In Ontario senior bankruptcies are increasing rapidly. The unique social and economic situations of seniors put them at a higher risk of insolvency and financial hardship, including unexpected health and long-term nursing care costs. On top of that, in some cases seniors continue to financially support their adult children and grandchildren for longer than they planned, despite the fact that they cannot afford to do so.
So the question becomes, what can be done to help? If you’re a senior and are struggling to stay afloat financially, or if you are trying to dog your way out of debt, review these tips and apply as many to your life as possible. If you still find yourself struggling, it may be time to book a free consultation with a Trustee in Bankruptcy. In that consultation, the Trustee will review your unique situation and explain the best path for you to take in order to get a fresh financial start.
Analyze Your Cash Flow
A major challenge of managing debt is to stop it from growing. Take a hard look at how money is being spent and whether you are budgeting properly. This will help you to assess where you need to make cuts.
Prioritize and/or Consolidate Your Debt
If you have more than one source of debt, it is important to prioritize your debt and to pay the debt with the highest interest rate first. Usually your debt with the highest interest rate is credit card debt. You can also look to consolidate all of your debt into one loan at a lower overall interest rate, such as through a secured line of credit. Until you pay your debt, however, consolidating it really just extends your repayment period by providing you with a lower interest rate.
Do Not Assume Debts of Others
You need to protect yourself by saying no to assuming a loan or co-signing a new loan. Paying off your child’s student loan is a common method of assuming debt that children should take their own responsibility for. If you have already cosigned, then see if you can buy out the debt or lower it enough so that the primary debtor can handle the remaining debt alone.
Consider Downsizing Your Home
As an empty nester, you may find it time to downsize your home, especially if you no longer have a partner or child living with you. Downsizing when you no longer need a large space is typically a good long-term plan. Unfortunately, many seniors stay in their home too long and also lose money by renovating. While renovations can add value to a home, you can never expect to get a full return on your investment. If you are planning to sell in the near term, you are usually better off to sell as is than to commit to the headache and cost of renovations.
Only Buy the Car You Can Afford
Sometimes seniors overspend when they need to purchase a car, wondering if it will be their last opportunity to buy a vehicle. However, there’s a good chance you may end up buying another car or two in your lifetime. If you buy a used car or a less expensive model this time around, then you won’t owe money on it for years to come.
Extra income can help in lowering your debt. Part-time work, including consulting work from years of labour force experience, can help provide needed income. If you were a homemaker, providing home care to another in need can also supplement your income. Selling certain items or holding a garage sale can also provide cash while also decluttering your home of items accumulated over the years.