Debt, the financial bane of everyone’s existence. Like a ball and chain that holds you down, it feels like it follows you to bed, and greets you when you wake up in the morning for work.
Like a disease, the symptoms of crushing debt are not easy to handle either. Do you find yourself frequently receiving calls from collection agencies, bouncing checks, or paying your bills after their due dates? These are small red flags that your debt is becoming unmanageable.
Many people let these situations cascade. They become worse and worse overtime, until finally, you’re forced to make a drastic decision.
Fortunately, this guide will help Winnipeg residents know the steps to get their finances back on track. This guide will give you the information needed to map out a plan for managing and taking control of your debt.
Create a Budget
First, you need to take the time to create a budget. A budget is a financial roadmap that tells you how much money you currently have and where it has to go. Making a budget is the most effective step in having control over your finances.
Identify how much money that’s coming into your account as well as things that you own’s total value (assets) and money that’s coming out of it (expenses). Make sure you track all of your debts, such as lines of credit, loans, credit cards, and daily expenses.
The expenses can include all of your living expenses such as utility bills, mortgages, insurance, and groceries. You need to be as detailed as possible.
Create a Plan
Not sure on how to pay off your debt, or even where to start first? There is a multitude of strategies and techniques needed to manage your debt and help pay it off.
One option is to pay off your debt with the largest interest rate. This means you’ll reduce the debt sooner and pay less interest overtime.
Alternatively, you can pay off the debt with the lowest balance. Removing multiple debt lines will keep you motivated to continue killing debt and build momentum by chopping at it from the ground up.
If you are unsure on where to start, you can schedule a consultation meeting with a Winnipeg credit or budget counselor. But, you need to ask the right questions before hand, for instance:
- Do you have any opportunities to consolidate your loans? (debt pooling)
- What approach will you take to pay off credit card debt?
- Can you negotiate your debt with creditors or lenders?
- Can you work with a mortgage lender to get the best solutions for your overall budget?
Remember, asking for help isn’t something you should be afraid or ashamed of. A counselor will assist you to help you sort out the harder points or find an alternative solution to your issues.
Place Your Plan Into Action
Once you’ve taken the time to draw out a plan, now it’s time to put it into action.
Whether you’ve decided to make your plan or accepted one from a credit counselor, Stick to your plan, and stay consistent. Try to make the minimum payments on all of your cards by their due dates. If you have any additional money in your budget, you can then place it towards paying off your debt.
But you need to be realistic. If you’re unable to meet the payments that are described in your plan, you’ll need to investigate alternatives like bankruptcy. If you haven’t done this already, then this is the time when you can hire a professional.
Remember, sticking to the plan might not always help based on your situation. The goal is to take care of your debt before it becomes too overwhelming.
Stretch Your Dollar
Following a strict debt plan lets you figure out how to stretch your funds farther. Take a look at your expenses to see where you can save money.
Start by looking at your budget. Are there some small things you can do to lower your expenses? Some solutions would be to create your food at home, to help save money on food. Or you can adjust the thermostat to help pay for your energy bill.
Next look at the fixed costs. Most Winnipeg Canadians are known to be house poor; they tend to pay too much for their living expenses such as their insurance, utilities, mortgages, and much more. Becoming house poor isn’t something you can fully control, but there are some ways to help you reduce some of your costs.
There are ways that Winnipeg residents can get debt help and make a difference overtime. By finding out your financial expenses and creating a plan, you can get rid of debt within a couple of months or years. When all else fails, you can seek professional help if you’re stuck, as they’ll have the plans needed to help keep your debt under control.
Sources:
- http://www.ic.gc.ca/eic/site/oca-bc.nsf/eng/h_ca02971.html
- https://www.debt.ca/debt-guide