According to a 2013 report, over one-third of Canadians are spending more money than they make each month. As a result, consumer debt levels in Canada were recorded at an all-time high of about $1.4 trillion in February 2014. These financial trends emphasize the important of understanding your current financial position and prioritizing the implementation of a plan that will address your financial situations head-on.
Achieving financial stability requires self-discipline, support and reliable tools. The credit-counselling experts at Alberta-based Money Mentor offer the following suggestions for those individuals ready to tackle their debt:
• Get Organized – Have a clear picture of your current finances. Record how much income, investments and assets you have, as well as any debt.
• Set financial goals – It is important to set and prioritize goals. Some examples may include paying down debts, creating an emergency fund or starting to save.
• Develop a budget and track your spending – Start by keeping track of all your incoming and outgoing funds. Create spending categories such as food, entertainment, credit card payments and rent. Once you have an idea of how much you spend you will be able to create a budget and find areas where you can cut back.
• Start saving – Start saving for irregular expenses, an emergency fund or towards retirement. When you receive an increase at work or a tax refund save that money. Also save the money on expenses you cut back on, like eating out.
• Pay down your debt – Develop a plan that helps you pay down debt. Stop using your credit card unless you know you can pay for those purchases before the end of your billing cycle. Talk to your bank about reducing interest rates on your credit card so more of your payments go towards your debt.
