Simple Steps to Debt Relief: Easy Ways to Properly Manage your Debt
Though household debt in Canada has been reportedly on the rise, a recent report from the Fraser Institute showed that Canadians are gradually learning to manage their finances more prudently than before. There’s always more room for improvement, though, especially since the fact remains that more households are finding themselves sinking in debt.
For a start, you can opt for an informal proposal to alleviate your problems with debt. Through this out-of-court settlement, you may be able to negotiate payment that’s considerably less than what you owe your lenders. The most effective path to debt relief, however, is not just through these programs, but how you manage your debt. Here are some ways you can start managing your finances today.
Budget Your Money Wisely
Now is the perfect time for you to start improving your budgeting skills. For your monthly budget, set aside 35 per cent of your income to pay for your rent or mortgage, 25 per cent on your everyday expenses, and leave 10 per cent for your savings. The remaining 30 per cent, meanwhile, should be devoted to paying off your debt. Start paying off the most expensive ones, then you can gradually pay off the others.
Generally, your monthly housing costs like mortgages and other necessary expenses should not exceed 32 per cent of your monthly income, while your monthly debt payments shouldn’t be above 40 per cent. Do everything you can to lower these payments and you won’t find yourself sinking in another onslaught of debt.
Do Away with These Expenses
There are some things you pay for that you’re actually better off without. These expenses are neither luxuries nor necessities, yet are contributing to unnecessary expenses that you could instead use to pay off your debt:
- Voicemail. There might be certain advantages that come along when you use it, but at the end of the day you can get the same functions from a cheaper second-hand digital answering machine.
- Expensive face creams. Some people tend to buy more expensive face creams just because they believe the price tag is worth it, not knowing that they could get the same effects with an over-the-counter equivalent.
- Bank fees. There might be necessary fees, yet at times you might be paying more than you actually need to.
- Magazine publications. We are in the age of information and everything can be found on the internet.
- Buying knickknacks.
- Late fees.
- Parking tickets.
- Buy no-name products.
Finally, talking to debt management experts, like Blair Greenwood from 4 Pillars Debt Consolidation & Credit Rebuilding, that offer effective debt relief programs in Canada can help you take those small steps into gradually paying off your obligations and live the rest of your life debt-free.
Five easy debt management tips, Brighter Life
7 things to stop spending money on, Canadian Living