Five Ways to Diminish Debt
Are you stressed out by the amount of consumer debt you carry and its effect on your ability to save for the future and feel financially secure? You’re not the only one. Statistics suggest that the average Canadian actually spends more money than they make!
While it certainly can be easy to fall into the debt trap, paying down debt can sometimes be a challenge. These five tips can give you a head start when it comes to dealing with debt and can help you get out of debt faster.
1. Create a Budget
One of the easiest ways to steer clear of debt is to use a personal budget in order to plan and track your spending. Being aware of how much money you have coming in and how much is going out not only helps to keep you financially organized, it also means that you can plan ahead for your financial goals and priorities and spend money more mindfully.
2. Focus on high-interest debts
Do you know how much debt you owe? If not, it’s a good idea to make a list. It’s also a good idea to rank your debt from highest interest rate to lowest interest. When paying off your debt, always pay the minimum amount and ensure you pay that amount by the due date. After that, put any additional money towards paying off the debt with the highest interest rate. By doing this, you’ll clear this debt faster and save money in interest payments.
3. Consider consolidation
If you find you have a lot of high-interest debts, consolidation may be a good option for you. When you consolidate your debt, you essentially combine multiple, high-interest debts into one debt with a lower interest rate. This means that you’ll save money in interest, money that can then be put towards paying off the principal of your debt loan.
4. Connect with creditors
If you find that you are really struggling to repay the loans you owe, it might be a good idea to connect with your creditors. You may find that your creditors are willing to provide you with more time to repay your loan or lower your interest rate.
5. Look for Extra Income Sources
If possible, it may also be a good idea to look for extra sources of income in order to help pay down the debts you owe. If your schedule permits, a ‘side hustle’ or extra part-time work could generate the money you need.
Healthy Finances, Healthy Life
Do you feel stressed about money and debt? You are definitely not the only one! Many people feel more than a little anxious when it comes to their personal finances. Despite the fact that this is common, it is a little concerning, particularly because of the negative effects that stress can have on your overall health and wellness.
Ensuring that you are financially prepared can help to reduce any stress you may feel related to your finances, which can, in turn, have a positive effect on our overall health and wellness. Here’s how to ensure that you are financially prepared:
1. Plan ahead
Creating a financial plan that clearly shows your financial goals and outlines the steps you will need to take to achieve them is an important way to ensure that you are financially prepared. A financial plan also removes the ‘unknown’ and can help you feel more confident in your ability to effectively manage your finances.
2. Deal with debt
If debt is a concern, it’s also important to make sure that you have included dealing with debt in your financial. Dealing with debt will also help to significantly reduce your finance-related stress. Keep in mind that there are many ways to deal with debt. It may be a good idea to talk to your financial advisor in order to determine the best debt strategy for you.
3. Focus on saving for the future
Although debt may take priority, it’s important to not neglect your other financial priorities, such as saving for the future. Saving for retirement, for example, is an important way to ensure you will be financially healthy and supported in your golden years. Knowing you have enough saved will also provide you with peace of mind now and help to reduce financial stress and anxiety.
Prepare Financially on a Tight Budget
When money is tight and you are living paycheque to paycheque, it’s natural to worry about the ‘what ifs’. What if you become ill or injured and are not able to work? What will happen to you and your family if you have nothing to financially fall-back on?
The right insurance policy can go a long way in ensuring that you are protected and supported until you get back on your feet. In some cases, you might be able to find a policy that bundles disability, critical illness and life insurance policies in one.
It’s important to keep in mind, however, that every situation is unique. As such, it may be a good idea to speak to an advisor who can help you make the right decision and choose the right investment and insurance solutions.
How to Get Organized and Prepare for Your Financial Future
Feeling a little financially lost? Wondering if you are really adequately prepared financially for the future? Financial disorganization can leave many Canadians feeling this way. Getting organized will not only help to diminish these feelings, but it will also help you stay on track to meet your financial goals.
Here are four easy ways to get organized:
Create a budget
A budget is one of the easiest ways to stay organized and on-track when it comes to your spending and saving. It also means that you will be less likely to overspend and to your consumer debt.
Creating a budget is fairly easy. All that is required is a pencil, paper, calculator and a budget worksheet (you can likely find a great one online).
…Stick to it!
While a budget may be easy to create, sticking to it can be a little trickier. Despite the difficulty, sticking to your budget is essential when it comes to avoiding financial disorganization. If you find yourself tempted to overspend, always keep that budget and your financial goals in mind. You may also want to investigate whether a smartphone budgeting app could help you stay true to the budget you created.
Deal with debt
When it comes to staying organized with your finances, your debt is another important factor that shouldn’t be overlooked. Although thinking about your debt may make you feel a little overwhelmed, creating a plan to deal with your debt will help to diminish this stress. When creating your plan, it’s important to do your research and see whether there are opportunities to repay your debt more quickly and more efficiently.
Anxiety about your financial future will also be lessened when you plan ahead for your retirement. Understanding how much you’ll need to maintain your lifestyle, where you may find potential sources of income and any other challenges you may encounter during your Golden Years will help you to feel more in control and ready.
Planning your estate is also a good idea in order to diminish financial clutter. Regardless of your age, creating your will should be the first step. With the help of a legal professional, a will is generally easy and quick to create and one of the best ways to protect your family and organized your finances and affairs.