Credit & Debt

Join our newsletter

Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit Top Finance Blogs


What could be easier than a payday loan? Created to help people who find themselves in a bind once in awhile, payday loans are an excellent way to get yourself into a whole lot of financial trouble if you are living from paycheck to paycheck. The idea behind a payday loan is that you borrow money from a high-interest lender for a very short period, typically until your next weekly or biweekly paycheck. Although the fees can be substantial, the loans are great when you have an unexpected emergency or you just need to take care of something in a jam.

What they are not good for is someone who is having a hard time paying their monthly bills and are in need of financial services Winnipeg. Many Canadians are finding that their disposable income is anything but disposable, which is putting an entire class of society in the red every month. If you have to rob Peter to pay Paul, you can see how that can quickly lead to a downward financial spiral. The increase in Canadian citizens taking out payday loans is telling economic forecasters that the economy might not be as stable as many people hope.

Only one indicator of what is going on in Canada, other high-interest loans are being taken out more frequently than the economy can handle. According to the Financial Consumer Agency of Canada, as many as 90% of Canadians are using high-interest payday loans to get from one month to the next. They are doing so to avoid late charges, but they may be unwittingly setting themselves up for much more disaster than they realize.

Payday loans are exorbitant — in some provinces the annual fees can be as high as 500%, which is twice the amount that was charged when they first came to market. Seeing the increasing demand, companies are maximizing profits and taking full advantage of putting out risky loans. You can’t blame them — with so much money out there floating around, they have to cover their risks and potential losses.

Economists have already spotted a trend in how the average Canadian is saving their money. Having no safety net and extending themselves beyond their financial means is the new normal for the average person. That means that when they hit an emergency, they don’t have a viable way out. This leaves them at the lender’s mercy. Prior payday loan customers were surveyed, and out of 1,500 loan users, just over 40% understood the high cost of payday loan interest.

Although the assumption that you would make is that a payday loan borrower would be low- to middle-class, the truth is that as much as 7% of borrowers have incomes in excess of $120,000. For the first time in Canada’s history, the level of debt that the citizens hold outweighs the gross domestic product. Debt is at 100.5% of the gross domestic product, which has many people worried.

Most of the debt crunch people are feeling stems from the rise in real estate prices around the nation. The federal government has looked at the problem and tried to provide a safety net — but if things continue on the same trend, that could spell some serious problems for both the real-estate market and the average homeowner. Although it’s a red-hot market now, things can cool down faster than anyone is expecting, and they definitely are not prepared or planning for it.

After what went on in our own country when the foreclosure disaster hit and people were left with no recourse, the signs are all there that the same could potentially happen across Canada. Payday loans are just one indicator that has many economic experts worried about what the future will bring. Canada is a country that typically prides itself by not falling into the same debt pitfalls as Greece, Italy, the United Kingdom and the United States, but if Canadians don’t heed the same signs that were seen before the other countries’ fall from grace, they are likely to meet the same demise.

Join our newsletter


Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit

entrance-843814_640Often called by other names in other parts of the world, the doorstep loan is a nice convenient arrangement for both the credit broker company and the prospective borrower. It offers a way to access loans often with a low credit score, without the need for a bank account, and with very little paperwork. Doorstep loans also have a way to hold the borrower accountable, which is healthy for the viability of the loan and helps to encourage a good money management culture among borrowers. Ultimately, this kind of money management culture will help the borrower better manage expectations for future financial purposes. It helps him do something that is considered very important in financial management, which is to delay gratification.

Anyone can get a doorstep loan

The doorstep loan is a type of credit access where the credit company interacts directly with the prospective borrower by sending a representative or an agent to the home of the borrower.

See for more details.

Some other benefits

The doorstep loan affords the borrower quite a few interesting benefits including the opportunity to interact with experienced loans and financial expert. He is free to ask questions where he does not understand and seek clarification about bogus and ambiguous terms that may be found in the lender’s printed materials and assets. Depending on the number of scheduled visits, the borrower can very well gain a large amount of enlightenment from his agent. Given the executive nature of this type of loan, however, it attracts a slightly higher interest rate from the lender, seeing as the agent who has been made available to borrowers has to earn a decent wage for his work. Generally speaking, interest rates for doorstep loans can go from a modest 190% to up to 650%. So it is necessary if you are interested in accessing this type of loan, to look closely at the fine print and understand what percentage of the loan you will be paying in interest. If possible, get an amount instead of a percentage. This helps you weigh the decision more objectively. See more details in

An important point to mention when talking about doorstep loans, however, is engaging with the right lender. Make sure your lender is an accredited agency with the authorization of the Federal Conduct Authority. A lender without this authorization is known as a loan shark, and it is illegal to engage in this kind of outfit, even dangerous. Loan details from loan sharks are not reported to the credit reference agencies and therefore do not have any effect on your credit score.


time because a failure to repay can hurt your credit score. Also, while it is an attractive loan type, make sure this type of loan suits your need. You can only do this by carefully considering all other types of loans and their different interest rates so that you can make a balanced, informed decision. The doorstep loan is often dubbed the loan of last resort because of its higher interest rates. So a careful perusal of the loans available to you before choosing would serve you here. A valuable discourse on doorstep loans from one of the most trusted lenders in the UK can be found here



Join our newsletter


Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit

surfer-2089817_640Automobile loan refinancing can be quite the safety net for some car owners; as long as they take an accurate assessment of their situation and understand the terms under which this option is beneficial. You should ask yourself questions such as:

  • Has your credit improved from bad to good since you got your current loan?
  • Have national interest rates decreased, making the refinance option viable?
  • Did you get a bad deal in your first loan, despite having good credit?

If you can answer any of these questions in the affirmative, then it may be time to check out current auto loan refinance rates to see what they have in store for you. Below, we’ll elaborate a bit on how to go about getting a deal that you can be happy with done.

Financial Hardship Considerations

It should become clear after just a few payments whether your current auto loan is just a little too much to handle; this is one of the reasons for which the refinancing option can ease the burden considerably. It’s better not to wait until you’re close to missing a monthly payment because the figure is too high. The best way to combat this is to regularly search the web for the current interest rates being offered by the lenders you would consider. When the time is right – or before, if necessary, approach your current lender first.

A note: if you apply and receive a rejection, then that means you should wait a few months and pay your bills on time to see an improvement in your credit score. Making sure that you pay your credit cards down always aids your credit history, as well s avoiding opening any new accounts. Doing this is the best chance you have of securing a refinance offer the next time you apply – just make sure not to do it right after the first rejection, because these inquiries negatively affect your credit history.

The Chance at a Better Interest Rate

This could arise for a number of reasons. Let’s say that you’re actually a prime borrower, and you went with an auto dealership the first time around. The problem with this is that auto dealers don’t always give you the best deal that your credit history would suggest; credit unions and local community banks are more reliable for this – you don’t really need negotiation skills to command the “proper” offer.

As a result of this, if you later learn that you can get a better interest rate – and, your credit score has improved even more since your current car loan went into effect – you can refinance and still make out better than before even though it is now a used car loan. If this sounds tricky, don’t worry; just use one of the many auto loan calculators on lender websites to make sure you come out ahead.

Lastly, your first option when you want to refinance is to check with your present lender. It may happen that they have the best deal for you, given your history with them.

Other than the short explanation of the above reasons, interest rates can decrease at any time, making for a good refinancing inquiry. Ultimately, you have access to all the information you need to see if a better auto loan awaits you afterwards.

Join our newsletter


Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit

How You Can Become CreditworthyJust a short four years ago, my finances and credit score were horrible. Multiple bad decisions left me with a credit score that was in the 500’s. As someone who was nearing thirty years old, that was not good. I got a better job and decided it was time to get my credit in order. In January 2015, I officially started working on bettering my credit. By August of that year, my credit score had gone up by 168 points. It was unbelievable. Who knew that by making a few changes that my credit would go up? Today, I want to go over some things that you can do that will help you become creditworthy.

Better Job

As I stated earlier, I got a better job. Yu should do that as well. I had been working two part time jobs for six months. I wasn’t making enough money to do anything except for getting by. The next job was just what the doctor ordered. I was able to make more money. This was actually the highest paying job that I’ve ever had. My stress levels went down. I was able to start saving money finally. I also devised a plan on what to do with my debt.

Making more money meant that I was able to get current on every debt that I had. I had been months behind on a few of my bills. To have enough money to get current was great. For some of them, it took me a couple of months to get current because I was so far behind. I was able to get there though. I learned that 35% of your credit score is your payment history. That was more than a third of my score. If you aren’t making enough, it’s time to consider getting a better job. More income will help you.

Pay On Time

The second thing that you can do is pay your bills on time. As I stated earlier, there were times where I was late. That was one of the reasons that my score was so bad. Whatever you need to do, make sure that you pay your bills on time.

Stop Using Credit Cards

The third thing that you should do is to stop using your credit cards. I used to use my cards all the time when money was low, which was a lot back then. At one point I was using 95% of my available credit. That wasn’t smart. The credit bureaus don’t like that. You are looked at as higher risk customer. The ideal credit utilization is 30%. I was nowhere near that amount, so I stopped using my cards. If you’re in a similar situation, you should stop using yours as well.

Doing those three things that I discussed above will help you become more creditworthy. You just have to have a little discipline. I know that anybody can do those things. I was horrible with money a few short years ago. Now, I’m not. Don’t let your past be an excuse. Decide that you want a better score and make it happen.

What is your excuse?

Join our newsletter


Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit

What is Debt Consolidation?A lot of us are in debt. Many people feel helpless when it comes to the debt they have. If you’re flooded in debt, one option that you might have heard about is debt consolidation. There are pros and cons to using a debt consolidation program. In this post, I will be going over how debt consolidation works.

Debt Consolidation 101

Basically, debt consolidation works like this. Let’s say you have four different debts. They total up to $1400 a month in payments. You simply can’t afford the payments anymore.

Instead of going into bankruptcy or going into default, you decided to go to a debt consolidation company. The debt consolidation company will go to your lenders and negotiate a deal to pay off all your loans for you. Typically they will get you a deal for between 25% to 75% off.  That’s a heck of a deal.

The debt consolidation company will pay off the loan; then you will owe them the money instead of your lenders. Instead of having to make four payments, you only need to make one now. Your monthly payment is much lower than your previous monthly loan payment amount.

They need to make money too

Remember, debt consolidation companies, even if they are a non-profit company, need to make money as well. Some companies will structure their program in a way that you will end up paying more at the end of the day. For example, they can lower your $1400 payment down to $900 a month while extending your loan terms by 24th months. This is something that you must consider if you are thinking about going the debt consolidation route.

Your monthly payment may be less, but in terms of the full loan, you may end up paying a couple of thousand dollars more. For the debt consolidation company, it’s a trade off. They need to make money, but if you can’t afford the higher monthly payments, then a smaller monthly payment, with a higher overall payment might be the lesser of two evils. Consider all of your options befoe you make that decision.

How does it affect your credit?

This is the million dollar question. Does debt consolidation affect your credit? Settling a debt is not as good for your credit as paying it off in full. It is better than ignoring it or not paying it off at all.

How it affects your credit depends in part on how delinquent you were before the consolidation. It also depends on if the creditor charged off the debt to a collection agency. If that has happened, the charge-off will appear on your credit report even if the consolidation company reaches a settlement with the collection agency. Timing is everything.

Working with a debt consolidation company does not lower your credit. Getting your debt charged off, settling for a lower amount than you owed and being delinquent on your debt can negatively affect your credit report. Is that something that you want?

Debt consolidation isn’t for everyone. If you are struggling and or near bankruptcy, it may be the option for you.

Join our newsletter


Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit

Is Debt Relief Better Than Bankruptcy?A lot of people have debt. Some are struggling, while others including myself are working hard to pay it off. If you’re struggling with your debt, I know that you possibly have considered bankruptcy or debt consolidation before. Do you consider debt relief a better option than bankruptcy? Do you think bankruptcy will help you out? There are arguments for both sides. It depends on your situation. There are a few things that you should consider.

Pros & Cons of Debt Consolidation

We all know what debt consolidation is right? It is taking one big loan to pay off your other debt. One drawback of debt consolidation is that you are not out of payments. You will still owe money.  You still have to make a debt payment every month. It may be a smaller payment so it might be more manageable.

One key benefit of debt consolidation is that it can address other kinds of debt that bankruptcy can’t eliminate. Some of those types of debt are alimony and child support. With debt consolidation, you’ll have someone that will take you by the hand and guide you through the debt repayment process. That can be a good thing especially if you’re stressing about payments.

One of the main things you need to ask yourself about any debt consolidation program is if you can stick with it or not. Certain statistics show that only 55% of the people who sign up for a debt relief program make it all the way through. So, 45% of people will spend months or years going through the debt repayment process and then give up. That’s crazy. Not only does that cost them money, but it could slow the process of them getting better credit.

Pros & Cons of Bankruptcy

People have different thoughts when it comes to bankruptcy. Some say they will never file for it. Others don’t mind. If they get into a financial situation, they will do what they have to do. The main benefit of bankruptcy is that you basically owe nothing once it’s done. As started earlier, with debt consolidation, you still have to make payments every month to the consolidation company. If you file bankruptcy, you don’t have to pay any more.

The next thing is a huge con. A bankruptcy will knock your credit score down by 200 to 250 points. That’s not something that I’d want to happen. I’ve worked very hard over the last couple of years to raise my credit score to over 700. I wouldn’t want one decision to mess it up.

If you decide to go the debt consolidation route, it is usually reported, but creditors as settled on your credit report. It will impact your score by only 50 points. Your bankruptcy will not only mess up your score; but it will also do something else. Future creditors who see a bankruptcy on your credit report will know that you ran away from your debt. Some of them would be less likely to trust you in the future.

If you have a lot of debt, you want to try to pay if off. If you are struggling, then debt relief may be the better option for you. Just make sure you can stick to the plan. It takes discipline. If you really are having problems, then you may be better off filing for bankruptcy. Before you make any decision review your situation.

Join our newsletter


Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit

credit-card-851502_640A lot of people have a bad history with money. Maybe they took out a loan that was too large to pay back or maybe they lost their jobs and had trouble just getting by, causing their loans to default. Either way, if you have a bad history with money, you may think that you will no longer be able to qualify for a good credit card.

The good news is that there are things you can start doing today to fix your credit so you get approved for those credit cards you may need. It takes time and it isn’t a cakewalk, but if you try hard enough, you can rid yourself of your bad money history and move forward financial. Here are a few tips to establishing credit and get back on track.

Look at Your Credit Report

The first thing any financial institution does before approving loans or a line of credit is to look at your credit history, so you need to know exactly what they will find so you can be prepared.

There are plenty of websites that you can use to look at your credit history, but the important thing is that you look at it thoroughly. There could be mistakes or items that should be expunged from your record but are still on there. These will hurt your chances of improving your credit, so should dispute them with the credit reporting companies. If the same thing appears on all three reports, you need to dispute it with all three companies to make sure the mistakes are expunged properly.

Start With Outstanding Debt

Once you know what’s on your credit history, then you can start fixing it. It will take some time, but you need to start with the largest debts on your report and try to get them taken care of.

You can often negotiate a price that will take care of defaulted loans. You will need to pay a lump sum, but you may be able to settle for pennies on the dollar, saving you money in the long run. Start with the biggest debts and work your way down until all of your outstanding debts are cleared.

Keep Up With Payments

Just one missed payment can affect your credit score, so make sure to keep up with any payments you currently have so the problem doesn’t get worse.

Make sure you pay all of your current bills before you throw money at outstanding debt. This way, your score won’t get any lower and it may even improve a little if you are constantly on time with payments. Pay off all of your credit cards each month if you have any with balances and never be late with payments on things like utilities, car loans or mortgages.

Again, your credit will not improve overnight: it’s a long process that takes time. But if you have a plan and stick with it, you’ll be approved for those new credit cards sooner than you think.

Nicole Humphries works in the personal finance sector and contributes to a selection of blogs with her articles on personal finances.

Join our newsletter


Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit

How to Become a Credit Card ProHello, everyone. Some people can live with, while others can’t. Credit cards can be good for helping you manage your finances. If you use them the right way, they can be useful for building good credit. Even though I wouldn’t do this, they can also be used as a backup plan if you have an emergency. Keep reading to get more info about credit cards and their use.

On time payments

Pay your credit card bill on time each month. If you are the type of person, who may forget the due date, set up a reminder or two. If something happens that doesn’t allow you to pay your credit card on time, don’t freak out. You should call your credit card company as soon as possible and let them know your situation. There is a chance that they may be able to help you out. They might be able to delay your due date, set you up with a repayment plan or work with you in other ways that won’t mess up your credit as much.

Pay the credit card in full

The next thing that you should do is pay the credit card in full every month. I’ll be the first person to say that I haven’t been able to do that. I’ve had credit card debt for years. There were times where I had to use my credit card when I didn’t have a job. It wasn’t possible to pay it in full. Now, I’m doing much better. I’m able to pay more money on it. If you use your credit card for ordinary expenses such as for gas or paying a utility bill, you should proceed to pay off the balance at the end of the month. Doing this will help you build your credit. You will also gain rewards from your card. Lastly, you won’t be getting any debt because you paid off the card.

Watch out for free

Credit card companies target people with freebies. I’ve seen different companies give away shirts, bags and even beach towels. I can’t lie, I’m a fan of free, but you have to be careful and pay attention to any free offer. The freebies that you are offered can be considered traps. The credit card company may lure you in. That could end up costing you a lot of money down the line.

Practice Discipline

It can be easy just to swipe that credit card without thinking. Don’t fall into that trap. Many folks lack the discipline to handle credit responsibly. The world tells you to spend, spend and spend again. Heck, you can get a “Black Amex Card” which is seen as a status symbol if you use a credit a lot. By having discipline, you can avoid getting into debt and possibly messing up your credit score.

Multiple credit cards

If you have multiple credit cards, you have to pay attention to them carefully. You don’t want to mix up the due dates. When you have a moment, review the balances and figure out which credit card you want to pay off first. Paying off the balance of the card with the highest interest rate is a good way to save more money in the long run. If you don’t want to go that route, you can also pay the credit card with the smallest balance.

Credit cards can be great to have. You just have to make sure that you don’t abuse them. They can help you build up credit. They can also make your credit horrible. Practice common sense and discipline when using them.

Join our newsletter


Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit