Ask the Experts: September 2018
A lot of people are hesitant to talk about money. They might feel like it’s impolite, they could believe that money is a personal matter, or they may feel embarrassed or too nervous to discuss finances since they don’t have all the answers. The reality is that talking about money is important.
When you discuss money, finances, and budgets, you learn more than you already know, and this helps you make better financial decisions. When you talk about money, and ask questions and share information, you get a better understanding of financial matters, which can help you build a stronger financial future.
That’s why we encourage people to discuss finances and budgets and why, each month, our team answers questions on money, finances. and budgets. Have a question for our team? Don’t hesitate to ask us by reaching out online on Facebook, Twitter or through our website.
Please note that the questions here have been condensed or rewritten for clarity and simplicity.
I have quite a lot of debt from various sources (mostly credit cards and a line of credit) plus my mortgage. Should I consolidate my debt?
It’s tough to give someone specific financial advice without seeing the exact numbers, but it is possible to discuss the situation in broad terms.
If you consolidate your debt, you’ll likely save some money in interest charges. This can be a big help if you’re currently spending a lot on interest each month. If you can consolidate your debt into a loan with a significantly lower interest rate than the overall interest rate you’re currently paying on your individual debts, you could save yourself a lot of money. However, you may find it tough to get a favourable interest rate, especially if you have a poor credit history.
It’s also important to note that consolidating your debts may save you money in interest, but it doesn’t actually reduce the amount you have to pay to your creditors. If you have a lot of debt now, you’ll still have a lot of debt after you’ve consolidated it. In general, it’s best to investigate all of your options before you commit to debt consolidation. Our Licensed Insolvency Trustees can help you understand all of the options that are available to you.
I have a budget, but I have trouble sticking to it each month. What can I do to make it easier?
First of all, good job creating a budget in the first place. A lot of people who end up in money trouble find themselves in that situation because they don’t have a budget at all. It’s also good that you recognized that there was an issue and you want to make changes.
If you’re having difficulty sticking to your budget each month, there could be a few of reasons why. The first thing you’ll want to look at is if you set yourself up to fail. Did you give yourself too little to spend in certain categories? Or have you allocated too much money in some areas, leaving you without enough in others? Even if your budget initially worked out and made sense when you created it, things could have changed and the reality of your current situation might be different than it was when you sat down to plan things out. Go back and review your budget and see if there are some areas where you could make changes. If necessary, make cuts where you can.
Another thing you’ll need to double check is that you’re tracking all of your spending accurately. Make sure that you write down what you’re spending shortly after you spend the money, so you don’t forget anything. Also, track every purchase. You might not think it matters if you spend $5 at a coffee shop and another $3 at a convenience store on the way home from work, but these small purchases add up.
If you find it tough to stick to your budget, it might be because you’re spending too much money on debt repayment. If a large portion of your monthly income goes towards paying off your debt, you won’t have much left over for anything else. If you’re struggling with debt, talk to a licensed expert to see what options are available to you.
Finally, if you aren’t able to stick to your budget, it could be that you don’t make enough money, that you need to make some big cuts, or both. Review your budget, cut where possible, and then think of any ways that you can increase your income, even temporarily. This will help you make ends meet.