Find Debt Help Now to Increase Savings in the New YearDec 20, 2016
Have you set a goal to add to your savings in 2017? Your first step should be to determine if you need debt help. Household consumer debt numbers are up again in the third quarter of 2016, and high debt loads aren’t only stretching household budgets and adding to financial stress, debt is inhibiting Canadians’ ability to meet other financial goals. Over half of Canadian families feel that their debt is preventing them from saving more. If too much debt is an issue for you, learning about ways to reduce your debt can help you increase your ability to save, which can greatly improve your financial outlook for the coming year.
Factors that may be contributing to your debt
Low interest rates have been a fact of life for quite a while, and they certainly make borrowing very enticing. But soaring hydro rates in Ontario and increased living costs have likely affected debt loads too. These increased costs have caused a growing number of Ontarians to rely on food banks, because they’re faced with the choice of paying the bills or feeding their families. This situation can be especially devastating during the holiday season when money is tight and budgets are stretched.
How reducing debt can increase savings
Almost 80 per cent of Canadians have long and short-term savings goals, but their debt may be holding them back. When a large portion of your income has to go towards debt repayment or bills, financial problems arise, making it difficult to break the cycle. This Life-Pie chart on Gail Vaz Oxlade’s website demonstrates a balanced financial allotment of living expenses, debt repayment, savings and all other necessary financial obligations. When one area of your finances is encroaching on another, such as debt payments inhibiting your ability to save, your quality of life can suffer.
Alternatively, you can see by viewing the chart that reducing debt payments can significantly make more room for savings to grow, protecting you from future debt. Growing an emergency fund should be the first line of business when you begin saving, giving you a buffer each month and keeping you from adding to debt. Then, move on to larger goals and divide your savings into long-term (retirement), medium term (family vacation) and emergency (job loss, car repairs).
Not sure where to start?
If you’re wondering where to begin, the first place you should turn to is your budget. If you don’t have one, use an app such as Mint.com or a printable spreadsheet to get started. Lay out each expense and then determine if costs can be cut. Often, once you see all expenses in front of you, you may realize you’re overspending in some areas. This is exactly what a budget is meant to demonstrate. If you’re able to cut back on everyday expenses, you can redirect those funds to savings. United Way’s Small Change app can help you with this process — as you change your spending behaviour, the app tracks your progress, showing you how much you’ve saved. Other coupon apps such as Flipp or Checkout 51 that offer cash-back and savings on everyday items can also help.
Do you know your debt options?
If you are living paycheque-to-paycheque, like many Canadians, there may be no room to cut expenses. But that doesn’t mean you have to put aside your savings goals. In Brantford, a Licensed Insolvency Trustee can meet with you to discuss your debt options and review your financial situation. A LIT is able to advise you about which debt options would work best for you. Some of these options may include a referral to a credit counsellor for budgeting advice, or a referral to a lender to assist you with a debt or loan consolidation. If you’ve reached the point where you cannot meet your debt obligations, a LIT can work with you to file a consumer proposal or bankruptcy, which is always a last-resort option.
Although there are many advantages to consumer proposals, the biggest advantage may be that in most cases of heavy debt, a consumer proposal is an excellent alternative to bankruptcy. It can help you settle your debt and keep your assets, while restoring peace of mind to those unable to meet their current financial obligations.
One of the best ways to prevent financial problems is to set financial goals. If your goal is to increase your savings in 2017, you may first need to seek debt help to decrease your debt. Before you set your financial goals for the new year, plug your numbers into the Financial Goal Calculator. This online tool from the Financial Consumer Agency of Canada can help you create a plan to pay down your debt or increase your savings – and it can help you decide what your next steps should be.
Look for debt help now and start meeting your savings goals sooner. Connect with other Canadians who share your journey on Twitter by searching #LetsTalkDebt #BDOdebtrelief