Take Control of Your Debt

Christmas is over, you’re back to work and the bills start coming in.  You realize that you overspent during the holiday season and now the debt is overwhelming.  Minimum payments will keep the calls from coming but, you realize that you’re treading water.

Debt stress can lead to other issues relating to health, relationship and employment to say the least.  But when you have reached the point where you can no longer pay your bills, it is overwhelming.  Is it time to panic or deal with your debt head on?

The Bank of Canada has repeatedly stated that one of its top concerns is the high level of Canadian household debt.  Notwithstanding those concerns, the level of household debt continues to rise, hitting 171.1 per cent of disposable income in the third quarter of 2017.  This means that the average household owes $171 for every $100 of income.

You need a solution to deal with all of your creditors to become debt free and make a fresh start.

There are some tips that can help you take control of your debt and build towards a sound financial future to avoid having your debts get out of control.

  • Prepare a budget so that you know where you are spending your money. A budget will help you identify areas where potential savings can be made. For anyone who is tech savvy, you can download a number of free apps which might make budgeting more fun. The results of your budget will show you how much is left over for debt servicing.  As well, a lot of bank online websites have budget or spend tracking tools that can help you keep track of your finances.  Its not the big things that are hurting you, it’s the nickel and dime things that need to be tracked.
  • Change your spending habits. Overspending is one of the most common ways to get into debt.  Keeping track of your expenses is a great way to know where your money is going, what exactly your spending it on and to change your overspending ways.
  • Figure out the best way to reduce debt. Two well known methods are called the Snowball Plan. This starts with trying to pay off the smallest debt and leads up to the largest.  This occurs while you are still paying only the minimum payment on all your other debts.  The other method is called the Avalanche Plan. The Avalanche Plan method starts by throwing as much money as you can at the debt with the highest interest rate.  Again, all while still paying only the minimum on all your other debts. Once that highest interest debt is paid off you go onto the next highest interest debt and so on and so forth.
  • Lastly get some professional help. Some of you will get a better sense of where you are financially and be able to get out of it on your own.  But for most, it won’t be that simple. The amount of money left over at the end of the day will show that you only have enough left over to make minimum payments, which will only leave you treading water. And if something happens where your income is suddenly reduced, you might not even be able to make the minimum payments and you will soon fall behind on the payments.  Then the calls will come.

So, the best way to meet that debt head on is to take control.

At Boale, Wood and Company Ltd, we understand the stress that unmanageable debt can cause.

Call us. It’s not too late.  (604) 605-3335.