You know it when times get tough. When money stress takes over and you are ready to tackle your debts, here are some helpful tips on how to get out of debt.
- Create a budget and track your expenses: By recording all of your spending by category (eg. groceries, cigarettes) you’ll have a better idea of where your money goes each month. While fixed expenses like rent or car insurance are generally consistent, using a budget tracker (whether it be on paper or a cell phone app) can ensure that you don’t spend more than you intended on items with costs that tend to fluctuate.
- Live within your means: If your living situation or work situation changes, leaving you with less income than before and you fail to adjust your lifestyle to reflect the changes, well, that’s a recipe for disaster. Going on vacation, having a nice car and eating out at restaurants are perfectly fine if you can afford to do so. If not, don’t get caught in a trap of spending more money than you bring home.
- Increase your income: Consider ways you can bring home more bacon to help make ends meet. Possibly a second job or working overtime? Can you rent out a spare room? Sell an asset?
- Reduce expenses: We can all cut somewhere. It’s your decision where to place priorities in your budget but common things to consider cutting back on are daily take-out coffees, spend less at birthdays and holidays, get a cheaper cell or cable plan, switch to non-brand-name products, etc.
- Be honest: Let those affected by your debt problems be aware of the issue if you are struggling. If your partner doesn’t realize there is a need for change how can you expect them to stop any expensive behaviours? When possible, coming up with a household budget together ensures that everyone gets a say and those involved are more likely to stick to it and be successful.
- Don’t procrastinate: The sooner you act to make changes and find a solution, the more options will be available to you. The longer you wait to get started, the more interest will accumulate on the balances and the chance of accounts being sent to collections or to court will be higher.
- Seek professional help: Even if it’s just to get a second opinion about what options are out there, getting professional credit counselling or meeting with a Trustee in Bankruptcy can help clarify the extent of your situation. Perhaps there are ways in which you can handle the debts on your own that you weren’t aware of or maybe using a third party is best to reduce the burden of not being able to keep up with the bills. They say knowledge is power so no harm in doing some research.
Of course every situation is unique. One of these or a combination of these suggestions may be enough to help someone out of debt but not someone else. If in doubt, contact Credit Canada at 1-800-267-2272 to see if we can offer any additional advice.