YOU ARE NOT ALONE IN FACING DEBT CHALLENGES
A Closer Look at Canadian Consumer Debt
Recent statistics from the credit bureau TransUnion show that the average Canadian’s consumer debt number is now $21,028. This is $148 higher than the same period in 2014. This excludes mortgage debt. The largest type of non-mortgage debt is a line of credit, which makes up 35 percent of the average debt for each Canadian. Another study from the Fraser Institute showed that Canadians spend 42.1 percent of their income on taxes, 21 percent on shelter, 11 percent on food and five percent on clothing. What these statistics show us is that average Canadians spend a large percentage of their income each month and borrow additional money. This pattern can leave people searching for debt relief tips.
When you spend the majority of your income, you don’t have room for savings. You also don’t have room for any unexpected expenses that may come up. If you’re spending nearly all of your money on living expenses, taxes and debt repayment, what happens if your basement floods and you need to make repairs? Or your car requires unexpected maintenance? Or you or your spouse lose your job? These are all costly expenses that you may not be able to afford. This means that you will need to take on more debt in order to pay these bills. Which means you’ll have to spend more each month on debt repayment and therefore, you’ll have even less money available for emergencies. As you can see, this can be a tough cycle to get out of.
If you are in this situation, you are likely looking for debt relief tips. Here are some ways that can you reduce the amount of debt that you have.
Four Debt Relief Tips to Help Canadian Families
Debt is stressful. Calls from creditors and collection agencies can be annoying and even harassing. Bills and debts can cause you to lose sleep and even lead to depression and other medical conditions. It makes sense that many Canadians want to get out of debt. Here are four debt relief tips that can help improve your financial situation and put you on a stronger financial path.
Evaluate your Debt
Many people do not know exactly how much they owe. Even more people are unaware of the interest rates on their debts, how long it will take them to pay off their debts and when they need to make payments. The first step in paying down debt is understanding your debt. Write down every debt you have, how much you owe, what interest rate you are paying and when you have to make payments. Include everything from automobile loans to credit card debt to lines of credit. Don’t forget monthly bills like utility bills, cell phone bills, property taxes, etc. Once you understand your debt, you can come up with a plan to pay it.
Create a Budget
Do you have a monthly budget? If not, create one. Include all of your monthly expenses (groceries, transportation, clothing, etc.) as well as your monthly debt payment. Add this amount up. Then compare it to how much you make each month. Can you afford to make all of these payments with the money you have? If not, you’ll need to make some cuts. Look for places in your budget where you can reduce your expenses.
Avoid Adding on More Debt
While you’re trying to pay down your debt, do everything you can to avoid adding on more. Don’t use credit cards if possible. Try to pay for all of your expenses in cash. Don’t take out any new loans either, as these costs will add to your monthly expenses.
Know when to Get Help
You may not be able to make your budget balance. If you have more debts than you can afford to pay each month, you might need to look for help. Following debt relief tips is the first place to start, but this isn’t the only option.
Another option is to speak with a licensed trustee in bankruptcy. Don’t worry, speaking to a trustee doesn’t mean that you will end up filing for bankruptcy. Instead, a trustee can look at your current financial situation and provide you with details on the options available to you. Bankruptcy may be an option but, for many people, it is not the only debt relief option available. The decision for how you wish to proceed is always yours to make.
When it comes to handling debt, by following debt relief tips and knowing when to get help, you can improve your financial situation and begin to rebuild your financial life.