By Peter Boys, CAFA
The Financial Coach
Canadians talk about debt all the time. It can be overwhelming, leaving you feeling like you have dug a hole too deep to climb out of. It can be embarrassing. Where do you even begin to try to turn things around?
If you’re serious about getting rid of debt, you need to start recording where all your money is going on a daily basis. Begin by finding out how much money you have coming in every month. That’s the easy part. Figuring out where you spend all of your money is the hard part. Find an app for your smartphone to track your daily spending or write everything in a journal. Then you can see where you can cut back.
1. Curtail eating out, drinking out and going out
That means you have to stay away from fast food restaurants on the way home or the local coffee shop several times a day. Preparing meals and coffee at home saves a bundle. Plan grocery trips and start couponing. Set a budget, menu plan and only buy what you need.
2. Consignment shopping
It is not worth going into debt to try to look good. Shopping at consignment and gently used stores can save you a bundle. Stop shopping online unless for items that are pre-loved and gently used and you actually need them. Sell your unwanted items. Consign them, or put them on Stettler Buy & Sell or Bidding Wars. Stettler has a consignment store downtown. Check it out.
3. If practical, sell your car
Gas, maintenance, insurance and car loans add up. Take the money and apply it to your debt.
4. Cut up your credit cards
Not literally. But, tuck them away and curtail using them except for emergencies. Budget and save for your wants.
5. Stop investing
There’s no point in earning minimal returns in the market when time and compounding works against you when paying interest on your debt. Look for ways to consolidate your debt to lower the overall interest payment.
6. Consider ditching – for now – expensive activities.
Golf memberships, exotic vacations, ski trips and cycling clubs, to name a few. Dump your gym membership and go out for a run or download a fitness app.
7. Comparison shop for the best deal going
This doesn’t mean the cheapest, it means the one that will result in the best performance for the money paid.
8. Stay focused
Once a little progress is made it is so easy to slip back into bad habits. Set a goal, stick to the plan and be an overachiever.
9. Just say no
Embrace the freedom that comes with simply saying “no” to expensive evenings out, hobbies, vacations, designer duds, etc.
10. Solicit others to go on a spending freeze with you
Get a “frugal buddy” so to speak. If you get tempted to spend, reach out to your support group/person. Better yet lead the charge. Be the person others aspire to be. Lead by example.
11. Downgrade your expectations if you are considering buying a new home or vehicle
Buying hamburger on sale won’t help much if you are drowning in debt owning homes or vehicles you can’t afford. Look around Stettler. There are many families doing just fine in quite modest homes.
Find a trusted financial advisor and have them work with you to set up a monthly budget to get control of your spending, a monthly payment to reduce debt, plus ideally, a payment into a “stuff happens” account. If your debt load has creditors calling and looking for money, you may have to consider working with an insolvency trustee to help get you back to a healthy financial situation.