Avoiding Money Troubles
Most of us have struggled with money at one time or another to a degree, but it’s all too easy to kid yourself into believing that an issue you’re having with money isn’t as serious as it really is.
However, sweeping this issue under the rug will mean that it steadily grows and could potentially turn into an issue too big for you to handle alone.
This can leave you feeling helpless and like you don’t have any options, or anywhere to turn.
Luckily, this is not the case and it is never too late to transform your financial situation.
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Acting quickly when you realize you have a money problem is crucial if you’re going to fix it before it turns into something much bigger.
Knowing how to spot money troubles and learning how to stay out of them in the long run will go a long way to helping you live a happier lifestyle and develop a healthier relationship with money.
How To Spot Money Troubles
There are quite a few signs that could indicate money troubles or impending issues if things don’t change quickly.
You’re Always In Your Overdraft
If you’re constantly in your overdraft, this is a big sign that you don’t have the right financial plan or budget in place.
Using your overdraft should be a temporary measure that you only do every now and again when you feel you have to.
It should not become a habit, as it means paying interest and fees and spending money that could be going into savings and towards a better future.
Always being in your overdraft indicates that you are living beyond your means and that something must change.
You’re Paying Interest On Your Debts
Making minimum payments on any of your debts will usually mean having a debt for years, and this means paying interest.
The more interest you pay, the more you’ll pay overall.
You may pay thousands extra for money you spent a long time ago.
Some lines of credit come with an interest free period, and can be helpful if you absolutely have to use them.
However, if you’re constantly paying them off and then using them again for non-emergencies, you will be paying interest on them for non essential purchases.
You’re Paying Your Credit With Credit
Your debts should be sorted way before your credit runs out, but if you’re paying credit with credit, it’s another sign you need help.
Many people should be able to pay off their credit with a change to their budget and a spending plan, but it’s essential you make changes quickly or you might become out of your depth.
You’re Borrowing Money From Your Loved Ones
It’s great to have support, but it’s better to make a change to your financial plan than to lend money from loved ones.
Borrowing money from loved ones may be less stressful as you’re unlikely to pay interest or receive collection calls, but failure to pay them back could ruin your relationship with them.
You Find Yourself Feeling Stressed About Debts
If you find yourself feeling stressed about your debts, and wonder how you’ll pay those as well as your bills, it’s a sign you need to make a change.
When you have a financial plan in place you should feel confident that you will be able to pay your debts and your bills with a little money left over.
Of course if this isn’t possible, then other options could be right for you – debt consolidation, for example.
Avoiding Bigger Money Problems
Knowing how to avoid bigger money problems will give you peace of mind and help you to get everything back on track.
Come Up With A Budget You Can Stick To
Start by coming up with a budget that you feel you can stick to.
Allocate a set amount of money to things like food, entertainment, and utilities and then stick to that amount.
Put as much as you can towards your debts so you can pay them off faster and avoid paying too much interest.
Spending money without a budget or plan puts you at huge risk of overspending and getting into trouble.
Find A Method Of Paying Debts That Works For You
Different methods of paying off debts work for different people.
Some find paying off smaller debts first helps them to feel accomplished, while putting money towards larger debts can mean paying less interest.
If you have lots of debts to pay and you struggle to remember dates and organise your cash flow, then consolidating them all might be a better choice.
Stop Impulse Buying
Avoid impulse buys, especially if using credit.
Using cash when you go shopping and leaving your cards at home can help this.
Figure Out Why You Spend Money
Many people spend money for a reason.
Stress might trigger you, or feeling bored.
There are all kinds of reasons we spend, but figuring out your own unique reason can help you to stay in control.
Plan ahead for things like birthdays and events.
Set a target amount and figure out how many weeks you have to save that.
Take it out of the bank and put it away somewhere if you know this will deter you from spending it.
Make Payments Automatic
Make your bills automatic along with your debt payments and account for them when you come up with your budget.
Having them go out of your bank automatically means you’ll avoid late fees and won’t have to worry about swapping the money over.
Save An Emergency Fund
Paying off your debts should be your first priority, but an emergency fund should be your second.
This can help you to avoid using credit in future.
Get Expert Advice
One of the easiest ways to avoid future money problems is to get expert advice.
Bankruptcy Canada can assess your financial situation and help you with things like budgeting, financial education, and more.
The sooner you act, the better.
Get in touch today for professional, non-judgemental advice!
Information on Consumer Proposals
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How to Amend a Consumer Proposal
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Consumer Proposal Eligibility
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Is There Life After a Proposal?
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What is Bankruptcy?
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Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?