3 tips to manage your finances better…
While Canadians are certainly not new to the idea of having too much debt, in recent years these levels have risen even higher. In fact as per the Canadian Credit Bureau Equifax, this national total has increased from $1.42 trillion at the beginning of 2014 up to $1.529 trillion in 2015.
One possible reason for this – the weakened state of the economy. That being said, while there have been many experts who have cautioned against more borrowing during this time – with the lower interest rates being extended even longer, many Canadians have instead perceived this an ideal time to take out more loans. Credit cards in particular, are one of the main borrowing avenues which can be traced back to the vastly higher debts that are occupied by many Canadians.
One fact that we should be conscious of is the reality that when the economy shifts, these changes can occur very, very quickly. As recently as December, the central bank of Canada did advise on the rising levels associated with household debts in the country and this message perhaps was further reinforced again when instead of raising interest, even lower interest rates were introduced in January of this year.
The truth is we don’t really know what will happen with the economy and when it will happen – however this does not mean we can’t take steps to improve our financial situation. If you are looking to devise a plan that can help you manage your finances more effectively – and even pay off some of your debts – here are 3 tips that may be able to help you do just that.
3 Tips to Manage Your Finances:
1) Budgeting & Reassessing Your Spending -
You guessed it . . at the heart of learning to manage your finances more effectively, this does of course involve, budgeting. As a part of your new budgeting plan, you will also look at reassessing your spending. On your own or with the help of a debt-relief specialist, you will want to review your income, your assets, and all of your current expenses.
Once you have a clear picture of where your income vs expenses are valued, you can find ways to devise a reduced spending plan. This will mean looking for areas where you can scale back on certain purchases and services, add well as maybe even going without various income-draining expenses that you just don’t really need right now.
2) Prioritizing Debt Repayment -
In addition to cutting down on your expenses, you will also likely want to identify how you can relieve some of your debts. One method of helping you achieve this goal can start with prioritizing your debts. Making a list and ranking your debts in terms of which ones you want and NEED to pay off first, can help get your repayment plan in motion. Knowing which loans should be made the priority can be a personal decision that may be different for different borrowers.
For example, if you have a lot of debt with high interest that is wrecking havoc with your finances – then getting rid of this debt first will make sense. On the other hand, if you have several debts with smaller balances and lower interest, then paying off these first can free up a portion of your debt and allow you to focus more on the large debt. Ultimately, you will need to make this decision for yourself – perhaps with the guidance of financial advisor as well – and work towards decreasing your debt load.
3) Consolidating Your Loans
The third tip, I have to offer – also has to do with loan repayment. Loan consolidation has been around for a while and has benefited many individuals who are trying to pay down their debts, yet have been struggling to do so. Consolidating your loans requires that you combine multiple loans into one – typically with a lower interest rate. This method can help you to also achieve your debt repayment goals, especially if household debt is largely looming over you.
A common way to go about combining your debts is to focus on your credit card debt. With multiple credit cards and high balances, consolidating all of your credit card balances into one loan is a definite option to allow for more effective financial management. You can also look to loan consolidation for other loans that are causing your debt to go unpaid and in turn get your finances back on track as soon as you can.
While there are many different ideas and tips you can turn to to help with your current financial predicaments – one thing’s for sure, you will want to address your situation before your household debts rise even higher. Listening to the financial experts who may caution us to take a step back from further borrowing is a good plan – although some times we still require more credit. Ultimately, knowing how to pay it off to the best of your abilities will help you out in the long run, so you can keep your debts from becoming so large that bankruptcy and other more serious financial outcomes may be your only option.
