Your Best Debt Solution Could Be Making More MoneyDec 20, 2016
For many Canadian families, the holiday season — and holiday shopping — has a way of highlighting the state of their financial situation. For some, the situation might be that their income isn’t keeping up with their spending. If you’re in need of a debt solution, or are looking for a plan to avoid debt before it gets out of control, now is the right time to sit down and set your goals for the coming year.
Even one year can make a big different to your financial situation. And one of the most straightforward ways to control debt is to make enough money to meet your financial obligations — or wants — and avoid using credit or loans.
For some Canadians, last-minute purchases or unplanned expenses stand in their way of saving or staying on budget, according to a recent Tangerine survey. And while those immediate consequences are troublesome enough, the long-term effects are daunting. More than half of families surveyed said they were worried they wouldn’t be able to support their kids during their post-secondary education, and a staggering 73 per cent are worried they don’t have enough for retirement. Not surprisingly, the majority of that same group of respondents are paying down debts that are preventing them from saving.
If you’re concerned about your debt, the time to set goals and create debt plans is now. Families have an array of costs to contend with — child care, mortgages, education and recreation fees, and medical expenses are common. The additional discretionary costs for special occasions like birthdays and holidays really adds up, too.
Start by identifying your priorities along with your spending and savings goals, and attach realistic timelines to them. That will give you a better idea of how much money you’ll need to bring in to achieve your objectives. Making a debt control plan to eliminate, or avoid debt can be empowering and motivating. The Financial Consumer Agency of Canada (FCAC) offers a useful Financial Goal Calculator that can help you structure your plan.
Work more to spend more
Today, it isn’t unusual to learn that someone is holding multiple jobs. In fact, approximately 959,000 Canadians had two or more jobs in 2015, according to Statistics Canada. For some families, taking on more work is a means to an end. Short-term goals may be paying off a vacation or holiday debt, or an unexpected cost like a vehicle repair.
For others, the goals are medium-term or long-term. One partner taking on more work to supplementing a maternity or paternity leave for a year or two can help float a family and avoid additional debt. Moonlighting or having a side business can be the additional bump families need to maintain the lifestyle they enjoy. Annual family vacations, arts and sports activities, or dining out and attending entertainment events can get costly. But the rewards can be that much sweeter if you can plan a year or more ahead, pay out of pocket, and avoid debt.
The best debt solution is avoiding debt wherever possible. As many moonlighters will tell you, working more has its costs, not just benefits. Time away from family, and personal well-being should be considered. Long-term goals like paying for kids’ education, contributing to RESPs and RRSPs, and putting money away for family inheritance can also come to fruition if you bring in more money over time. In these cases, recognizing your goals early means that contributing a relatively small amount every month can make a big difference to your end goal many years down the road, while allowing you to maintain balance at home.
What are you doing about debt control? Tell us your story on Twitter. #BDOdebtrelief #LetsTalkDebt