Mistakes to Avoid When Getting a Mortgage for the First Time
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3 Simple Ways to Avoid Racking up Debt in the Summer
August 5, 2021
When people fall under hard times, they often accumulate debt to get themselves by and meet their immediate needs. However, getting stuck in a cycle of debt is never ideal, and many can find themselves crippled by a mountain of debt.
If debt relief is not achieved, debt can often follow one throughout their lifetime. Unfortunately, it can be very easy to get into debt and quite tricky to get out of it. Here are some common reasons people often fail to get out of debt.
- Poor Financial Knowledge
Financial literacy or lack thereof plays a considerable role in managing debt. When people don’t have a proper understanding of finance, they can make the wrong financial decisions. They could quickly get into bad financial habits that put them in a lot of debt. And without the proper knowledge, they might find great difficulty getting back to a debt-free life.
- Being Unemployed or Underemployed
A person’s apparent financial stability can shatter when they lose their jobs. And without a source of income, people can quickly get into debt to meet their immediate needs.
Managing debt can also become increasingly complex with sudden unemployment. Trying to meet the same payments can become tricky, and fees and interest can accumulate.
Debt relief can also be challenging to achieve for someone that is underemployed. With a small paycheck, one would tend to develop a dependence on credit cards. This can put a person in debt for longer than expected.
- High Mortgage
When a mortgage is too high, it can be challenging to meet the payments. Larger loans would mean a larger amount of debt to repay each month. And if one already struggles to pay these amounts each month, imagine what would happen if additional expenses need to be paid as well.
It’s best never to take on loans that one won’t be able to pay on time. Consider downsizing or finding different lenders that can offer better terms for a mortgage.
- Late Payments
It is crucial to develop good financial habits such as paying on time. For one, not meeting payments could negatively impact one’s credit score. And secondly, late payments also result in fees. With multiple late payments, one can expect to be slapped with more considerable fees and interest rates. This could lead a person to fall behind in their payments and remain in financial debt.
To avoid this situation and get out of debt, it’s best to set up automatic payments. One could also set up constant reminders for payment deadlines and use calendar apps for synchronous reminders.
- No Second Source of Income
Having a steady income stream outside one’s day job can serve as a neat financial net to fall back on. Unemployment and underemployment can increase one’s chances of accumulating debt. So, with a second source of income, one can be better prepared for sudden changes in employment and meet their financial needs. However, without it, people can find themselves paying far too much debt every month.
Conclusion
Managing debt can be challenging for many people for several reasons. One could find themselves unemployed or underemployed without a second source of income to help pay off their debts. They could also take on a mortgage that is too high and pretty difficult to pay up on time. Or maybe they just have a lack of financial knowledge that can lead to poor financial decisions and late payments.
For those struggling with debt, Debt Helpers provides customized debt solutions for all Canadians. DebtHelpers.ca offers a range of consulting services designed to help you reach your goal of becoming debt-free. Reach out today to get a free consultation!