The Top 5 Tips to Avoid Drowning in a Pool of Debt
If you're like many Canadians you may be tackling more debt than you've ever imagined. One day you just take a look at your pile of bills and wonder how your finances ever became so out of control. Here are the top 5 reasons why this commonly occurs:
You may simply not be making enough money. If you're bringing home $400 - $500 weekly, you'll need to be prepared to fit your lifestyle to your income. With this amount of money it can be a lot more difficult to drive a fancy car or take a vacation every year. If you're trading time for money and only working part time so that you can spend extra hours with your kids, you'll need to weigh the pros and cons of doing so. It's okay to make this trade-off as long as you can fit your lifestyle into your income.
Lack of financial skills
It's a good idea to start teaching kids early in life how to manage money. Many people just don't get it when it comes to handling finances. While it's simple in theory, it can be much more difficult to apply in real life. On paper you just need to make the income match up with the expenses. In reality, you'll need to walk past the tempting items you see when you're shopping and say no. This can be incredibly difficult especially if you have a plastic card in your pocket.
Inability to curb spending
There may come a time in your life when your income will go down for some reason or another. At these times in your life a new budget needs to be prepared to reflect the changes in your income.
Lack of insurance
We have learned the hard way here in Calgary that sometimes life can throw you a curve ball. When the flooding occurred last year, many people found that their house insurance wasn't going to cover their damages. Not only should you have insurance in place to cover the variety of curve balls that you may be thrown but you should inspect your policies carefully.
Not saving money
It's so important to set up a safety cushion to cover an emergency. No matter how much you can afford to save, you need to get started early. Your end goal should be at least 2 months worth of income set aside to help cover emergency situations. This will help get you through an unexpected event in your life while you are waiting for the insurance to get any claims settled.Posted by on