Tips from a Licensed Bankruptcy Trustee on How to Control Your Debt
If you struggle with debt, you are not alone. Canadians are living with more debt today than in previous generations, and the major contributing factor to this unprecedented level of debt is overspending, and living beyond our means.
Believe it or not, this is actually good news.
If we’re overspending because our expectations are beyond our financial means, then the solution is actually pretty simple: Set new expectations. Developing a budget, cutting out unnecessary expenses, and focusing on your own financial goals will all help to steer you in the right direction.
As Licensed Bankruptcy Trustees, the team at Fuller Landau Debt Solutions offers a few tough-love strategies to help you overcome some of the more common financial mistakes that get people into trouble:
Don’t Tie Your Expectations to Others—Especially with Regard to Real Estate
A very common mistake when it comes to major investments is to compare yourself to friends or family. Trying to “keep up with the Joneses” has caused many hard-working people to fall on hard times.
Your next-door-neighbour may be able to afford a shiny new sportscar, but that doesn’t mean that the same is true for you. And your parents may have purchased their first home at the age of 25, but that might not be a realistic expectation in today’s market.
Unshackling yourself from unrealistic expectations, when it comes to personal finances, can be both rewarding and liberating. Sure, you may have to take public transportation for a few extra years, rather than drive to work, but the savings can really add up. And in terms of buying a home, there are many alternatives to consider, such as renting, sharing space with a housemate, or commuting from less-expensive neighbourhoods.
Also, don’t forget the ‘hidden expenses’…
Many people fail to consider the extra, hidden expenses when making a big purchase. Your monthly lease or financing payments on a car may be manageable, but what about the costs of insurance, gas, maintenance, and repairs? The same is true for home ownership – mortgage payments, utilities, and property taxes can add up, and very quickly translate into insurmountable debt.
Plan Carefully for Retirement, and Consider a Downgrade
When you retire, you will most likely need to get by on a lower income (such as your work pension, CPP, and RRSPs). This can make many expenses that were affordable during your working life – such as property taxes and utilities on a house – become much more difficult to pay.
Lower retirement income can make things particularly difficult when it comes to outstanding debts, such as mortgages or credit card debt. Remember: If you had a difficult time maintaining payments on a debt when working full-time, you will need to do something about them before you retire.
There are a number of solutions for dealing with debt, including debt consolidation and credit counselling. Be sure to explore your options with a Licensed Bankruptcy Trustee before your debt spirals out of control
Identify More Practical Alternatives to the ‘Latest-And-Greatest’
Big, fancy, shiny new things are nice to have, and it can be fun to treat yourself on occasion—but it’s important to ask yourself, “What practical value does this provide? And is there a less expensive alternative that’s almost as good?”
For example, buying a brand new car is a major investment that loses significant value immediately after it has been driven off the lot. So why not buy one that’s already been driven off the lot? A small compromise may translate into a huge savings.
There’s nothing wrong with treating yourself now and again, but it’s important to realize when you’re spending outside of your means.
If Debts Start to Get Out of Control, Seek Help!
It is common for most debtors to try to deal with their financial troubles themselves, by accumulating even more debt. Maxing out one credit card to pay for another, taking out a personal line of credit, making arrangements for payday loans—these can all compound a problem into an unmanageable situation.
If your debts are starting to get out of control, rest assured that you are not alone.
With offices in Toronto and Hamilton, the team of Licensed Bankruptcy Trustees at Fuller Landau Debt Solutions is here to help. We can present alternative options to Bankruptcy that may be better for your specific situation, including a Consumer Proposal, credit counselling, and debt consolidation. Call today for a free consultation – it’s time for a fresh start and a FULLER life.