Since the Great Recession, we have borrowed too much, spent too much, and got ourselves too much into debt. Why? To satisfy the Mephistophelean spirit that tempts us every time we walk by a store, look at our credit cards, or browse on Amazon. We are addicted to spending, and it isn’t letting up.

Of course, by the end of it all, Canadian consumers are in the hole by trillions of dollars, servicing the debt is costing millions, and people are hardly keeping their heads above water. It has gotten so bad that the Bank of Canada has warned that debt will affect national economic expansion in the coming years.

Canadians, many of which are house rich but cash poor, appear to be trapped and they can’t get out. Surely, there must be a solution, right? Have you thought about debt consolidation services? That may be your ticket to financial freedom and debt relief. Be aware of the facts first.

Here are five debt consolidation tips every household needs to know:

1. Know Your Options First

Debt consolidation that takes out a single loan to cover the cost of multiple loans. This allows highly indebted individuals or households to make convenient and affordable monthly payments that can pay off all of your debt, from credit cards to energy bills.

Before you locate the first debt consolidation service in your area, it is first important to know your options. You need to find a reputable outlet, you need to know what forms of debt consolidation there are, and you need to determine if this is right for you.

Also, there are other ways to consolidate your debt:

  • Home equity loan
  • Home equity line of credit
  • Second mortgage
  • Low-interest balance transfers.

So, speak with a credit consultant, and learn what is available to you.

2. Make a List of Your Debts

A lot of our debt is petty – did you really need to spend $100 on a sweater or get another iPhone? However, there is some debt that made you decide between eating and living under a roof for another month, which is understandable considering the high cost of living and stagnant wages.

When you’re thinking about debt consolidation, it would be a good idea to make a comprehensive list of your debt. This way, you know how much you owe, to whom, and what the interest looks like.

You might even learn that some things you can just pay on your own (see below).

3. You Don’t Need to Throw Everything on the Pile

It can be rather tempting to throw all of your debt onto the immense pile of debt consolidation. From the $150 credit card to the $85 water bill, you just want to get it over and done with and get it paid off.

But here is a question: Do you think it is possible to pay an $85 water bill by yourself?

In other words, you may not need to put every single piece of debt into consolidation. If you think you can pay a $200 cellphone bill from five years ago, then you should do it.

4. There Are Plenty of Benefits

If you’re still unsure about debt consolidation – which is certainly understandable – you should be aware of the myriad of benefits:

  • You give your credit score a boost.
  • You avoid paying obscene amounts of interest.
  • You will repay your debt a lot sooner.
  • You can simplify all of your finances.

If these don’t sell you on the idea, then nothing will.

5. Refrain from Incurring New Debt

Think of it this way: debt consolidation is a get out of jail free card. You will be free of debt once you complete your final debt consolidation payment. There is no greater feeling than to be debt-free.

Why bring this feeling back by incurring new debt? Answer: You mustn’t. Once you no longer owe a cent, you need to keep it this way. Simply put: don’t rely on credit cards, don’t live beyond your means, and use a budget to keep track of your personal finances.

Remember, you don’t want to use a debt consolidation service a couple of years from now again, do you?

For every $1 we earn, we owe $1.70 – and that number is growing. It’s a sad state of financial affairs for both households and the country. With the central bank set to raise interest rates at least one more time in 2018, the cost to borrow and service our debt will balloon. You need to get out of it as quickly as you before rates go even higher – and they’re expected to in the coming years.

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