involved simple things I could do every day to pave my way to financial independence.
The first thing I did was consolidate all of my debt into a single loan with one payment at a lower interest rate.
This allowed me to save some money every month, despite the debt. My saving grace was our family home. Although this is not an option for many Canadians suffering from debt, for those who have a home, consider consolidating all of your debts into your mortgage if you have enough equity.
Next came lifestyle changes.
Gone were the days when I lunched out every day. I shopped the sales, stockpiled food, limited grocery runs and cooked and froze meals everyday.
I also sold my car, biked to work and encouraged my kids to walk everywhere. I even embarked on a business venture, by renting out my basement.
Though I had to borrow a few hundred dollars from Affirm to make the space habitable, the loan process was a hassle-free one and I was able to pay everything off within three months when my tenant moved in.
Now with a few bucks under my belt, I applied for the Affirm MasterCard.
I was careful to keep my spending to a minimal and reserved for essential things only, following the advice of my credit counsellor.
With a credit limit of $3,000 and a reduced interest rate for homeowners, the relief of having access to emergency funds felt as though half of my worries had been alleviated. Slowly, I began rebuilding my credit with on-time payments.
After a year, I started investing to mitigate some of my costliest expenses, like reducing energy costs at home. An article by Affirm Financial recommended proper insulation, low energy appliances and using hydro wisely.
The stat is that half of every dollar seen on your energy bill comes from keeping your home warm or cool, which is why proper insulation helped me cut costs by ten per cent.
Unplugging everything that wasn’t being used was something I did too. As my savings rose, I was even able to invest in a few appliances sporting the Energy Star logo. The Affirm blog also provides valuable information for anyone looking to save a few bucks, whether it’s to decorate on a budget or apps for grocery savings.
It took time, but I am now very close to paying off my debt.
Debt is a scary thing and it can seem everlasting, but there are remedies. While a single strategy may not produce any tangible results, a combination of techniques, some help from trusted financial institutions and support from family and friends are key to reaching a debt-free life.