The world of investing is a complex one – for those with higher balances on credit cards another high-interest vehicles, paying down debt and foregoing investment for a period of time may make sense.
In a recent survey of the financial situation of Canadians, 44% of respondents claimed they were $200 per month or less away from financial insolvency, with a significant percentage of people highlighting credit card debt as one of the main drivers behind this trend.
To get started on a journey to getting that consumer debt balance down to zero, try these three strategies:
Create a Budget
Cutting costs starts with creating a budget for how much one expects to spend in a given period of time. Get to know which expenses are necessary and which are discretionary, cutting out the ones which may coincide with another life goal (getting rid of that latte is good for both the pocketbook, and the waistline).
Find Extra Income
It is only possible to cut costs to a point – things like rent/mortgage, food, utilities, etc. cannot be taken out of the budget. Finding an extra shift per week or a side gig is an excellent way to improve the revenue side of the cost-revenue equation.
Make Long-Term Investments
Sometimes spending money strategically is the best way to meet long-term financial goals. Replacing that water heater that may cost $10,000 today to fix, but will save more than $1,000 per year in heating costs, is a prudent move if one has the ability to finance such an endeavour.
Reducing high-interest debt may also require taking out a consolidation loan at lower interest rates – all debt is not equal, and taking out debt to re-position can sometimes be a good thing, long-term.
Invest wisely, my friends.
