Now is the Time to Review Options Like Debt ConsolidationFeb 26, 2016
Residents of Sault Ste. Marie continue to face economic uncertainty in 2016. The outcome of the Essar Steel Algoma restructuring process remains unclear. People we meet with at BDO Sault Ste. Marie are worried about their debt levels and how to consolidate debt in times of uncertainty. People are looking for alternatives to filing for bankruptcy such as debt consolidation or consumer proposals in these uncertain times.
Uncertainty gives individuals the opportunity to review their financial positions and develop steps to face financial challenges, which in turn allow them to avoid problems associated with high debt levels. A recent Ipsos Reid poll conducted for BDO Canada Limited finds that nearly one-quarter of Canadians have resolved to improve their finances. The most often mentioned resolutions pertain to saving more and spending less, followed by reducing credit card debt, car loans, student loans, lines of credit and paying down the mortgage quickly. The Ipsos Reid poll also found that in order to meet their financial goals in 2016 almost half of Canadians will seek out some sort of financial resource to help them, including meeting with a financial advisor.
A financial health checkup – performed on your own or with the assistance of a Licensed Insolvency Trustee – will help you determine if you are ready to face uncertainties, and will assist you in developing plans to make you more financially flexible. The record low interest rates provide an opportunity to consolidate and reduce debt levels. Reduced debt levels result in more flexibility when events beyond your control impact your finances. 70 per cent of Canadians admit that events such as a long-term injury/illness would cause financial difficulties; 63 per cent would be challenged by a job loss.
Your financial health checkup involves:
1. Watching for key signs of financial trouble and acting on them quickly before events outside of your control occur. Are you:
- Using cash advances on one credit card to pay off another?
- Skipping payments on some bills to pay others?
- Receiving calls from creditors or collection agencies?
- Feeling stressed about your financial situation?
2. Organizing your situation:
- Make a list of debts outstanding including the total balance outstanding, interest rate being charged, minimum payment required and length of time to repay the debt.
- Determine your take-home pay available to meet debt payments using realistic assumptions about available working hours.
- Estimate living expenses.
- Track your expenses so that you know where your money is going and what adjustments can be made.
- List assets available to meet obligations and living expenses, if an unexpected event occurs.
3. Developing a plan of action:
- Use a debt calculator to determine the impact of a change in interest rates or an increase in payments have on your debt level.
- Assess options available to reduce high interest debt such as debt consolidation loans or consumer proposals. Our debt repayment calculator can help you evaluate options available to repay debts.
- Establish a plan based on realistic income and monthly expenses with a focus on identifying areas of savings in order to maximize debt repayment.
By detailing your situation on paper, you can make adjustments, prepare for changes in your life, and help reduce the stress caused by economic uncertainties. If a process like this sounds daunting, you don’t need to face your situation alone. A Trustee will review your financial circumstances with you, and then explore options such as debt consolidation that can help you reduce your debt.
What do you do to prepare your finances for hard times ahead? Share your ideas on Twitter by visiting #BDOdebtrelief and #LetsTalkDebt.