Don’t Lose Yourself To Debt

It worries me when someone has a full time job where you work hard and look out for the wellbeing of your family and when that paycheque crosses your hands, you give a sigh and wonder if you can still make ends meet.  Is that the way you want to live?  You don’t have to.

Start to take control of your finances so you have peace of mind and know that your family will be taken care of and you will be set for your retirement.

Do you know that 1 in 20 Canadians fear they will never pay off their bills?

According to Statistics Canada, data shows that household debt rose to 164.6 per cent of disposable income in 2012.  Canadians owe about $1.65 for every $1.00 they earn in income.

The situation is becoming so bad that Bank of Canada governor Mark Carney said, “the greatest risk to the domestic economy is household debt.”

Credit card debt is the most common debt that everyone is suffering from.  What people don’t realize is that if you continue to carry over a balance which has an interest rate of over 10%, then when you make a payment not all of it is going towards the balance of the card.  The interest gets covered first and then your payment gets applied to the balance on the card, leaving you to take years to pay it off.  If you purchased something for $1000.00 and don’t pay it off in a reasonable timeframe, then that $1000.00 purchase you thought was a great idea, turns into a $1500.00 purchase or even a $2000.00 purchase over time.  Doesn’t sound like a great idea anymore, does it? You end up paying more and putting yourself deeper into debt for something you just had to get your hands on.

I believe every household should have at least one credit card just in case those emergencies come up but use it for emergencies only.  Tuck that card away somewhere that only one partner knows about, usually the more financially responsible one and even then, discuss the purchase with your partner before using the card.

There are a few things you can do to help you on the road to financial recovery:

·         Use cash and debit card for your purchases so once it is purchased, the expense is out of the way.

·         Prepare a weekly and / or monthly budget so you know where your money has been and where it is going.

·         Start a savings account for emergencies that don’t require the use of your credit card.

·         Get yourself an RRSP so it can be applied against your income and therefore towards your taxes at the end of the year.  This benefit will ensure you have a good chance at a rebate.  Check your assessment for last year to see how much you can contribute.

·         Have an RESP set up for your children so they don’t start their futures in debt.  Even some savings towards their education is better than nothing.

·         Do not use places such as Money Mart and other Pay Day Loan establishments since they sap your paycheck, charge you fees and it takes you time to catch up and get back to your normal spending.

·         Teach your children and others what you have learned and share your experiences to keep family and friends out of a lifetime of debt.

You know how frustrating it is to be left strapped for cash.  With some perseverance, patience and a financial plan, you can do it.  You can get yourself out of debt.

It won’t be easy, but after some hard work, you will be financially independent and your life will be worry free.   Doesn’t that sound great?  Think about it and do what’s best for you and your family.

 

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By J. Catherine Andrew Posted in Blog

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