Some Canadians are faced with the reality that they simply can't get to the end of the month before running out of money. We humbly turn to credit cards, lines of credit or even borrowing from family and friends to make ends meet.
For some Canadians having a high debt load and spending more than they earn spells disaster and for some debt denial is better than acknowledging it. This ends up leaving no room for retirement savings, the kids RESP let alone an emergency savings account. With grocery prices slated to increase in 2013 it's time to buckle down and make a game plan before the going gets tougher.
Do you feel like your hands are tied and you don't know where to turn? You're not alone but there are ways to tackle this problem so don't give up.
What do you need to do?
You need to either improve your income or reduce your expenses meaning that you have to take a hard look at your finances.
- Do you know your net worth? You should.
- Do you use a budget? You should.
Budget, but why should I budget when I don't have enough money each month? That's OK, you still need to know your numbers even if you are not making enough money to cover the bills. You can't improve something when you can't see what you are dealing with. I always like to equate this to an accountant who works for a corporation or any business for that matter. If he/she knew the company was struggling but couldn't give the CEO numbers how would they know where the problems were? They need the true figures to fix the problems and so do you.
If your debt has come about because you are spending more than you earn or other personal reasons you have to take back control. Being open to change is the hardest part of budgeting as no one wants to hear they can't have something or have to give something up. Not everyone is in debt because they spend money frivolously there are a myriad of reasons but only you know your situation best.
- Cut Back... and trim the fat from your budget-You might get discouraged but don't be a quitter. Budgeting is the single most important thing you should be doing in my opinion with your finances. It's simple and will show you areas you need to improve on so you can continue to build on designing your budget to make it work for you instead of against you.
- Utilities- Haggle with your communications company to get a better deal or better yet get rid of what you don't need.
- Grocery Budget- Use coupons, shop flyer sales, price match, play the grocery game challenge, cook homemade, keep an inventory and well stocked pantry
- Eating Out- You simply can't do this, cook at home until you are in a better position.
- Cut Up Credit Cards- If you already can't afford to pay your bills get rid of your debit and credit cards and live on cash. Some like to put money in envelopes or jars which becomes your cash budget for the month.
- Transportation- Look for a cheaper insurance carrier, sell your car get a smaller vehicle that uses less gas, opt to bike or ride the bus instead of a car, carpool to work or walk if you are so luck to be in walking distance. Petrol is at an all time high in Canada and another huge expense next to the mortgage and groceries.
- Clothing- Second-hand shops, consignment stores or even retail outlets have blow-out sales on clothing or end of season.
- Downsize- If your house is eating up most of your pay or your rent it too high you may be faced with having to downsize.
- Debt Consolidation- Consult with a professional to see what they recommend for you as it might be something to think about.
That's all fine and dandy but I still don't have enough money...now what?
Get a second job- Pick up overtime hours if you can but if not look into a second job that is part-time. Do what you can to earn income from a second source!
Higher Paying Job or Promotion- Keep handing out resumes as you never know if a higher paying job that you love will pop up! Don't be shy to ask your boss for a raise or to apply internally for a promotion with-in your organization.
Pay What You Can- Pay your bills with the lowest owing and the minimum on the others. Once you pay off a bill go to the next lowest until all your bills are paid. Some call this the snowball effect and can be an effective way to get out of debt.
Negotiate Interest Rates- Don't be afraid to call the credit card companies and tell them your situation. Tell them you need to get the interest rate lowered or you might struggle to pay them the money you owe them.
At the end of the day you don't have to walk this lonely path alone, ask for assistance. Most of all never give up when there's too many bills and not enough money, simply make a plan of action and follow through.
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