Chartered Accountants

Eight Steps to Help you get out and stay out of Debt

1. Cancel all your credit cards except one, and pay that one off every month. Use a debit card or a charge card instead of a credit card. With a debit card, the money is deducted from your account immediately. A charge card required that you pay off your balance in full each month.

2. Never use credit to purchase non-income producing items. Meals, clothing and vacations are good examples.

3. Limit instalment debt (other than your home mortgage) so that monthly payments do not exceed 10% of your income.

4. Shop for lowest interest rates.

5. Establish an emergency fund. Without it, you'll be forced to use credit when unexpected expenses occur.

6. Don't cash in income producing investments to pay off debts. This will rob you of the benefits of long term investing.

7. Use debt consolidation loans with great care. You may end up paying more interest in the long run.

8. Live within your means. Establish a budget and stick to it. Remember: If you can't pay for it now, you won't be able to pay for it - plus interest - in the future.

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