A New Look at Debt: Deciding on a DIY Approach or Seeking Professional Help
Debt management could be compared to a DIY project. Some people have the knack for it and can successfully navigate through the complexities of financial management, while others may not have the necessary skills or time. Deciding when debt should and shouldn’t be your next DIY project is a critical evaluation that can have significant impact on your financial future.
The DIY Appeal
There are numerous factors that push individuals to consider handling debt management by themselves. These factors could range from a desire to acquire new knowledge, the satisfaction derived from doing the work personally, the reluctance to seek help due to pride or embarrassment, or simply because they lack the resources to hire a professional.
However, it’s essential to remember that just like any DIY project, undertaking debt management without the proper knowledge or experience may not yield the desired outcomes.
The Risks of DIY Debt Management
It’s often said that there’s nothing more fulfilling than a task well accomplished. However, as we’ve observed from reality shows and even in our personal experiences, DIY ventures without the required expertise do not always end well.
Managing debt can be likened to constructing a deck, revamping a garden, or remodeling a bathroom. While simple projects can help develop necessary skills and raise confidence levels, biting off more than you can chew can lead to bigger, more expensive problems. Here are some considerations when deciding if you should reach out to a Licensed Insolvency Trustee.
Assessing Your Debt Load
To determine if you can realistically clear your debt in a reasonable timeframe using a DIY approach, consider the following:
Examine Your Budget: Start by identifying your fixed and flexible expenses, excluding all credit card, loan, and line of credit payments. Ask yourself if you can afford to make your monthly minimum debt payments. If possible, can you pay more than the minimum amount? The key to overcoming debt lies in decreasing the principal value of your debts. If you can’t contribute significantly beyond the minimum, you might be facing a potentially lengthy timeline to clear your debt.
Increasing Cash Flow: Consider other ways to augment your cash flow, like increasing your work hours or getting a part-time job. However, be mindful of any potential negative impacts such as additional taxes, childcare, transportation costs, etc., which could counterbalance any extra income you earn.
Assets: Do you own assets that you could sell for a quick cash boost? Selling off lightly used items like clothes, electronics, secondary vehicles, etc., could help you reduce your debt. However, think twice before selling anything you might want to replace soon, especially if it means taking on more debt or anything that might be protected in a Bankruptcy or Consumer Proposal (e.g., RRSPs; equity value in tools, vehicles, real estate, etc.).
The Long-Term Perspective
Every expert started as a beginner, and the best professionals continue to learn new skills throughout their careers. Admitting that you need professional support to handle your debt can be a daunting realization, but it might be the best decision you ever make.
Consider consulting with a Licensed Insolvency Trustee for a free, no-obligation assessment of your debt situation. They can help you understand your financial challenges, discuss your options, and provide an impartial opinion on the quickest and most cost-effective way to get your finances back on track.
If you decide the DIY route isn’t suitable for you, remember that Licensed Insolvency Trustees are the only professionals who can guide you through the Bankruptcy or Consumer Proposal processes. Even if you decide to handle it yourself, they can provide tips, strategies, and resources to boost your DIY efforts. Either way, they will ensure you have the confidence, information, and skills you need to succeed both now and in the future.
