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Manage Finances: 3 Steps to Deal with Debt

The present uncertainty in the Canadian economy has generated mental stress among Canadians. One report states that 25% of Canadians were stressed due to debt, growing expenses and overall financial problems. Turns out our ability to manage finances has a big impact on both our budgets and our emotional state.

Why Canadians Feel Financial Stress

There are a few primary reasons why Canadians suffered from financial stress over the last few years:

  • Overall, income dropped over the last few years for the average Canadians (making it much harder for most to pay monthly bills);
  • Most Canadians were unable to control their expenses which gradually chipped away at their savings;
  • Both secured and unsecured debts grew in the past 24 months with many Canadians unsure of how to tackle this recent debt burden.
  • Although not as prevalent, another major issue was the inability to cover medical expenses, although not every Canadian faced this dilemma.

The good news is there are accessible solutions to debt-related stress. Follow these three financial steps and take control of your stress and learn to manage your finances.

1. Emphasize Different Money-Savings Options 

The habit of saving regularly a good amount of money is the correct financial step to control money and debt stress. To start, set up an automatic deposit into your savings account from each of your paychecks. Not only do you get into the habit of saving, but the removal of this money from your account helps prevent future debt through overspending.

To help set up automatic savings, use the simple 50:20:30 budget rule. Using this budget strategy, 50% of your monthly income is spent to pay off your regular bills like groceries, electricity and heat. The next 20% of your monthly income is used for savings. This is the portion that is automatically deposited into a savings account. The final 30% of the money can be spent on anything. The advantage of the 50:20:30 budget is that it doesn’t create a mental deficit—not only do you pay bills and save, but you also have money left over to spend on whatever discretionary expense you see fit.

2. Choose Safe, Secure Ways to Deal with Debt

In 2020, many Canadians have faced difficulties to repay their secured and unsecured debts. Though some government support exists all these steps were temporary steps.

In the new year, you have to think about and adopt new ways regarding how to deal with both secured and unsecured debts safely and securely.

1. You can think about mortgage refinancing if you are having difficulties paying off your mortgage loan. Mortgage refinancing may reduce the interest rate of your home loan and the result is you may have to pay a lower monthly payment every month for your mortgage.  

2. For your unsecured loans like high-interest credit card debts; you can choose one of the various options available to you. You can go for a debt management plan, debt consolidation loan option, or debt settlement option to tackle your unsecured debt problems.

These options may help you to ease your debt stress.

3. Another important point to note is that during this pandemic, many Canadians have leaned towards payday loans to fulfil their emergency money crisis. Payday loans have both positive and negative effects. 

On a positive note, the payday loan can fulfil your emergency money-need and on the negative aspect, the interest rates of payday loans are unimaginably high.

If you are in the trap of payday loans and suffering from unnecessary financial stress and anxiety; you can ask an expert regarding how to eliminate payday loan debt.

So, no more suffering from financial stress and anxiety regarding how to tackle your debts as you have a way now for your secured and unsecured debts.

3. Consult an Expert to Deal with Debt

Some sessions on basic money management may be helpful to curb your money and debt stress.

Other than that you can take help from a financial planner to get help on long-term savings and where to invest your money to get a financially-secured future.

The service of a credit counselling agency can be a great help for you if you cannot control your ballooning debt amount. The professionals from the credit counselling agency can help you by negotiating with your creditors on behalf of you or can provide you with sound advice on debt management.

So, if you are going through a stormy situation and do not know what steps to take to control your money and debt stress, remember there is a financial expert present there at every financial section to help you.

Final words

After reading the article, you may have understood that money and debt stress happen in our life due to the money management mistakes we commit.

But you do not have to be worried deeply regarding the financial mistakes you have made. With the correct financial guidance written in the article; you can control your money and debt-related stress.

So, do not let any financial stress control you and keep faith in yourself.

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