Set Achievable Money Goals as One of Your Debt SolutionsMar 17, 2019
Whether you’re carrying a little debt or a lot, you probably spend a lot of time worrying about it. When debt is affecting your current and future financial health, it’s natural to worry. But, think of what could you achieve if you redirected that energy. Putting your time and thought into creating money goals is one of the best solutions for getting debt out of the picture — as long as your money goals are achievable.
It’s important for women to actively manage their own financial situation, particularly Gen X women. Of all Canadians, Gen Xers carries the most debt — an average of $10,000 of consumer debt, according to a 2018 poll.
And while women, on average, are contributing almost half of the household income, they’re still more likely to carry heavy debt than men. As a group, Canadian women also struggle with affordability more than men.
Goal setting is a powerful way to move forward. Setting financial goals for budgeting, debt repayment and saving refocuses your attention on what you can do to change your situation.
Debt Solutions Goal #1: Create a budget and stick to it
If you’re worrying about too much consumer debt, chances are good that you’re not following your budget, or you don’t have a budget at all.
That’s understandable. In today’s busy world, it’s hard to remember every dollar we spend and to take the time to record our spending each day. And life is always throwing surprise expenses at us that we don’t necessarily adjust our budget to accommodate.
But sticking to a budget is key to reaching your other goals, and with technology it doesn’t take much time. Use a template like this one and be honest about your income and expenses.
There are many free apps you can use to track your spending so you know where your money is going. Stay on top of your spending so you can adjust your budget as required.
Debt Solutions Goal #2: Get rid of your most costly debt
Credit cards have high interest rates. Start chipping away at the unpaid balance on the credit card with the highest interest while maintaining your minimum payments on any other cards, loans and lines of credit.
Commit to putting all extra money toward eliminating this debt. Once it’s gone, apply the money to the next debt. This technique is called the debt avalanche.
If you don’t have extra money to use for debt reduction, talk to a Licensed Insolvency Trustee (LIT). An LIT can advise you on the debt solutions that might work for you and help you decide how to move forward to ultimately clear all debt.
Debt Solutions Goal #3: Establish an emergency fund
Life is unpredictable and most people are not prepared to deal with unexpected illness, injury or job loss. It’s best to have an emergency fund equal to three to six months of expenses in case something unexpected happens.
Build your emergency fund slowly — contributing only as much as you can afford, even if that’s $10 a month at first. If you contribute consistently, you’ll eventually have enough of a cushion to feel prepared for anything.
Once you’re out of debt, you can add a fourth goal of increasing your retirement savings with these monthly contributions.
Nobody wants to worry about debt. Some debt solutions are right at your fingertips: Setting goals to balance your budget, eliminate debt and protect your family in case of an emergency allows you to take action to change your financial situation.
Are you worried about debt but avoiding taking action to get rid of it? How has setting goals helped you in other areas of your life? Tell us your story on Twitter. #LeaveDebtBehind #BalanceForBetter #DebtSolutions