#CreditCardDebt #FinancialAdvice #DebtSolutions
Hey everyone, I need some guidance on how to climb out of an almost 11K credit card debt hole 🕳️
Here’s a breakdown of my financial situation:
– 2K income per pay cheque
– Seasonal job with varying income
– 10.8K credit card debt
– 6000$ in RSPs and 2K in TFSA
– Monthly expenses totaling 2310$
Here are some options I’m considering:
1. Negotiate lower interest rates with the credit card company
2. Check if balance protection insurance can help during seasonal job layoffs
3. Explore a line of credit or borrowing against home equity to lower interest rates
Any other suggestions or personal experiences to share? Let’s help each other out! 💡💰
1) Do you need blaance protection insurance?
2) Reduce unnecessary expenses and increasepayment to debt.
3) You can try for a lower rate LOC to pay off the credit card debt.
Your phone and internet are too high. No one with 10k in credit card debt should be spending even a penny on Netflix. I’d clear out tfsa for sure to knock down the debt, and would seriously consider doing the same with rrsp. Build a plan to knock it down with any leftover savings you have any month.
Look into working at a remote camp job for a while. You typically do a 2 week in and 1 week off schedule, so for 3 weeks of a month, your room, travel & food are paid for. You just have to work out your dog situation for that time. Good way to help you get ahead.
Line of credit with lower interest rate. But then you’ll need to bring down your credit card spending limit to what you can manage and pay off then and there.
150 to medicate dogs? . Plus your internet and phone cost is way too high.
If you’re only paying minimum amounts you will never pay off your debt. Stop using the credit card. Put all available money every month towards your debt.
2k biweekly is 4300 monthly. Your monthly expenses are 2300. Pay 2k monthly and your credit card debt is gone in six months. Less balance principal, less interest.
If you have months where you’re not earning that much or are on EI or do seasonal work and using the credit card for essentials during that time, that means that your entire lifestyle and all your spending needs to be reevaluated. Base your budget and spending on the unemployment months, not the full employment months.
Get another part time job now and put every penny towards debt.
Where is all the excess money going? You reported $2300 expenses when your income is $4k. All of that extra money needs to be going to your debt
You have a spending problem.
Cancel netflix, get a cheaper phone plan, evaluate your internet options. If you’re not rural, you should be able to get a better deal. $85/mo saved.
Switch to scratch cooking, and look at transitioning your dogs to cheaper food.
Your borrowing options are going to be limited if your debt is currently growing faster than your savings. Are you sure you can afford the home you’re in? Are there cheaper options on the market where yoy live?
You need a behaviour change.
Start listening to Dave Ramsay… There are callers all the time that are just like you.
That said, my advice:
1. DO NOT touch RRSP.
2. DO NOT open up a line-of-credit or try to restructure your debt, or negotiate interest rates. PAY IT OFF.
3. Use the $2K in TFSA and throw it directly at the CC debt. (this is fine, because you can re-contribute to your TFSA later).
4. Cancel Netflix (download a free streaming app instead like CTV which has TV shows & movies).
5. Find a way to get cheaper phone/internet.
6. THROW EVERY PENNY SAVED AT THE DEBT.
You make >$4k monthly, and your monthly spending is fairly low, so you should be able to clear it in 4-5 months (assuming you use $2k from TFSA to pay it down… which you should).
LOC with a lower rate is good, but still will probably be close to 10%
Might also look at some 0% credit card promos if you do a balance transfer. Might help a bit as you aggressively look to pay it down.
This is a very easy answer. If you hold your discipline and not spend anything beyond the necessary expenses. You can get out of your debt in about 6 months by putting all your extra income towards your debt (without touching any of your tfsa, nor changing anything else). 6 months is not a long time. Not sure where you are spending $1700 extra income every month. Even if you only put half of that towards your debt, you are still in a good position to pay off your debts.
You have a surplus of $2k per month. Buckle down and it’s gone.
Get a second job if that isn’t doing it fast enough. You’ll not only bring in a bit of extra money but you’ll have less time to spend.
Okay. For one. Cancel insurance. I work for a big 5 bank. It’s a scam. If you DO need it- good luck filing a claim before your credit is ruined or before they revoked your card due to non-payment.
Insurance, unless absolutely legally required, should always be avoided.
2nd -stop using your credit card. The bank will absolutely not lower your interest rate. Get a consolidation loan immediately (a line of credit is better, but if you have spending issues, you’ll just rack the debt up again)
The bank will also absolutely not honour an insurance claim because you’re seasonal.
Get a loan, cancel your insurance, stop using the card.
You also mentioned having a mortgage. Why not see if you can bundle your debt into your mortgage and refinance? Or take out a home equity line of credit?
Otherwise. Not a ton you can do. Stop paying the minimum payment.
You don’t have to cancel Netflix. Especially if it’s your main source for entertainment. Just lower your plan to the $7 commercial one. Go retro.
Internet can be cut down to 50 easily even for 1000mbps
Get a 2nd job pay it off.
Wouldn’t touch the RRSP as well, TFSA at $2k is ok I’d leave that in there for small emergencies. Your expenses aren’t ridiculously high either, they’re quite reasonable. Just put the extra money towards paying down the credit cards. You don’t have an interest rate problem so it wouldn’t really make a difference to move the high interest credit card debt to lower interest. Just pay the cards off. I would not transfer CC debt to my home either, your debt is not that high as a % of your income.
You can easily cut your cell phone and internet bill in half if you shop around. Cancel Netflix. Eat rice and beans for a while. Find a balance transfer promo offering low or 0%. Doing all this and living as poor as possible will free you up to $300-400 a month (including the interest). You’ll have the $11k paid off within a few years. You got this!
Your post confuses me.
“I work very little, how can I pay my debt?”
The question answers itself: work more.
I am right now helping my son install his flooring and I thought. This is something I could do if I needed he money. There are so many things one can do and make money. Stop slacking and relying on EI.
I live EI. It’s there for when you need it. Shouldn’t be part of your financial plan. Really.
1. Remove Netflix you already have internet, imagine $30 savings every month.
2. Look for cheaper phone/internet.
3. Withdraw TFSA. credit card has bigger interest than your tfsa, pay it directly
4. Live below your means.
5. Try calling them and ask them if they can waive the interest for few months.
Budget budget budget
People rattle off what they think are their monthly expenses are but don’t save for their true expenses- things like auto repair, vet bills, cloths and shoes, home repair and property taxes…..you said you have a mortgage. What about savings??
You absolutely should not roll that $11K into your mortgage. You need to buckle down and pay that off. It seems like a lot but you can do it. Just don’t dig yourself into a bigger hole.
Get a budget– maybe look into YNAB.
You need to stop using that credit card, cut your expenses and make more money. You need a full-time job.
Call the credit card company and get rid of that insurance. Then ask them to reduce the interest rate or look into a balance transfer to 0%.
Get on scheduled payments that you can’t break from. Put extra towards it when you have the extra.
Overall, get control of your spending and create a budget and stick to it. Maybe look at taking a free online financial course or something similar.
Consumer proposal
Stop spending on your credit card & pay it off. There isn’t some secret formula it’s pretty straightforward
I’m no expert but here’s my regular Joe advice:
1. Stop using your CC. Period.
2. Cancel the protection insurance. If you don’t carry a balance, you don’t need it.
3. Renegotiate or change your credit card type to one with low interest. Or transfer the balance to a new card with 0% for 6 months and low interest after that.
4. Change your phone/internet packages (if you’re not in a contract). I pay $35 for 50gb with Public Mobile and $50 for internet from Oxio.
5. Downgrade your Netflix account. I don’t understand how you’re paying that much. Maybe you have premium and you’re paying for an extra user (20.99 + 7.99)? The package with ads is $5.99 a month. Switch to that until you get the rest sorted.
6. Put yourself on a spending budget for all else. Give yourself whatever you think you need for luxuries (eg eating out, buying video games, whatever else), take out that much in cash and that’s all you get.
7. Reevaluate your unemployment. I know everyone is saying to get a job at that time, but depending on your income, it might not be worth it to lose the EI. You may just need to adjust your spending during that time.
All that being said, it seems like we’re missing part of the problem in your post. If not, it shouldn’t be hard to pay off your credit card before you get laid off. Sit down, make a real budget or you’ll just find yourself in this situation over and over again.
Use TFSA on debt with highest interest, as a start. Change your lifestyle and live on the bare minimum until you get your debt under control. As you pay off your credit card, call the bank to lower the limit each time to help you avoid getting into a similar situation.
Here are some pointers below to help get you started:
> Always pay more than the minimum balance on your debt – you will never pay it down if you don’t add extra payments. Somewhere down the line, you’ll end up using it again, making it worse before it can better.
> Do NOT touch your savings unless you have no choice – I may be wrong but you might get hit with penalties by taking it out early so it’s pointless in my opinion because you’ll end up losing money for retirement and it doesn’t help teach you the habits you need to help yourself in the future.
> The balance protection insurance? Get rid of that immediately. You can find an episode of CBC marketplace (or Fifth Estate, I can’t remember) to confirm this, but it is so useless you might as well start a savings account once your debt is gone for emergencies, which is exactly what you should do anyway. The banks will do absolutely everything in their power not to fulfill their end. Better yet, when you end this insurance, if you can’t remember signing an authorization form, contest it and you may even get some of that money back! This is what happened to my parents and they got hundreds back.
> It might seem little, but get rid of Netflix for now and start binging YouTube or Tubi instead (or other free sites you can think of) because when you’re in debt, any little cash saved helps. Check out your local library – they tend to have DVDs, tv shows, etc… that you can borrow.
> I would 100% recommend you get into doing the cash stuffing method. There are many people on TikTok that show it really well and have helped me personally. (cdngirlcashstuffer is my personal fav) I’ve paid off a lot of debt already and kept myself (mostly) accountable by using this method. My debt is halfway down and I’m still going. I make hiccups in my budget, but I make sure to work a lot of overtime to accommodate this (sadly I love fast food haha). Accompanying this pointer, budgeting will help you immensely and will help keep you on track. You’ll also know exactly how much you have to spend and when you look at the cash in your weekly binders, you’ll feel less inclined to spend it all.
> I’m assuming you are a one-person clan so try to cut down the spending on groceries. I know grocery prices royally suck right now, but try to keep the grocery bill as low as possible. Right now I’m limiting myself to 45-50$ per week for myself and my partner. It’s hard and we eat many of the same foods but it is doable. If need be we’ll visit the food bank because we’re also only on my income right now so I really can’t spend more than that on groceries anyway 🙁 once my debt is gone we can start being adventurous again (within moderation of course)
> See if your car insurance has a discount saver in place (ex. belairdirect has (or had at least) a way where they would track your driving habits for a year or so and you’ll get a discount when you prove you’re a safe driver). Your car insurance is honestly really low like mine so there may not be any wiggle room to go lower but it doesn’t hurt to ask though! Some companies also give savings for things like winter tires, anti-theft devices, etc.. these might also be something to look into.
> Every week keep aside money in a savings account for emergencies because let’s say during this pay-off debt journey, one of your dogs gets sick and needs an immediate operation. You don’t want to be relying on your credit card because you’ll throw yourself back to the starting line. Mitigate this by setting aside a couple hundred a paycheck until you reach what you believe would be a good amount. Mine is currently at $1k (it honestly should be more but I’m doing a lot of overtime every week so accelerate my debt repayment). Once my debt is paid off, I’ll be aiming to save 6 months’ worth of monthly expenses. This is something I recommend for you also (maybe even a year to be honest) ESPECIALLY since you’re seasonal and have a lot of worries with work at certain points in the year.
Worrying about money really sucks but having a safety net will help so much. I’ve had a few unfortunate things happen over the last few years that got me to where I am but now that my mental health is back in order, I’m trying to get my old financial habits into shape.
Continued below…
Get rid of the balance protection
Get a public mobile plan. $29 – 40GB. https://subscribe.publicmobile.ca/en/bc/activation/plans/40GB-4Gspeed3
Cancel Netflix. Cancel BS credit card insurance. Get a cheaper phone and internet plan. Figure out where the rest of your income is going every month, create a budget and stick to it. Get a part time job to carry you through the winter season.
At the end of the day, it’s not magic. Earn more, spend less, stop accumulating CC debt.
Buy a tent, seriously. And some canned beans. Sell the house you can’t afford it or your spending habits. The coast guard will actually house you and pay for a 4 year education, that is free. We need more people ‘float to live’ (to be honest with your comical financials, floating is probably something you know well). AND cancel your credit cards. Go back to envelopes with cash it works.
There are many variables unknown here and a few assumptions to but here are a few things you can explore to see if there feasible:
1. Consider finding some expenses you can perhaps cut back on. Cancelling Netflix for sites that have the same content for free, reducing your phone plan or internet plan. Throw that extra money towards the debt.
2. Consider switching your credit card for a lower interest rate card if you haven’t done so already.
3. Consider using your RRSP to nuke the balance owing on the credit card. (Maybe keep the TFSA as an emergency fund). For one the returns your making on your RRSP are probably significantly less than how much you’re paying on your credit card. For 2 you can aggressively rebuild your retirement once your debt is gone and you have a reasonable emergency fund.
4. Explore your insurance options with your credit card company. They should be able to explain your coverage and direct you to the proper channels. If you’re paying for insurance that’s not protecting you, consider cutting it.
5. Finding another income stream to leverage on your off days.
Of course talk to a professional before doing anything.
1. Don’t use the credit card.
2. Stop all unnecessary spending. You are broke. You are worse than broke.
3. Remove balance protection insurance.
4. Pay as much as you can each paycheck to the credit card.
5. Look for more & better work when you are out of season.
how do you own property with that income?! you probably should not own dogs.
Phone, internet, Netflix all should be able to be trimmed a bit but that is probably max 50/mo savings.
You list $2310/mo in expenses and $4k/mo in income. Where is the other $1690 going? Credit card can be paid off in about 7 months with this.
That said, look for another job or upskill so you have full time work year round. Get a second job, especially Friday night, Saturday to help more.
Try to get a balance transfer. If no ballance transfer use the 2k from TFSA to pay down some.
Change your habits to avoid spending more than you earn and increase income.
Also, you only list your income but have a mortgage. Can you rent out a room or two?
Give up the TFSA
2k is nothing unless it’s yielding more than your CC interest
Well you probably don’t need balance protection. It’s especially pointless if you’re not using it while laid off.
As an experiment, outside of rent, insurance, and utilities, pay cash for everything one month. See what happens.