No one likes to think about all the things that could go wrong, but it’s important to be prepared for the worst while expecting the best. If you’re like me you were taught to be ready for a rainy day and to be prepared, just in case something should happen, like a house fire or accident. I’ve been a Credit Counsellor for over three decades (nearly four!) and if there’s something I’ve learned it’s that you can be prepared for the unexpected, to a certain extent.
The truth is making decisions ahead of time can go a long way, and with a little foresight and the right planning, you will have the right safety net in place if and when you hit a bump in the road towards your financial freedom and wellness.
Below are six items you should consider that can help you be prepared for the unexpected.
Contents Insurance. If you have a mortgage you are required to have home insurance. But if you are renting, do you have contents insurance? A client very recently lost everything in a house fire and now has to replace everything down to their toothbrushes. You can get contents insurance for approximately $30 a month. Is a peace of mind worth giving up a coffee a day to pay for the insurance? It’s totally up to you but I know more than a few clients that would have happily made the exchange.
Safety Deposit Box. Do you have all your important documents organized and in a safe place? You can rent a Safe or Safety Deposit Box (SDB) from your bank or post office for about $70 per year. You can keep the originals in the SDB along with a list of the documents, bank accounts, investments, insurance policies, etc. The information will then be available when you need it fast.
Life Insurance. If you have life insurance through your work make sure you review the statements you receive showing your benefits to ensure everything is in order and accurate. That includes checking to make sure your income is up to date and your beneficiary is correct. It’s important to stay on top of your life insurance before you or anyone else should need it.
A Will. Everyone should have a current Will. My husband passed away unexpectedly and I was better able to deal with everything as I didn’t have to worry about would happen with the house, the bank accounts, etc. And make sure you name a Guardian for your minor children, that way YOU choose who will take care of your kids – not the government.
Power of Attorney. You should also have a Power of Attorney (POA) for both your finances and health or personal care. A POA is a document that allows another person to legally act on your behalf. Don’t assume simply because you are your partner’s spouse that you will be able to make decisions for them. And young people need POAs too! Once a person reaches 19 years of age, the parents don’t automatically get to make decisions in an emergency situation with regards to their finances or personal care. You can download a Power of Attorney Kit through your provincial government online. Remember to follow the instructions very carefully when filling it out.
Talk to family. Talk to your family about all of these issues and what your wishes are. Before my parents went away on any vacation, my dad would organize all the necessary documents, put them in the bottom drawer of his dresser and remind my brother, sister and I where we would find the information. When they came home, he would file the documents away in their regular location. My dad is older now and he recently showed me that he has put a number of documents in his bottom drawer that we will need if something should ever happen to him.
They say hindsight is 20/20 but when it comes to your financial stability, it’s always best to minimize the risks. Talking about preparing for the unexpected doesn’t make it happen, but you will be in a much better position if you’re organized and willing to do the work. Believe me, your future you will thank you, and so might your family!
If you need help getting your finances in order in case the unexpected happens, contact us today to book a free appointment with one of our certified credit counsellors who can tell you exactly what you need to prioritize to make sure you’re prepared.
Frequently Asked Questions
Have questions? We are here to help
What is a Debt Consolidation Program?
A Debt Consolidation Program (DCP) is an arrangement made between your creditors and a non-profit credit counselling agency. Working with a reputable, non-profit credit counselling agency means a certified Credit Counsellor will negotiate with your creditors on your behalf to drop the interest on your unsecured debts, while also rounding up all your unsecured debts into a single, lower monthly payment. In Canada’s provinces, such as Ontario, these debt payment programs lead to faster debt relief!
Can I enter a Debt Consolidation Program with bad credit?
Yes, you can sign up for a DCP even if you have bad credit. Your credit score will not impact your ability to get debt help through a DCP. Bad credit can, however, impact your ability to get a debt consolidation loan.
Do I have to give up my credit cards in a Debt Consolidation Program?
If you enter a DCP in Canada, you will have to refrain from using credit, which includes unsecured credit cards; however, you can still use a secured credit card. Once you've successfully completed the program, you may be eligible for an unsecured credit card.
Will Debt Consolidation hurt my credit score?
Most people entering a DCP already have a low credit score. While a DCP could lower your credit score at first, in the long run, if you keep up with the program and make your monthly payments on time as agreed, your credit score will eventually improve.
Can you get out of a Debt Consolidation Program?
Anyone who signs up for a DCP must sign an agreement; however, it's completely voluntary and any time a client wants to leave the Program they can. Once a client has left the Program, they will have to deal with their creditors and collectors directly, and if their Counsellor negotiated interest relief and lower monthly payments, in most cases, these would no longer be an option for the client.
Sandra Sherk • Author
Sandra has been in the credit counselling field for 40 years and her goal has always been to empower people to take control of their finances.
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