Recently, a client told me that they’d like to keep one credit card that has a low interest rate and keep a line of credit for emergencies.

It is far better to deal with your debts in a manageable way and set aside some money to be used in case of emergency. People often don’t have an emergency fund because they are using all of their current income to keep up with their debts. That’s why budgeting and making your debt payments manageable is the key.

If you are going to get a consolidation loan to deal with your debts then I would strongly recommend that you destroy all of your credit cards. Having a workable budget, that allows for savings (an emergency fund) is critical.

The worst scenario is to:

  • Consolidate all of your debts.
  • Have no money left over.
  • Then use your credit card to pay for an emergency.
  • Now you have incurred more debt that you can’t afford to pay.

No matter how you choose to deal with your debt issues there are three things that must be true in order for your plan to be a success:

  1. Your budget must make sense – you must be able to afford the monthly payments.
  2. It must be a complete solution – you must deal with all of your debt issues.
  3. You must have real and measurable results – you should clearly see that your total debts are reducing and that there is a light at the end of the tunnel.

If you have any questions or would like to review your options, I would be happy to meet with you. You can contact my office to arrange a free, no-obligation initial consultation.

We have offices across Ontario and can meet with you in the evenings and on weekends so you don’t have to miss work. Let us help you get a fresh financial start!

– Chris

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