The only consolation you have if you’re in debt is that you’re not alone in this. Consumer debt in the Canada, in fact all over the world, is extraordinarily high. It can be hard to admit or judge that you have a debt problem as it can be overwhelming to realize that you are in over your head and to worry that you’ll not be able to pay back your debt.
The first step to getting out of such a situation is to act now and stop procrastinating. Taking charge and formulating a plan for your finances will reduce your anxiety and get you on a path towards a better and safer financial future.
But first you have to find out whether debt has become a problem for you and here are some of the circumstances that will clearly indicate that it has indeed become a problem:
Monthly bills of the next month arrive before you have paid last month’s.
Your bills are carrying late fees or you avoid opening them when they arrive.
You bounce checks or you procrastinate balancing your checkbooks.
Write It All Out
Are you aware of the amount of debt you are in? Most people are not and if you’re not an exception, that’s okay because you have to start somewhere. Make a list of everything that you owe. Include mortgage, credit card balance, student loans, and even the small sums you have borrowed from your friends and family. Write it all down and total them up. The number you’re looking at now could be troublesome, but that’s okay because you have just completed the first step to paying off your debt.
The Power of 50
If you’re paying the minimum due amount on your credit card bills, you’ll never be able to get out of debt. If you pay $50 above your minimum due amount every month, you’ll be making an incredible difference in how quickly you can pay off your debts. You can save at least half of the interest and pay off your debts in a lot less time if you pay just $50 over the minimum amount. Just imagine how much better you can do with $100.
Set Realistic Goals
After you have become familiar with your debt situation, it’s time to set up a monthly budget and set up realistic goals. You may have to put your summer trip or the new car you were planning to buy on hold before you can pay off your debt. You’ll have to make sacrifices, but if you make budget cuts smartly, chances are that you’ll be able to save on expenses that you didn’t need to make in the first place.
Don’t Feel Discouraged
A debt consolidation expert very aptly puts it that reducing debt can be a lot like losing weight. You’ll not be able to lose 50 pounds in four weeks and you can’t lose weight without cutting back on your diet. Similarly, you can’t pay off your debt if you’re not patient.