Set a Goal to Reduce Debt this Year – You’ll Feel BetterFeb 02, 2017
Have you put “reduce debt” at the top of your list of 2017 goals? Almost 30 per cent of Canadians have done the same. Are your finances stressing you out? You’re not alone – money was cited as a leading cause of stress by Canadians. These findings from recent reports may not surprise many Sault Ste. Marie families who have been dealing with rising electricity costs and an uncertain job market for some time now. Trying to make ends meet in the current economy isn’t always easy, especially if you’re also dealing with debt.
Stress is often highest when circumstances — like rising utility costs — are out of your control. However, you can reduce your stress by concentrating on the aspects of your everyday finances that you can control, like your debt. Start by creating financial goals for the new year that are within your reach. A debt reduction plan will not only ease some of the money worries you might be feeling now, but it will help you avoid financial problems down the road.
Depending on your level of debt, and your ability to repay your debt, there are two “roads” you can take: find a plan that will help you get out of debt on your own, or seek advice and assistance from a debt relief professional.
Goal: reduce debt on your own
If your debt isn’t yet overwhelming and you feel able to repay it, you may simply need a strategy or plan to help you get out of debt. Two popular debt repayment strategies are the debt avalanche and the debt snowball. The avalanche method prioritizes paying off your highest interest debts first, the snowball method has you paying off your smallest debts first. Read more about debt avalanche vs. debt snowball here. There are also a number of valuable resources and tools that can help you prioritize your debts, understand your options and prepare a budget. How much of your budget should you dedicate to debt payments? That will depend on your circumstances. The 50/30/20 rule is a good starting point for first-time budgeters.
Goal: getting help to reduce your debt
If your debt has reached the point where you’re unable to keep up with payments and you’re unsure what steps to take, it’s time to speak to a professional. Speaking to a credit counsellor or Licensed Insolvency Trustee about your situation doesn’t commit you to a formal debt solution. But it does help you make an informed decision about what debt option will work best for you. If you want to do a bit of research beforehand, this information on the Government of Canada website tells you more about the role of an LIT and how to find one near you.
Keep track of your progress
Regardless of which road you take to debt relief, make sure you put some time aside each month to take stock of your goal and review your progress. Unexpected expenses come up, life circumstances can change…if you’ve decided to reduce debt on your own, you may need to adjust your monthly budget to ensure you stay on track to meeting your goals. If you’ve sought the help of a debt relief professional, don’t hesitate to check in regularly if you have questions or concerns about your debt relief plan. Making and sticking to a financial goal isn’t always easy, but if you’re persistent you’ll not only find that your finances will be in better shape, you’ll feel better too.
What’s your number one financial goal for 2017? Share your thoughts on Twitter. #BDOdebtrelief