How to Improve a Dysfunctional Debt Relationship #DebtReliefFeb 26, 2019
Did you start the new year with the goal to tackle your debt? Do you and your finances have a complicated past? We are here to offer some debt relief tips on how to improve your relationship, just in time for Valentine’s Day.
Your debt – always there when you need a quick fix but lacking long-term stability. Instead, it takes and takes, leaving you to pick up the pieces… and bills. Every. Single. Time. Leaving any relationship, even a bad one, can be hard. You’ve known each other for so long and you’ve come to depend on one another. But, you know, deep down, that you can’t fully accomplish all your goals with debt hanging around. Time for a change!
How to end things amicably
If you’re ready to start the process of mutual separation, here are some things you should know:
- You’re not alone – 60 per cent of Canadians in a recent survey said they’re cutting back on spending in order to curb debt and minimize the effects of interest rate hikes.
- There are tons of resources – Learning to live without debt will take practice. Luckily, there are a lot of people who can help. Check out some financial bloggers like Christine Drummond at The Wallet Diet or Kerry Taylor at Squawkfox. You can also refer to Your Financial Toolkit, provided by the Financial Consumer Agency of Canada (FCAC)
- Your financial stress will dissipate – More than a third of Canadians reported feeling stressed, worried and anxious about their debt load. Once you break the debt cycle, you’ll feel like a weight has been lifted!
How to forge a healthier financial relationship
You’ve decided to take the next step and look for a healthier relationship. Here’s a checklist that will help you get over your debt quick:
- Just say no – Cut up those credit cards, put them on ice – whatever it takes to stop turning back to debt. To make this transition easier, write out a budget that includes all your monthly expenses. Then, withdraw cash for items in your budget such as clothing, entertainment and groceries so you don’t overspend.
- Divide and conquer – Add up your debt balances using a debt calculator, including your interest rates. Now, decide how you’ll repay those balances. Here are some options:
- Determine to pay off your smallest credit card debt balance by putting all extra money towards it, while maintaining the minimum balance on your other cards.
- Consolidate debt by combining your high-interest balances into a low-interest line of credit or credit card. Remember to cancel paid cards.
- Speak to your bank about applying for a consolidation loan that will combine all your debt balances and save you the interest.
- Talk with a debt professional such as an LIT who can advise which debt relief options will suit your needs. Compare your options using this calculator.
- Plan ahead – Without a back-up plan, you’ll be tempted to turn to debt again and again. Start with an emergency savings fund and aim to save 3-6 months’ worth of income as a buffer. From there, start adding to your savings account each payday to save for short, medium and long-term goals. Use this calculator to plan them out.
Ready to end your dysfunctional financial relationship? Take our debt relief advice and find more tips by connecting with us on Twitter #LeaveDebtBehind #LoveAndMoney #LITsCanHelp