Regardless of how large your debt is, there is a way out. With debt restructuring, you could eliminate your debt and keep it paid off. As long as you are dedicated and willing to put in the work, you can kiss your financial woes goodbye with a sold debt restructuring strategy. 

What is debt restructuring? 

Simply put, debt restructuring can be considered a proposal you create and made out to your creditors. You offer to repay your debt by renegotiating the terms of your contract that you originally agreed to. When you do this, you’re often paying back a reduced amount on terms that work better for you. 

When you’re overwhelmed with debt, you may need to start picking and choosing which bills to pay. If you have gotten to this point with your finances or you’re struggling to make all your payments, now is the time to consider debt restructuring. Missing payments can lead to additional fees or, in more extreme cases, legal action was taken against you. 

However, if you reach out to your lenders and creditors early on, they may be able to provide you with debt relief options. Many people see their creditors as the enemy. But they will only become the enemy if you stop fulfilling your financial obligations and don’t ask for help.

Regardless of what type of debt you have, you can use a debt restructuring plan to help pay off and eventually eliminate that debt. 

What is the difference between debt restructuring and debt refinancing?

It’s important to note that debt restructuring is not the same as debt refinancing. The big difference between the two is that debt restructuring is renegotiating the terms of an existing contract. Debt refinancing is when you create an entirely new contract with different terms. Debt refinancing is when you pay off or replace your old debt with new debt.  Moving it from basket “A” to basket “B.”

An example of debt refinancing would be using a home equity loan to pay off a credit card. A person may choose to do this because interest rates on a home equity loan are typically much lower than on a credit card. Therefore by debt refinancing, they are able to roll multiple debt payments into one monthly payment to help increase cash flow. However, when you refinance your debt, you often extend the period of time that it will take you to pay off your debts overall which will cost you more interest in the long run. Furthermore, you are taking highly negotiable unsecured debt and securing it against your home while giving up equity. Something to think about.

How does debt restructuring work?

Debt restructuring works by renegotiating the terms of your existing contract with your lender. You do this so you can make it easier for yourself to pay off your debts. 

In fact, it is as easy as this 5 step process: 

1. You reach out to your lender

The first step is usually the hardest. Once you realize that you are unable to meet your financial obligations, you’ll need to start the debt restructuring process. You’ll need to begin by contacting your creditor or lender to explain to them your current financial situation. Your lender may give you options, and usually, debt restructuring is one of them. It’s best to reach out to your lender first before they reach out to you. This shows that you are aware of the issue and are willing to put in the work to fix the problem. 

2. You wait for a response.

A lender is not obligated to give you any help and may not change the terms of your contract. If this is the case and you miss a couple of payments, your account could be sent to collections, or you could be sued for your debt. However, usually, a good first step is to ask for help. It may take some time for your lender to come up with a response, so don’t panic. In the meantime, think of ways to budget your finances more effectively. 

3. You weigh your options. 

If your lender offers you help, you’ll need to weigh out your options. Your lender may offer you temporary hardship assistance or a refinancing plan. You’ll need to review the contracts and consider the pros and cons of each to ensure you’re picking the best option. 

4. You negotiate.

Before you accept an offer, you may be able to negotiate some of the new terms. As an example, you can attempt to get a lower payment amount, have the fees waived, or have the term of your contract increased. 

5. You accept the offer.

Once you and your lender have come to a compromise, you can agree to the new terms of your loan. You’ll do this by formally accepting the terms and signing the agreement. You will then be obligated to comply with the new terms and continue paying off your debt. 

What types of debt restructuring options are there? 

While the process is the same, there are a few different types of debt restructuring strategies you can use to help you pay off your debt. 

These are three main types of debt restructuring: 

Consumer proposal: A consumer proposal is when you follow the formal procedure under the Insolvency Act. An offer is made to pay off the debt interest-free over a period of up to 5 years, and in most cases, the principal amount owing is also reduced. The term tends to be open, meaning if you are able to make additional payments at any time, then your proposal will simply be paid off faster. With a consumer proposal, your assets are fully protected, and no legal action can be taken by your creditors who are included in your proposal.

Informal Proposal: An informal proposal is when your debts are reduced by negotiating directly with your creditors outside of the Bankruptcy and Insolvency Act. Rather than making monthly payments, the agreed-upon payment is made as a lump sum. 

Bankruptcy: This is when your consumer debts are extinguished through filing bankruptcy. Bankruptcy should only ever recommend bankruptcy as a last resort. To learn more about reasons to avoid bankruptcy, click here.

How effective is debt restructuring? 

Throughout the years, we have seen thousands of people create a plan to pay off and eliminate their debt using the power of debt restructuring. Everyone’s battle with debt is different, and not all debt-help companies are cut from the same cloth. How are we qualified to determine this?  If the company does not pass our gold standard test, then we will not recommend their services.

If you are looking for the best advice on how to consolidate your debt, fill out our contact form, and we will be sure to refer you to a company that we approve of. Let it be clear, we do not mine your data nor sell your information to all kinds of companies. We are simply looking to connect people who are serious about dealing with their debt to a professional who is best suited to help make that happen. You have nothing to lose and a lot to gain, so fill out a contact form and take that first step to a debt-free future.

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We all may have experienced the past year differently, but in one way or another, we have all felt the impact of shutdowns and or illness. Although we are not fully out of the water yet, this past year has taught us all a valuable lesson about being prepared for anything, especially financially. Some of us may not have been impacted at all, while others are still struggling to find work. Some may have debts under control, while others might feel their loan deferrals creeping back to them now. But 2021 is a new year to start fresh and leave your financial woes in the past.

Peace of finances can certainly help with Peace of mind.

More than you may realize, your mental health and your finances may go hand in hand. According to a report by Morneau Shepell, the greatest concern Canadians have related to this past year is the financial impact it has had. Canadians fear this even more than losing a loved one to an illness or even becoming ill themselves. This doesn’t go without reason. The past year has brought uncertainty for many, so of course, there will be fear about our finances, but remember – you are not alone. Many of us are in the same waters but not the same boat, and the first step to relieving your financial stress is taking action.

Start zeroing in on your finances.

This is the time to sit down with your finances and start coming up with a plan or a solution to your debt issues. Evaluate where you currently stand and where you want to see yourself a month, 6 months, or even years from now. Think about your spending habits and where you can cut down to decrease your debts. Think of alternative income opportunities or ways to increase your current income. It’s time to stop worrying about how you will pay off your debts and loans and start thinking about your long-term financial goals. The earlier you get help, the better!

Overloaded with debt? Maybe we can help.

If you’re ready to take back control of your financial well-being and make your debts a thing of the past, there’s no better time than the present! At GetMeDebtFree, we have searched out who we believe to be the best companies to help people deal with their debt. If the company does not pass our Gold Standard Test, then we will not recommend their services. If you are looking for the best advice on how to consolidate your debt, fill out our contact form, and we will be sure to refer you to a company that we approve of. Let it be clear, we do not mine your data nor sell your information; we are simply looking to connect people who are serious about dealing with their debt to a professional who is best suited to help make that happen. You have nothing to lose and much to gain, so fill out a contact form and take that first step to a debt-free future.

The post Why Now Is the Time to Care About Your Financial Wellbeing appeared first on Get Me Debt Free.

If you’re ready to become debt-free, these are the 5 steps you need to take to get started.

Before you read the brief summary of the steps below, it is important to note; you may not like the idea of taking some of them, but it is not really about what you like and don’t like here. It is about getting free of the debt which shackles you down.

1. Your current debt

Sit down and compile all your current debts. Everything from credit cards, vehicle financing, mortgage, and even student loans if they are still lingering. Make a list of everything you owe money on and how much you owe on each of those debts and loans, and how much interest you’re paying for each one. Thinking about the money you owe can be overwhelming, but if you have a proper system to organize your outstanding debt, it can make it a little less stressful to look at and review.

2. Prioritize your debt

Now that you’ve compiled all your debts into a list, it’s time to start prioritizing them from most important to least important to pay off (not to say that some types of debt are not important, just that certain debts are better to pay off right away). To decide which debts are more important to start working on, first, look at the interest rates. In most cases, you want the debt with the highest interest rates closer to the top of your priority list.

3. Review your current spending habits

Are you buying a $5 morning coffee daily from your favorite coffee shop? Do you find yourself spending money on things you want rather than need? If you’re currently sitting on a lot of debt, it’s time to make a few lifestyle changes to help pay that debt off. That daily $5 dollar coffee, for example, is costing you roughly $150 dollars a month alone, which would be otherwise money well spent paying off your debt. So, as you have just prioritized your debt, you need to prioritize your spending habits as well and create a budget for yourself. Stick only to necessities and dedicate more of your money to paying off your debt.

4. Find another source of income 

Another great way to start paying off your debt is to find another source of income. Easier said than done of course but think of extra ways you can earn some cash. Maybe by getting a part-time job or starting a small business. Also, think about things you could sell. Whether it be an older car you’ve been meaning to get rid of or holding a garage sale to earn some extra cash, every little bit counts.

5. Ask for help

The biggest step of them all is asking for help with your debt. As we’ve discussed in this earlier blog, talking to someone and opening up about your debt can seem like a really difficult step to take, but you’d be surprised by how much help you can get if you just ask for it. Regardless of whether you have someone to ask for help, you always have us at GetMeDebtFree to get you started in the right direction. With our industry knowledge and experience, we have searched out who we believe to be the best companies in Canada to help our fellow citizens get out of debt. If the company does not pass our Gold Standard Test, then we will not recommend their services. If you are looking for the best advice on how to consolidate your debt, fill out our contact form, and we will be sure to refer you to a company that we approve of. Let it be clear, we do not mine your data nor sell your information to numerous companies. We are simply looking to connect people who are serious about dealing with their debt to a professional who is best suited to help make that happen. You have nothing to lose and a lot to gain, so start your debt-free future today.

The post 5 Simple Steps You Can Take To Get Out Of Debt appeared first on Get Me Debt Free.

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Canada is well-known for its tasty maple syrup, welcoming atmosphere, and chilly winters. But more recently, Canada has become known for its skyrocketing household debt. With $4.4 trillion in household and corporate debt, more Canadians than ever are succumbing to mounting debts. And the debt resolution process is anything but easy.

How to navigate the shark-infested waters of Canada’s debt management industry

If you are like many Canadians struggling with debt, you’d like to find a trusted company to help you with it. But the prospect of navigating the shark-infested waters of the debt management industry can be intimidating. Fortunately, there are some simple steps you can take to ensure that you select a company with a proven track record of success in debt resolution. Below are four hallmarks of a company that will fight for your rights and successfully guides you toward debt resolution. 

1) A proven track record of success with clients

There is no substitute for experience in the debt management arena. Ontario’s top debt counselors have over 15 years of experience. They are able to help over 95% of their clients achieve freedom from their debts. Additionally, they have helped thousands of people experience the freedom that comes along with debt resolution. As you compare prospective companies, be sure to inquire about their industry experience before committing to work with them. 

2) A reputation for providing clear, concise guidance to clients

No one plans to accumulate a mountain of debt. But if you suddenly find yourself in the unpleasant position of owing thousands of dollars to creditors, you may not know where to turn for help. In this case, it is important to choose a company that will guide you through the debt restructuring process. Ideally, they will use clear terms that you can understand.

3) A talented team that delivers personalized service

Facing mounting debts and calls from bill collectors can be embarrassing and depressing. The last thing you need is a debt adviser who is negative and critical of you. Especially if you find yourself experiencing these feelings. Unfortunately, some companies use a combination of criticism and pressure in an effort to coax people to use their services.

This is where GetMeDebtFree comes in. We know that we are a valuable resource to Canadians who are looking to get out of debt. We do not accept money from creditors, the consumer does not pay for our service, and we set the standards for who we will refer our fellow citizens. In other words, we have removed barriers of influence while taking out the guesswork for the consumer. You might say that we are on a mission to see as many Canadians as possible get the necessary help. Simple.

4) Expertise outlining debt relief solutions that involve other solutions that simply bankruptcy

And if you are being bombarded with collection calls and are struggling to make minimum payments to your creditors, you may be tempted to take the advice of a bankruptcy service provider who is trying to coax you to use their services. Rather than simply pushing you to declare bankruptcy, a debt restructuring expert will sit down with you and review your individual finances to determine the options you can feasibly explore. 

Once you are aware of your available option, an industry expert will carefully review the advantages and disadvantages of each option. They will help you determine whether debt consolidation might be the best path or whether bankruptcy is a better choice. Some top experts will even suggest a customized consumer proposal process, which is frequently the most cost-effective means of resolving your debt. Regardless of the path you end up taking, they will make sure that you are aware that bankruptcy is often not the only option for people.

Canada’s trusted name

At GetMeDebtFree, with our years of experience and knowledge in working with thousands of past clients, we have searched out who we believe to be among the best companies in Canada to help people deal with their debt. If the company does not pass our gold standard test, then we will not recommend their services. If you are looking for the best advice on how to consolidate your debt, fill out our contact form, and we will be sure to refer you to a company that will look at all options with you. Let it be clear, we do not mine your data nor sell your information to all kinds of companies. We are simply looking to connect people who are serious about dealing with their debt to a professional who is best suited to help make that happen.

The post Choosing the Right Company to Help You Deal with Your Debt appeared first on Get Me Debt Free.

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Sharon, a well respected career nurse, suddenly became a single mom. She was left with a large mortgage, a car payment, and $70,000 of credit card & line of credit debt, which by the way she herself did not create. Sharon’s three young daughters were her priority, but she was unable to spend the time required with them due to needing to work to service the debt.
Sharon sold her house and downsized, but that still wasn’t enough and she continued to work her second job on the weekends. Being worn out and not giving the attention needed to her daughters. Sharon had no choice but to look for options to deal with the high cost of servicing the $70,000, after all it was taking roughly $1500 per month out of her pocket.
Sharon went to see a company who claimed to be able to help her with her debt, but their plan was quite unattainable given her budget, and further to that they wanted to take back or collapse the RESP’s that were in place for her daughters future education. Could you imagine? Looking for help, only to find out that the “help” will make things worse.

Thankfully Sharon decided to get acquainted with some of the ins and outs of the “debt help” industry in Canada, and that is how she found us. With our years of industry experience and in working with thousands of clients across Canada, we were able to connect Sharon with a company who would work with her, considering specifically her situation, and not shoe horn her in to a boiler plate plan.Thankfully Sharon contacted us before she pulled the trigger on the options that were given to her by others. The company we were able to connect Sharon with, saved her an additional $30,000 over an above what the other companies offered her. Why is that? To put it plainly, and without speaking in a derogatory way; there are many companies selling services, and all of them do things their own way. Sharon, just like anyone looking to deal with their debt, sat down with a company who was willing to give her the time, answer all of her questions, and tailor a plan best suited for her. When looking to manage debt as best as possible, a cookie cutter solution is just not going to cut it. All too often people end up in a plan less than ideal, and they don’t even know that it could have been better. Sadly, this happens because they have been under immense financial stress for months and years. They then meet with someone who offers a solution, and at the time it looks like relief, but it could have been so much better. It doesn’t make the company a bad company, they still helped to some degree, but they might operate a but different or are limited in scope as to what they can offer.

Since 2010, the proprietors of Getmedebtfree.ca have been helping Canadian families and businesses find real solutions to put debt behind them for good. After working directly with thousands of clients, it was determined that Getmedebtfree.ca could help more people, and do so nationwide, by offering a simple referral service. When you fill out a contact form on Getmedebtfree.ca, we will put you in touch with a company who we have personally vetted. If the company does not pass our test, then we refuse to send anyone to them. It is our mission at Getmedebtfree.ca to connect Canadians with companies who we know, like, and trust, and who are best suited to help people and businesses handle their debt challenges. By playing this role, of simply connecting people with quality companies, we know that we can help more Canadians forgo the all too common experience of ending up in a less than ideal situation, when looking for solutions to manage their debt.

Congratulations to Sharon who now is in a completely different place financially, is spending time with her daughters, and doing the things that truly matter in life!

The post Case Study of Success – Sharon appeared first on Get Me Debt Free.

If you have debt, pay it down now

While you may not be able to pay all of your debt off within the coming months, make sure you are managing it as effectively as possible. According to a survey by TransUnion earlier in 2017, Canadians are spending more on credit even though we are now carrying fewer cards.
Here are a few strategies for taking charge of credit cards:

• The stacking method – If you want to hit your debt where it hurts most, focus on the card with the highest interest rate first because this is your most expensive debt, and pay at least the minimum on the other cards.

• The snowball method – If you are more motivated by momentum, try focusing on paying off the smaller, more bite-size chunks first. While you may not be paying down the most costly credit, understanding what motivates you and having the best plan in place for you are important steps toward success.

• The consolidation loan method – If you have several sources of debt overwhelming you with interest and stress, talk to a Debt Relief Specialist about consolidating your loans into one manageable monthly payment, preferably at a more attractive interest rate.

Don’t forget to save

While it is important to manage your debt, you need to balance your payments with your savings. Debt repayment plans and savings plans are not mutually exclusive. Building up some cash reserves is another important step toward overall debt reduction – the more expenses you are able to cover with cash in hand, the fewer expenses you will need to cover with credit.
One strategy for freeing up more cash in the short-term is to focus less on long-term savings, such as RRSP contributions, which will be less useful if you’re in a lower tax bracket anyway. Additionally, savings help to cushion the blow of any unforeseen expenses or emergencies, such as having to leave work earlier for your maternity leave due to health concerns. Think of your savings as your insurance plan; think of your credit cards as your last resort.
Make your budget your new best friend
The best way to plan for the future is with the help of a budget. While preparing for baby is more fun than preparing your budget, start thinking of your budget as your new best friend. Like any best friend, your budget will help you through the tough times and keep you motivated the rest of the time. The most important advice you need to ask of your budget before baby comes is:

• How will our income change on parental leave? Figure out how much employment insurance (EI) you are entitled to and any employer benefits you can access. If you can afford to, test out your future income reduction by restricting your budget ahead of your leave.

• How will our spending habits change with a baby in our life? For example, diapers are not currently part of your monthly spending, so you will need to account for those. Think about everything else you will need to spend more on – such as your water bill – and the things you may get to spend less on – such as gas, if your current commute is a costly one.

Once you’ve created a budget, start using it – now! You can update your budget as your needs evolve, and it will help you to distinguish baby’s needs from parents’ wants. There is a lot of good advice available to new parents, and balancing needs and wants is a common thread.

But what if…?

If you’re expecting a new bundle of joy but feeling overwhelmed by a bundle of debt, don’t be afraid to ask for help now. Debt is a major source of stress, and you will have enough of that to deal with as a new parent. Since 2010, the proprietors of Getmedebtfree.ca have been helping Canadian families and businesses find real solutions to put debt behind them for good. After working directly with thousands of clients, it was determined that Getmedebtfree.ca could help more people, and do so nationwide, by offering a simple referral service. When you fill out a contact form on Getmedebtfree.ca, we will put you in touch with a company who we have personally vetted. If the company does not pass our test, then we refuse to send anyone to them. It is our mission at Getmedebtfree.ca to connect Canadians with companies who we know, like, and trust, and who are best suited to help people and businesses handle their debt challenges. By playing this role, of simply connecting people with quality companies, we know that we can help more Canadians forgo the all too common experience of ending up in a less than ideal situation, when looking for solutions to manage their debt.

The post Budgeting for Baby appeared first on Get Me Debt Free.

Now, you might hate spreadsheets. Or dread actually looking at the math behind your income versus expenses. But it’s something that we all need to do every once in a while.

Today, take a few hours and complete the following 10 steps. By the end of this session, you’ll know:

• Where your money goes every month—and where you can cut expenses.
• A complete picture of your net worth, total debt, and financial health.
• Hidden places to cut fees, reduce unneeded expenses, and a realistic plan to pay down debt faster.

Step 1: Assess your situation, know your net worth

If you’re serious about improving your finances, you need to know your net worth. This is an exercise that is helpful to complete each year.
Your first task is to document every debt. You can use a spreadsheet. Or just a notepad, if you like.

First, list all of your debts.

Make a comprehensive list of all of your debts. Make sure to include debts such as:

• Mortgage
• Car loan
• Credit cards
• Overdraft
• Utilities you’re behind on
• Small loans (such as payday loans or in-store credit cards)

Next, break the list of debts down into secured and unsecured debts and list the interest rate by each one. If you don’t know the interest rate, you need to track down these numbers as this will be critical as we move through the plan.
This can be very daunting and scary. But you need to be completely honest and open when you do this.
What’s your total debt? Write it down as you’ll need it for the next section.

Make a list of your assets.

Next, complete a full review of all your assets and the estimated value of those assets. When valuing your assets look at reasonable fair market value.
Include assets such as:

• Your home
• Your car
• RRSPs or TFSA accounts
• Any stocks or investments

What’s your total asset value? Write it down.
Now, calculate your net worth. This is done with a simple formula: your total debts minus your total assets equals your net worth.

What’s your financial outlook for 2018?

You now have your net worth. It doesn’t matter if it is positive or negative. What’s more important is that you now know where you stand financially.
Don’t throw away this piece of paper or spreadsheet.
Save it on your computer or keep it somewhere safe as you are going to review it at the end of the year and see the progress you have made.
Every year, you will complete the same exercise and review against previous years.

Step 2: List all automated withdrawals

The next step is to figure out where the money goes every month.
List every single weekly, bi-weekly, monthly, quarterly, semi-annual and annual direct payment that comes out of your bank account.
This means going back on last year’s bank statements to ensure you don’t miss anything. It’s a bit of work. But think of all the time you spend at work earning this money—a few hours figuring out where it all goes can really help you improve your awareness of how to improve your finances.
Pay attention to the charges that come out less frequently as they are the easiest ones to miss. For example, your children’s annual Xbox membership.
Don’t forget to check your credit card statements. Include both the annual fee on your travel card for example and include any monthly bank fees.

How much money goes out in automatic withdrawals?

Write this number down. You can later look for purchases to cut. You’ll also be more likely to consider future purchases more carefully.
For example, when I did this exercise I found that I spent over $1,500 in unnecessary subscriptions and impulse purchases—an Amazon Prime account I didn’t really need, an Audible.com subscription I rarely used, a credit card with a hefty annual fee, tons of books I ordered, a subscription to accounting software I never used, and a host of small charges.
These charges seem small. But if you invested that $1,500 every year, you’d have $297,589 by the time you retire (a $1,500 annual contribution with a 10% return over a 30-year period).

Step 3: List all your income and deposits

Now do the same for your income and any deposits. List all sources of income you had throughout the year.
This includes everything that was deposited into your account including child tax credit, annual tax refunds, gifts from family and bonuses or overtime at work.
Review your bank statements and document every deposit.
Next, categorize it and add it up so you have a total received by category for the full year.
You can do this by manually reviewing your bank and credit card statements. Or you can download all of your transactions into a spreadsheet. You can also use a tool like Mint.com to help you automate the process.

Step 4: Review and prepare for 2018

For your income and deposits, you need to go through and make a list of what is guaranteed income for 2018.
For the outgoing direct deposits, go through each one and put them into two categories: ‘must have’ and ‘nice to have’.
‘Must have’ includes utilities, mortgage payments, car insurance, and ‘nice to have’ includes things like Netflix or the movie and sports channels you subscribe to above your standard TV package.
Now go through the ‘nice to have’ list and decide if you need the service and how much you used it last year. If you don’t get any value out of it, cancel it. You can always get it back anytime.
When going through the ‘nice to have’ list, be mindful of the value it may add to the family and or other savings it may offer. For example, if having the movie channel means you have family movie night at home versus going to the movie theater then it makes sense to keep it as it saves money in other areas.
Review bank fees and annual credit card fees closely and understand if they are worthwhile.
Lots of banks now offer free chequing accounts which could save you $30 a month on bank fees.
It can be a pain to change bank accounts, but as we said earlier, this is going to take time and effort. If it takes a couple of hours and saves you $360 a year, that’s a nice hourly rate you are paying yourself.
Look at the annual fee on a rewards credit card. For example, a travel credit card can have an annual fee of $120. If you used the card a lot and got more than $120 worth of travel benefits, then it’s worth keeping.

Step 5: Plan your payments and calculate what’s left

Now that you have a clear understanding of what’s guaranteed to come in next year and what is guaranteed to go out, you can start to create a plan. This makes your life and budgeting easier.
The first step is to make sure all your outgoings correspond with your incomings. If you are paid monthly, have all payments switched over to come out monthly shortly after you get paid.
If you are paid bi-weekly or semi-monthly, add up all the outgoing funds and divide by two. Then have 50% come out on your first pay period and the other 50% come out on your second pay period.
Try to balance the amounts coming out as closely as possible so one pay period isn’t much higher than the other. This will make budgeting for the non-discretionary expenses much easier.
Now calculate exactly what’s left over for each pay period.

Step 6: Create a budget

The earlier exercise allowed you to understand your fixed expenses and potentially cut out some of the non-essential fixed expenses.
Planning your spending for when you get paid is the most effective way to manage your money. However, for most people, tracking and planning the variable expenses is by far the hardest part of budgeting.
As you did with the fixed expenses, you need to try to plan variable expenses evenly over pay periods but this won’t be as easy given these expenses are variable.
In order to estimate the budget for each category look back on last year’s expenses for some categories like kids’ activities and sports, school fees, even clothing and gas.
To get an accurate understanding of categories such as groceries it will take a few months of diligent tracking of how you spend your money each month by keeping receipts for every purchase and putting them into the correct category.
Try to avoid using credit as this will hinder the debt repayment plan you are going to put in place and can also create a false and unrealistic budget.
If you do use credit, keep the receipts and transfer the funds immediately. Once you have completed a couple of months of tracking, you will then be able to create your budget and help ensure you are allocating money to the right places in-line with things that you value most.
Tracking spending is a discipline that needs to become part of your monthly routine. It’s not a process that stops you spending money in certain areas such as travel or eating out but helps you make informed decisions.
It’s often filled with moments of self-discovery and what previously seemed important can become an opportunity to reduce expenses and accelerate financial goals.

Step 7: Only use cash

Do you stick to your budget every month? Are you sticking to your debt repayment schedule?
If you answered yes, you can skip this tip. But if you’re having trouble, consider switching to only purchasing things with cash. Spending cash really works. It removes a lot of spur-of-the-moment spending.
Spending physical cash is emotionally harder than swiping a card. For example, spending $300 in Home Depot with a credit card is easy. Handing the clerk a stack of $20 bills makes the purchase more painful and memorable.
Use the envelope or jar method to allocate physical cash to each spending category during each pay period.

Step 8: Start a financial calendar

Whether getting caught off-guard by property taxes or missing your credit card bill (and getting hit with interest), it’s easy to forget to pay things on time.
Print out a calendar for your fridge. Or use Google reminders and Google Calendar to organize your financial life.

• Add a calendar date for bills that need to be paid. You can have these events automatically repeat every month.
• Schedule a trigger to review your budget every month.
• Add a calendar date to start saving for things such as annual vet appointments, car repairs, or property taxes.

Step 9: Tackle your unsecured debt

Secured debt is things like mortgages. They have a fixed monthly payment. And if you keep paying, you’ll eventually reach zero.
In contrast, credit cards or lines of credit can go on forever. You only need to pay the minimum payment. This can keep you in debt and balloon the cost of the initial loan over time.
In step one, you listed all your unsecured debts and the interest rates on each one. You now need to set yourself a goal of having the debt paid off and calculate what this will take.
Use this calculator to work out the required monthly payment for each debt to have it eliminated within the number of years you have set as your goal. You can find other helpful debt calculator tools here.
Now add them all up. Review the required monthly payments against the surplus income you have after all discretionary and estimated non-discretionary expenses and see if this is achievable.

Choose your debt repayment plan (Snowball and Avalanche):

List all the unsecured debts by smallest to largest by amount owed. Don’t worry about interest rates at this point. This method doesn’t include interest rates and is designed for people motivated by results.
Pay minimum payments on all the debts except the smallest one. Then, use all additional funds allocated to debt repayment each pay period to aggressively pay down the smallest debt.
Once it’s paid in full, take the money you were putting toward that debt and allocate those funds to the next debt on the list. Once that one is paid, take that combined payment and go to the next debt.
The point of the debt snowball is a psychological approach to debt repayment. In terms of pure dollars, it makes the most sense to pay down the debt with the highest interest first. But when you focus all your efforts on the small debt first, you see progress very quickly.
Soon the first debt is paid off completely and gives a huge sense of accomplishment and satisfaction. You will see that the plan is working and will commit to the plan and you may have a greater opportunity to succeed in your goal of becoming debt-free!
It makes more sense mathematically to target your debts in descending interest rates. But studies have shown that consumers who used the less rational snowball method were more likely to eliminate credit-card debt.
For the mathematicians out there, the avalanche technique may be the preferred method to create a debt repayment strategy.
The principle is the same: you’re maintaining minimum payments on all debts but one, and then allocating all available funds to that debt until it is paid off, then moving on to the next one. This is different from the snowball method technique because you are allocating all available funds to pay off the debt that has the highest interest rate first instead of the smallest balance.
This technique works best for those who are really disciplined and don’t need the motivation of quick wins in seeing the smaller debts paid off first.
It also works well for those motivated by understanding the math behind your debt, knowing that when you pay off the debt with the highest interest rate first, you will be paying less in the future as you will decrease the amount of interest that you would have paid on the high-interest loan.

Step 10: Get expert help

For some of you, the above steps will help you get a better sense of your finances.
Unfortunately for many Canadians, it won’t be that simple. After completing steps 1-8, you might realize that your debt is unmanageable.
And your calculations might show that no matter the changes you make, your income and budget will at best allow you to continue to make the minimum payments which will never repay the debt.
At worst, you might not even be able to make the minimum payments and you will soon fall behind on the payments.

Advice for families deep in debt

Many unexpected circumstances push us into financial corners we never expected to be in and this can be very difficult to deal with.
The thing to remember is unmanageable debt and financial crisis is only a short-term setback. There are many options available to deal with overwhelming debt, allowing you to restructure the payment arrangements, reduce the principal owed, and stop the interest.

Debt restructuring can help

Debt restructuring (also called debt consolidation) involves consolidating all of your debts. This reduces your overall debt and is a common strategy for dealing with large amounts of debt.
While effective for many people, there will be an impact on your credit rating. But when done right and carefully planned, debt restructuring will bring your long-term financial goals closer, not push them further away.
Since 2010, the proprietors of Getmedebtfree.ca have been helping Canadian families and businesses find real solutions to put debt behind them for good. After working directly with thousands of clients, it was determined that Getmedebtfree.ca could help more people, and do so nationwide, by offering a simple referral service. When you fill out a contact form on Getmedebtfree.ca, we will put you in touch with a company who we have personally vetted. If the company does not pass our test, then we refuse to send anyone to them. It is our mission at Getmedebtfree.ca to connect Canadians with companies who we know, like, and trust, and who are best suited to help people and businesses handle their debt challenges. By playing this role, of simply connecting people with quality companies, we know that we can help more Canadians forgo the all too common experience of ending up in a less than ideal situation, when looking for solutions to manage their debt.

Get an expert in your city to review your situation

If you are struggling to repay your debt, please fill out our contact form and we will be sure to connect you will someone who will be able to perform a full assessment, at no charge, of your financial situation. They will go over all options with you, and they will do so with respect and compassion. You have nothing to lose, and a lot to gain. Fill out our form today.

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