Debt is something we all have experience with, and while some of it — your mortgage or student loan, for example — may be essential for helping you build the life you want, other forms of debt can have a toxic effect on your finances.
It’s no secret that North Americans tend to spend more than they have to finance their lifestyles. It’s also no secret that this kind of debt can quickly snowball out of control. Knowing how to deal with debt is essential to smart money management, and if this is an area where you are struggling, these four tips can help you chart a course toward a healthier financial situation.
1. Track Expenses
The absolute first thing anyone who wants to take charge of their spending needs to do is figure out where their money is going in the first place.
We live in a society that makes it incredibly easy to spend money without thinking about it. Between subscription entertainment and grocery services, debit cards, and online shopping accounts, it’s very easy to get to the end of the month with only the foggiest idea of what your main expenses were.
Tracking where you spend money will help you identify areas where you can economize, which in turn will help you avoid unnecessary or extravagant expenses.
2. See a Certified Credit Counsellor
One of the worst things about getting into debt is the sense of shame that comes with it. If you’re in a downward spiral financially, the anxiety can be overwhelming, and it can feel easier to just ignore it. In the long run, of course, this simply exacerbates the problem.
The good news is you don’t have to go it alone. Getting free help from a certified Credit Counsellor from a non-profit credit counselling agency like Credit Canada can play a huge role in getting you back on your feet financially.
Certified Credit Counsellors provide non-judgmental support and advice, and can use their expertise in debt management to help you explore your options for reducing your expenses and coming up with a sustainable financial plan.
3. Create a Budget — and Stick to It
This is probably the most common piece of advice a financial adviser will give their clients, but this is because a budget really is one of the most important tools for taking charge of your spending.
If you’ve tried to make a budget before and struggled to record expenses or stay within the parameters you set yourself, consider downloading a budgeting app or exploring other budgeting and saving software that can make it easier to incorporate your budget into your daily routine.
4. Consolidate Your Debt
If your level of debt has become unsustainable, you may need to take measures to streamline your payments and carve out space to start planning for a more long-term solution.
Consolidating your debt is one of the best ways to ensure you aren’t spending your entire paycheque just keeping your head above water, so ask your certified Credit Counsellor about the consolidation options that exist in your area.
For most of us, our financial situation is something we feel deeply private about. Talking about it with other people is one of the scariest things we can imagine.
But the truth is that avoiding thinking about money is one of the most reliable ways to ensure it will remain an ongoing source of anxiety. Instead, track your expenses, create a budget, and get expert financial advice from a certified Credit Counsellor who can help you get your financial life back on track.
