Many individuals continue to carry debt with no understanding of the potential problems surrounding their increasing debt load.   Eventually, an issue will come up in their lives that makes their clustering debts a big problem.   If you are carrying a heavy debt load, it is a good idea to be proactive in dealing with your finances before you reach a crisis situation.

The first step in dealing with debt is to recognize the warning signs that you are struggling financially:

  • continually spending all your money before the next pay day;
  • using credit cards for regular expenses like gas or groceries;
  • living from one payday to the next;
  • borrowing money from friends or relatives to make ends meet;
  • garnishment of wages for outstanding debts;
  • only paying the interest or the minimum monthly payments;
  • receiving phone calls or demands from your creditors;
  • having your utilities, or accounts suspending your privileges.

If any of those warning signs are an issue for you, the next step is to come up with a plan to gain control of your finances.   If you are unsure where your money is going, you may want to spend a few months tracking your spending.  After a few months you will better be able to see where your money is going, and can review whether you are spending more than you would like in certain areas.

After tracking your spending, you can then set a budget and stick to it.  It is at this stage where you can usually determine whether you need to seek expert advice regarding your debt load.  Sometimes you need to see the numbers in black and white to realize that you can no longer afford your obligations to your creditors.

There are many resources to assist you with managing your debt.  Look into the options first to see what’s right for your unique situation:

  • credit counselling companies are available and may assist you if you’re having troubles  making a budget and sticking to it. Note:  services may differ from province to province;
  • a government licensed Trustee can provide you with personalized advice on debt management and help you determine which strategy is right for you including filing a consumer proposal or declaring bankruptcy;
  • beware of services offering quick credit fixes or instant debt removal as some of these are “too good to be true” and may end up costing you more in the long run.

Whatever action plan you come up with to get out of debt, remember that it can take a long time to get used to following a fixed budget, or to pay down debt that has taken years to accumulate.  Stay positive and do not be afraid to contact a trusted advisor to help you through the process.