Your Debt Solutions Experts
BDO Timmins

7-85 Pine Street S
Timmins, Ontario
P4N 2K1
(705) 268-3333

What Do You Need to Know to Get Out of Debt?

Get out of debt: it’s once again the number one financial goal for Canadians in 2017. Paying down debt is a worthwhile goal. But for Northern Ontario families who are already facing high electricity rates, rising cost of living and higher unemployment, the stress of trying to deal with debt may seem beyond the realm of possibility. The key to decreasing your debt might be to learn something new.

Not all Canadians are as knowledgeable about finances as they’d like to be. According to a recent report, only half of Canadians consider themselves to be financially knowledgeable. It can be difficult to fast track debt repayment if you’re unaware of the resources, tools and strategies that can help you do so. So if your priority is to reduce your debt or to get out of debt this year, here are a few things you need to know that will help you reach your goal.

It all starts with a budget. You’ve probably heard it time and time again — one of the best money management tools to help you deal with debt is a budget. If you’ve never had a formal budget, don’t be intimidated. The biggest time investment will be the initial set-up. Take a month or two to track your income and expenses — write everything down. Then plug your numbers into a budget worksheet like this or a budget calculator like this. Once you have a budget in place that’s realistic for your situation (and includes a debt repayment plan and savings goals), be diligent about sticking to it each month. And remember to update your budget when or if your financial circumstances change. There are many articles online with advice about how much of your income to allocate to spending, expenses, debt repayment, savings and the like. Mint.com details the 50/20/30 rule. Financial writer Gail Vaz Oxlade writes about The Life Pie as a guide to creating a budget.

The internet is an excellent resource. While it may seem obvious that you’ll find useful information online, it helps to know where to look. Start with financial literacy-based websites — they not only offer good info about money and debt management, but also present that information in a straightforward, easy-to-navigate manner. For example, the Financial Consumer Agency of Canada (FCAC) has resources, tools and tips that help you manage your money during different life events like budgeting for university and living in retirement. Other websites that are worth visiting include Practical Money Skills Canada and Get Smarter About Money.

If your goal is to reduce your debt to a manageable level, it helps to keep up on personal finance news. Think about spending some time on the personal finance pages of Huffington Post Canada, Yahoo Canada Finance, Globe and Mail or Financial Post to read the latest news about interest rates, the housing market and more. If you want to know more about how others are coping with money worries similar to yours, you can find a personal finance blog for just about any age group. Here’s a list of Canadian personal finance bloggers to get you started.

A debt relief professional can help you. If you have debt that you cannot repay, if you’re living paycheque to paycheque, or if you’re relying on credit cards or loans to get by, paying down your debt may seem impossible to you. However, there are debt relief plans for all financial circumstances. Review your situation with a credit counsellor or Licensed Insolvency Trustee. An initial meeting with one of these debt relief professionals is an opportunity to get answers to any questions you have. Is there a downside to consolidating your debt onto one credit card? What’s the difference between a debt management plan and debt consolidation? What are the advantages of a consumer proposal vs. filing for bankruptcy?

You can learn a lot by being a Follower. Twitter is a great resource when you’re trying to overcome financial challenges. Start by following financial accounts like @FCACan@MoneySkillsCA, and @BDOdebtHelp for tools and tips to help you get out of debt, save for university, avoid payday loans and more. You’ll also find info on topics like how to deal with after-holiday debt and how to avoid credit card fraud.

What would you like to learn this year about paying down your debt? Talk about it on Twitter. #BDOdebtrelief

 



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