When to Seek Credit Counselling – The Early Warning Signs

Financial problems can seem to creep up on us out of nowhere. It’s surprising how many people seem to be doing fine with their finances and then within a fairly short amount of time they encounter serious financial difficulties. Many times, the truth for a lot of people who find themselves in this situation is that they missed the first signs that there was a problem until it was too late.

With really easy access to credit in Canada, high levels of personal debt, and an uncertain economy, a lot of people are at risk of financial difficulty in the future.

What to Watch Out for – Signs of Financial Problems

If you’re feeling uneasy about your finances, that alone can be one of the first early warning signs of financial trouble. 

To help you figure out if you’re vulnerable, here are a few telling signs that can reveal the early stages of financial problems:

  • You freely use your debit card presuming money is available (but you’re not always confident the funds will be there)
  • You regularly use your credit card in place of your debit card or cash for normal expenses
  • You only pay the minimum amounts on your credit cards
  • You do not have a spending plan or budget to keep your expenses in line
  • You sometimes find yourself spending more than you earn
  • You barely have any savings available to handle seasonal or annual expenses or emergencies
  • You find yourself counting on your overdraft or line of credit to handle your expenses for the month
  • You have withdrawn money out of your RRSPs or TFSAs to manage urgent financial situations

If it seems as though two or more of these warning signs apply to your situation, then it’s time to take a hard look at your overall financial picture and how you are handling your finances. 

Remember, if you and your family are experiencing any of the financial warning signs, we are here to help. Give us a call today and start your journey to financial health.

Christmas on a Budget: 7 Tips from the Trenches

With only a few weeks before Christmas we’ve got some tips to help you manage your budget, your spending, and your stress.

General Tip for All Occasions: Set an overall budget for Christmas then break down a budget for each person you’ll be buying for…and then stick to it. 

And now the Christmas ideas!

Tip 1: Try to think back on past gifts that were a big hit – we would bet they were thoughtful and meaningful rather than just being expensive. Planning a creative or unique gift that costs less is a great way to keep costs down and the joy up!

Tip 2: Consider doing something different this year. Traditions are wonderful, but shouldn’t cause financial stress. Create new traditions like family gift exchange, one gift from Santa, giving up the stockings for adult kids, or making your own gifts. 

Tip 3: Plan ahead and shop ahead but don’t buy (too much) ahead – often the gift giving fever hits and we have the tendency to buy even though we’re “done”. Make your plan and stick to it!

Tip 4: Combine forces for kids gifts. Too often gift opening can be overwhelming for kids – under the tree might look full to bursting, but that doesn’t translate to a better Christmas! Try thinking of fewer, more valuable gifts and then reach out to family and regular gift-swappers and see who would be up for going in on a gift. It’ll lower everyone’s stress, create wonderful memories, allow for less post-Christmas clutter cleanup, and keep budgets in line. 

Tip 5: Start purging the valuable items that you no longer use, and set up consignment or Facebook marketplace sales for those items – as they sell, put the money aside for Christmas.

Tip 6: Make before you buy. Consumables (food, homemade bath and spa items, candles, etc.) are all fairly inexpensive to make and are a huge hit during Christmas! 

Tip 7: Download a savings app that allows you to save on your schedule, (there’s even a function for you to save the change on purchases you make, rounding up to the nearest dollar.) 

When you’re doing Christmas on a budget, you’ll need to be a bit more creative and disciplined, but January will be a lot less stressful.

7 Creative Options to Reduce Debt

  1. Use credit card rewards or cash back to pay off debt

Your credit card probably helped you get into debt, so why not use it to help you get out of debt?

If you have a cash-back card, claim your cash-back rewards every month and use the money to make an extra payment on the debt you’re working on paying off. 

If you have a rewards card that lets you redeem for points or merchandise, redeem for things you’d have spent cash on such as grocery gift cards or airline tickets. Then, use the money you’d have spent on these items to make an extra payment on what you owe. 

  1. Make yourself some visual aids

Staying motivated can be one of the trickiest parts of paying off debt — but it becomes easier if you have some visual aids to help you. 

Consider making a paper chain with each link representing $100 or $1,000 of your debt (depending how much you owe). As you pay off each amount, you’ll move a chain from the link. You’ll be able to see your progress in tangible form with this approach, which could motivate you to do more to pay down debt. 

You could also draw a thermometer on paper with your debt in increments that you colour in each time you pay off a set amount.

Whatever visual cues you use, the purpose is to make sure you’re able to see the progress you’re making so you actually stay inspired to send all these extra payments towards your debt.

  1. Create monthly challenges for yourself

Sending extra cash to debt can sometimes make you feel deprived, but you could make it fun by challenging yourself to save as much as possible in certain areas each month and send the extra to your debt.

For example, for one month you could challenge yourself by seeing how low your food costs could go by making all of your meals at home with healthy recipes using less expensive ingredients – even buying some in bulk that go a long way. Whatever you save on groceries compared to a typical month, send immediately to debt repayment.

The next month, you could challenge yourself to see if you could find only free activities to do for the month so you can redirect your entire entertainment budget to debt payoff.

If you mix up the challenges monthly, it should stay fun and you won’t feel burdened by all the extra cash you’re sending to your creditors. 

  1. Increase your debt payments with income from a side gig

The more extra you can pay on your debt, the faster your debt will be paid down. 

Unfortunately, there’s only so much you can cut out of your budget to make extra debt payments. But you can increase your income substantially by picking up some side work — and can use this extra cash to pay off what you owe ASAP. 

From selling on Etsy or Facebook Marketplace to dog walking or ride sharing, options for side gigs abound. Just pick something you can do with your spare time and immediately put the extra cash towards paying off debt. 

  1. Turn coupon savings into debt payments

Using coupons can save you money on just about everything you buy. Whether you clip coupons from the paper, print them off your computer, buy them from coupon clipping sites, or search for promo codes online, you can score big savings with a few simple hacks to the way you shop. 

Any time you save with a coupon, why not use that cash for debt repayment? If your bank account is linked to your loan account, you can generally make an extra payment immediately for the amount of your coupon. This can work especially well for credit cards, which allow you to make payments as many times as you want each month. 

If your lender doesn’t accept multiple monthly payments, just move the saved money into a special savings account earmarked for extra debt repayments. When you make your monthly payment, add the money from the savings account to it.

  1. Automate extra payments

Setting up automatic payments of your bills is a great way to make sure you don’t miss a payment. But you can and should set up automatic payments for more than the minimum. 

In fact, why not try inching up the automatic payments you’re making just a little bit every week. If you’re paying an extra $100 on the debt you’re working on paying down, try upping that automated payment to $125 this month and then $150 next month.

By slowly increasing the extra payment, you probably won’t miss the extra cash. Just keep inching up that payment amount until you find you really can’t live on what’s left. Then scale back a bit. 

  1. Enlist the help of an accountability buddy

For dieters, there are tons of groups where you have to go each week and weigh in. This helps keep you accountable — and it can also make losing weight more fun when you’re doing it with others. 

Why not try the same approach to debt payoff? If you have one or more friends working on paying down debt, set up weekly or monthly check-ins. You can each share the progress you’ve made towards becoming debt free, and can even exchange tips and tricks on how you’re cutting spending to pay off what you owe. 

If you are still struggling with paying down the debt and you are doing your best, call the Rita Anderson & Associates Team to help you develop a great plan & put you on the road to good financial health.