Ahhh spring… the birds are chirping, the sun is shining, plants are beginning to sprout – it’s the time of year that can inspire many to seek a fresh start. If you, like many Canadians, currently carry quite a bit of household debt, it may be a good idea to focus this fresh start on your finances.
According to recent statistics, the average household debt in Canada now sits at $22, 837 per person, not including mortgages. Recent studies also show that many Canadians (roughly 37 percent) continue to add to the amount of debt they owe.
It’s not only a bit overwhelming, but also a bit tricky to know where to start when it comes to spring cleaning your finances and debt. Here are five tips that will give you a head start.
Know how much you owe
You can’t effectively tackle your debt if you don’t know how much you actually owe. Start by getting a solid grasp on it all. First, write down all the debts you currently owe, including your car loans, line of credit, credit card debt, mortgage and consumer debt. Next, calculate the total amount of all these debts combined. Finally, in addition to the total amount of debt you owe, you will want to determine how long these debts will take you to repay and how much interest you will pay in the process.
Know your options
Once you have a clear picture of exactly how much debt you have, it’s also a good idea to gain a better understanding of the best way to deal with it. Many people are not aware of all the options that are available to manage and reduce the debt they owe. You can start by doing some preliminary research online.
Mortgage refinancing and debt consolidation, for example, can be an effective way to deal with debt. If you have a number of outstanding debts, including credit card debt and personal loans, you can consolidate these into your mortgage and actually pay a smaller amount towards your debt repayment each month. Keep in mind however, that there may be some penalties involved, so it’s best to discuss this with an experienced and qualified mortgage broker to help you decide whether this option makes sense for you.
Make a plan
You know how much you owe. You know all the options. Now it’s time to make a plan and take action. When creating your plan, remember to keep it realistic and include a reasonable time frame. Write each milestone down on a calendar so you can see your progress. It’s also a good idea to seek support from a friend or family member who has also successfully dealt with their debt and to see whether you’re on the right track.
Sticking to your plan IS the plan, but this can also be a challenge. Staying motivated (and avoiding the temptation to veer off course) is essential in order to make positive change and get your finances and debt back on track. To stay motivated, write your goals and timeline down and cross each one off once it’s accomplished. This will allow you to see your progress, as well as help keep you on track. Rewarding yourself for diminishing your debt will also help when it comes to motivation. Your reward doesn’t have to be huge or extravagant – a nice dinner out or a pot-luck get together with friends to celebrate the steps you’ve taken towards your financial fresh start will do just fine.
If you’re looking for a fresh start when it comes to your household debt this spring and would like to know more about your options, let’s connect. As an experienced mortgage broker in Barrie, I can help you determine whether debt consolidation and mortgage refinancing makes sense for you. Call me today to set up an appointment at 705-230-1306.