Once you end up in a situation where you have a large amount of debt, you may find it difficult to get out of it. Many Canadians deal with high amounts of debt and paying down these debts can be tough. Household debt in this country hits a new record high nearly every time it is measured. Having a lot of debt can limit your options during your lifetime. You won’t be able to save money for emergencies or retirement, since a large portion of your income will be going towards debt repayment. Therefore, if there is an emergency situation such as a job loss or an expensive repair bill, you will need to borrow more money in order to deal with it. This means putting yourself even deeper in debt. As you can see, once you’re in a large amount of debt, it’s very easy to get into even more. But it’s not quite as easy to get out. If you’re struggling with debt, debt management strategies are needed. You will need to put together a plan and a budget in order to improve your financial situation. This sounds complicated, but that isn’t always the case. Here are some tips for putting together a debt management plan.
Paying Down Debt with a Debt Management Plan
One of the first things you will need to do is create a list of all of your debts. Many people aren’t even aware of how much they owe. Write down your debts, how often you make payments and the interest rates on these debts. This will help you understand your situation more accurately which will make it easier for you to come up with a plan. If you have credit card debt, one of the first steps that you should try to take is to see if you can increase your payments so that you are paying more than the minimum. If you only make the minimum payment, you end up paying down only a very small portion of the debt that you owe. This is better than missing a payment of course, but using this method will see you spend years and years paying down debt. You’ll also end up paying large amounts of interest this way. As a part of your debt management plan, see if there’s any way that you can pay more than the minimum. It will help you. In order to find money to pay down debts, you’ll likely need to reduce the amount that you spend on other expenses. This process can be difficult and it is certainly not enjoyable, but it’s often necessary to get your debt under control. Take a look at everything that you spend money on and see if there is a way to reduce these expenses. Maybe you can start bringing your lunch from home and cutting out restaurants and fast food. Maybe you can give up smoking or drinking alcohol. Maybe you can reduce your cell phone bill or your cable bill. Any money that you are able to save by cutting your expenses is money that you can spend to pay down your debt more quickly. This will help you reduce the amount that you spend in interest and give you more money in the long run.
Help with Debt Management
Some people create a budget that balances and a plan that makes it possible to pay off their debt. However, some people are in a financial situation where this isn’t possible. If you are struggling with debt and aren’t able to come up with a plan to pay it down, you may want to speak with a financial professional for help. One person who can help with debt management is a Licensed Insolvency Trustee. This is a person who is trained, licensed and regulated by the federal government and is able to review your financial situation and provide you with information on the debt relief options available to you. Most licensed insolvency trustees offer a free consultation. A trustee can help you understand the debt management options that are available to you. In some cases, a consumer proposal or bankruptcy may be options that you might consider. When you speak with your trustee, you will be given detailed information on these options, what they mean and how they can help you eliminate your debt.