Demystifying common financial advice on how to get out of debt

There’s no shortage of financial advice floating around - from your co-workers and neighbours, to online financial experts, you can find thousands of different methods on how to get out of debt. However, what is rarely taken into account is how everyone is different and therefore, not all financial advice will work for everyone.

For example, having an emergency fund in place that equals at least 6 months of your current income is common advice. But what if you have a lot of credit card debt and you're having trouble making your minimum payments? In this case, having an emergency fund in place would mean that you’re taking money from bills that you’re already struggling to pay. Let’s look at debunking a couple more pieces of financial advice on how to get out of debt:

Transferring credit card balances to a card with a lower rate is a good idea - this may be true, but it’s important to read ALL of the terms of the new credit card agreement. What will your interest rate be after the promotional low interest rate period? What are the fees for transferring a balance? Reading the fine print will help you determine if you’re better off leaving your balances where they are.

“I need to have debt to prove I am responsible with money” - while paying your debt on time over a long period of time may help prove this, it’s not a good reason to get in debt or to stay in debt.

“I’m stuck with this interest rate” - you never know until you ask. There’s no reason to not call your credit card company or home loan lender to try and negotiate better terms.

Remember, no two people have the same financial situation. What makes financial sense for your friend, neighbour or family member may not make sense for you. When thinking of taking steps to pay down your debt and get ahead financially, relate the advice to your specific situation to make sure it makes sense.

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