Not only is the federal government deeply in debt, millions of Canadians are bleeding red ink.
A not-so-surprising report came out in June that found Canadians owe $1.67 for every $1 of disposable income they have.It doesn’t end there. More and more Canadians are living paycheque to paycheque, a growing number of consumers are relying on their credit cards to get by and the cost of living continues to surge.
These are all ingredients for a recipe of immense levels of debt. The fact is is that many Canadians are languishing and it’s a scary time for the country’s finances, public and private,
Although Canadians’ love affairs with debt do not seem to be subsiding anytime soon, if you want to get out of this abusive relationship then there are many measures you can employ. It will take some hard work, some sacrifice and some time, but you can eventually succeed.
Here are five tips for getting out of debt by the end of 2017:
1. Discover the Root of Your Money Woes
A common trend that financial experts find is that when consumers become debt-free they return to the life of indebtedness. This is because they don’t know how to handle the money they have.
Prior to launching your crusade to achieving a life of being out of debt, you need to discover the root of your money woes. Are you not making enough money? Are you spending too much of your salary? Are you depending entirely on credit cards for your shopping?
Once you learn why you’re in debt then you will succeed in staying in the black.
2. Establish a Thorough Monthly Budget
Financial experts also have learned over the years that the primary reason why so many households enter into debt is because they refrain from starting and maintaining a budget.
Are you one of these households? If so, it is time to establish a thorough monthly budget.
The budget should include these three elements:
This can also provide you a picture as to what your monthly finances look like and what you can do to give them a shot in the arm.
3. It’s Warm Out There but a Debt Snowball Will Help
Snowballs in the middle of summer? Figuratively speaking: yes.
One of the most popular methods of reducing debt is to undertake a debt snowball initiative. This is when you pay off debts with the highest interest rate first or the small debts first. The method is entirely up to you, but once you start paying off one debt there and one debt there then you get on a roll and eventually you ring in 2018 and you’re debt-free (don’t forget the champagne!).
4. Forget the Plastic at Home
When you’re working hard to tackle your debts, you don’t want to remain stagnant by still adding debt. Do you know what is holding you back? Using your credit cards, these coquettish pieces of plastic that come with a Faustian nature.
Moving forward, you should simply forget the plastic at home whenever you go out – or acquire prepaid cards where you can place a limit on how much you can spend.
If you don’t know how to use it, credit will continue to be the harbinger of your doom.
5. Downsize Your Lifestyle – Yes, It’s Hard to do
Wait a minute…in order to get out of debt, you have to get rid of your expensive cable television package, Cadillac smartphone data plan and daily trips to Starbucks or Tim Hortons? Yep.
The best way to achieve your objective of getting out of debt and remaining debt-free, you need to downsize your lifestyle. This means no more visits to restaurants three times a week, weekend trips to the shopping mall and ordering pizza on Tuesdays, Fridays and Saturdays.You don’t need to live like a monk or Gandhi, but you need to stop the excess.
Nobody ever wants to be in debt. It keeps us up at night, it stresses us out and it eats away at any disposable income we may have. Debt can lower our standard of living, hurt our retirement dreams and prevent us from maintaining a comfortable lifestyle.
You may have had a slow start to 2017, but now you can seriously rein in your debt. No one ever said it would be easy, but getting out of the debt is one of the biggest accomplishments in life.