How to Get your Debt Under Control
Debt is an issue for many people. One reason for this is that it is quite easy for a manageable amount of debt to become difficult to handle very quickly. For example, you may be able to currently pay all of your bills and debts, but would that still be true if you were hit with a sudden repair bill for your car or your home? What if you got sick or were injured and couldn’t work for a while? What if you lost your job? These situations are all examples of ways that debt can turn from reasonable and manageable into a problem.
If debt has become a problem for you, what can you do to resolve this issue? Here are a few tips for getting debt under control.
Add it Up
Many people are unsure of exactly how much debt they have or they don’t know many of the details surrounding their debt. This can be a mistake. If you are having trouble paying your debts, the first step that you should take is to fully understand your debt. Write down everything you owe, how much interest you are expected to pay, when you need to make payments and every other relevant detail.
Create a Budget
You simply cannot get control of your debt without a budget. In order to create a budget, you’ll have to write down every single one of your expenses. This includes everything from your mortgage or rent to your credit card bill to the amount you spend on food and entertainment.
You’ll then need to compare your expenses to your income. When you’re doing this, only take into account income that you are guaranteed to receive regularly (such as your salary). Don’t count on tips or bonuses, since these likely won’t be the same every month. And be sure to calculate your income after taxes and deductions like CPP
When you’re budgeting, the goal is to make sure that you have enough income to pay all of your expenses, including debt repayment. If you aren’t able to do this, you’ll need to make some cuts.
You’ll likely need to cut your expenses in order to manage your debt. Take a look at everything you’ve written in your budget and see what you can eliminate or reduce. For example, you can likely save some money by making coffee at home every day instead of buying it out. The same is true for lunches. You can probably also cut the amount you spend on clothing, entertainment and other unnecessary expenses. The more you can cut, the more you can have for debt repayment, making it possible for you to get out of debt more quickly. Can you reduce your monthly cable package or phone bill? Are you able to save some money by taking transit instead of a taxi? These cuts may seem small, but they certainly add up.
Help with Debt
If you’re not able to make your budget balance and you can’t find a way to repay all of your debts, it may be time to speak with a financial professional for assistance. One professional who can help you is a licensed trustee in bankruptcy.
The name may sound like this person can only assist you in filing for bankruptcy, but this isn’t true. While a bankruptcy trustee is licensed and registered to administer bankruptcy and proposal processes, that isn’t all that he or she can do. A trustee can also review your financial situation and provide you with the information you need on the various options that are available to you. Since trustees are bound by a strict code of ethics, they are required to inform you of the details on all options, not just the ones that they can help you with.
Each financial situation is different and, therefore, the options available to each person will be different. By sitting down with a trustee, you can find out more information on the debt relief options that are available to you. This will help you make a decision that will allow you to get control of your debt and start you on the path to a brighter financial future.