The level of household debt in Canada continues to rise. It almost feels like no one is immune to household debt. If your debt is starting to feel overwhelming, minimum payments might keep collection calls from coming but chance are it won’t keep them away forever.
Here 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 tracking expenses more fun. The results of will show you how much is left over for debt servicing and where your money is being spent.
Curb your spending habits. One of the most common ways to get into debt is overspending. Everyone needs to know where they are spending their money.
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 you 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.
The best way to meet that debt head on is to take control. Contact us today to set up a free, no-obligation appointment with a Licensed Insolvency Trustee. We will be able to review your situation and come up with the best plan to help you.
