Debt is an issue that affects many of us. It has almost become a way of life for Canadians to have debt. In fact, according to the Fraser Institute, research shows that since 2007/08, combined federal and provincial net debt has doubled from $1.0 trillion to a projected $2.0 trillion in 2020/21. According to the same report, out of all of Canada, Ontario has the second-highest combined debt-per-person at an average of $58,559. Now that’s a lot of debt. For many people, it may feel impossible to pay off their debts. It may feel even more impossible not to let your debt overwhelm you. Well, we’re here to tell you that there is a way to take control of your debt and pay it off. A debt-free life IS possible, no matter how far away it may seem.
These are a few tried and true ways you can stop feeling overwhelmed by debt and start taking control of your finances.
Evaluate how much debt you have.
The biggest mistake Canadians make with debt is waiting until it becomes too overwhelming before taking action. Instead of taking control of debt early on, some of us try to sweep the problem under the rug until the pile builds up so much it becomes too big to ignore. DO NOT wait until your debt is out of control before you take action. It is time for you to finally face your debt head-on. Facing the problem is the hardest step for many people living with debt, but it’s the first step towards taking action for a better financial future. If you want to stop feeling overwhelmed by debt, you have to stop avoiding the issue.
While taking a good long look at your debt, for this step you’ll want to compile and evaluate all the debts you owe. Everything from loans to mortgage payments to credit card debts. Compile it all together and get a clearer picture of how much debt you have. Once you’ve organized your debt into one place, it becomes a little less overwhelming.
Change your perspective.
When looking at your debt, it’s important to consider how you got into debt in the first place. Everyone’s financial journey is different. Whether it’s because you invested in a house or an education, or because of an unexpected financial emergency, it really shouldn’t matter. What does matter is that you understand how you got to where you are, you’ve learned from it, and you’re working towards a plan to fix it. Don’t fixate on how much debt you have and how impossible it feels to pay it off, think about how you’re going to get out of debt. Once you’ve started on the path to debt recovery, the overwhelming feeling of debt will begin to disappear. Just remember, debt is an issue many of us face and you are not alone.
Track your spending.
When starting a plan towards debt recovery, it’s ideal to track how much you are spending on a monthly basis. Just as you would you compiled your debts, this is a good time to compile how much you spend monthly. Everything from grocery bills, morning coffees to subscriptions, phone payments, and so on. What may seem like a small monthly bill can quickly add up when you combine everything together. Think about what is necessary for you to live with versus what you don’t really use or need to pay for.
As an example, maybe you have a monthly subscription for a magazine you don’t read anymore. Maybe you have a Netflix account that you don’t watch anything on anymore but you’re still paying for it. If you don’t need it or don’t use it, it is time to cancel it (at least until you get your debt under control).
Also, consider your regular recreational spending habits. For example, let’s say you stop by your favourite coffee shop every morning before work and you pay roughly $10 for breakfast. If you work 5 days a week, that’s $50 a week, or $200 a month, or $2,400 a year that you’re spending on breakfast. When you start looking at the bigger picture, those small purchases start having a big impact.
Start budgeting and find new sources of income.
Once you’ve taken a closer look at your finances and your spending habits, it’s time to start budgeting. Evaluate how much of an income you make each month versus how much of that income you need to spend on essentials. Then with whatever is leftover from that, think about how much you need to spend paying off your debts. If your income is lower than what you’re spending, it may be a good idea to find another source of income. Whether you get a part-time job, babysit your neighbour’s kids, or even start a small business, there are many ways you can find another source of income. Don’t be afraid to get creative and think outside the box.
Even if you don’t have the time to pick up another job, sell items from around your house that you no longer use like old clothes or electronics. You’d be surprised by how much income you could have stored up in the attic, hidden in the garage, or tucked away in your closet.
Work with us at 4 Pillars and start consolidating your debt!
Debt can be overwhelming, and at 4 Pillars, we understand where you’re coming from. But, before you hit the panic button and file for bankruptcy or opt for a payment deferral program, reach out to us first. We can show you how to consolidate your debt without long-term repercussions. Debt is not a battle you have to face on your own. We are on YOUR side and we work for you and ONLY you at 4 Pillars. Talk with one of our debt relief specialists today at one of our 3 locations in Northern Ontario. You can reach our Muskoka & Parry Sound office at 705-640-0187, our North Bay office at 705-980-0158, or our Sudbury office at 705-806-1252. Stop letting debt control your life — take the first step today!