Archive for March, 2012

It’s Debt season

Its debt season!  After a  fall and winter of indulgence many of us find ourselves  behind in our repayments of debt. Before you know it  the black hole of red ink is bigger and bigger and a financial crisis ensues. It may not even be over indulgence, an accident, illness, job strike or layoff are all set backs that can cause debt stress. Credit cards, line of credit or mortgage payments  it does not matter which , non payment is not healthy.

If you work with an advisor or live in a perfect world  you’ve got an emergency fund set aside, that  3 to 6 month cushion of funds you can live on or use to get back on track. Many of us in the real world however live pay check to paycheck or have only a small amount of savings  ( usually in the form of an RRSP) .  Knowing  how to budget   , which expenses to cut ,  how to access any other potential resources  and where to get help can make a real difference in your financial survival.

Budgeting only works if you keep it simple and short term. Too often good intentions are derailed by that over whelming long term look at where you want to be in 5 or 10 years . Here are five tips to help you start  your budget

Step 1  keep track of all your spending  for 2 weeks , especially  the non essential spending, the where how and why  will help you understand your spending habits

Step 2 Get your money’s worth  !  review expenses like  telephone, cable, bank fees  are you using all the features you pay for?  Can you do with less  or find it somewhere else for less?

Step 3 Prioritize    cover the essentials first   rent/mortgage, groceries, travel, saving fund ( yes savings   pay your self  the sooner you start  the better off you will be )

Step 4  Envelope/Jar     setting aside money for the week for groceries, gas and entertainment  will help you not to overspend    research shows  using  debit and credit cards  leads to overspending   its just too easy    bank once a week and use cash

Step 5  Proactive saving    you know when your taxes are due or when the car needs servicing  so set aside money on a monthly basis for these periodic expenses

 

Quite often those in financial stress find it difficult to ask for or find help. Its really important  to access the correct service to help you get a handle on your situation. That could be learning better money management skills or having someone help you develop and maintain a repayment plan for your debts. In some  cases it could even involve intervention with creditors  to reduce interest  and schedule repayment.  I recently attended a networking event  where I was introduced to a group who could help people do just that. We are fortunate in the Eastern Ontarios area to have a great credit counseling group but there are many such groups doing credit counseling across the country.

K3C Credit Counselling is a non-profit, charitable organization established in 1967 dedicated to helping people achieve financial stability. Their mission is to provide credit counseling as a social service in the public interest  to the people of the communities they serve.  A Debt Management Program and educational Budgeting and Money Management program can help those on that slippery slope of debt.

They can’t perform miracles  but have the people to help clients make the most informed decisions about their finances.  Here are a few signs you may need their help

You have cash flow difficulties

You are using pay day lenders

You need to pay your Student loans

You are thinking about bankruptcy

You no longer answer the phone due to collection calls

You need help planning a big purchase or budgeting

You are combining incomes/debts  with a partner

You want an honest evaluation of your situation

 

Too often in my practice I hear about  people who have too much debt. I cannot help those people plan and save for retirement or even a rainy day until the debt is serviced !   If you find yourself nodding yes   to many of the above statements  maybe its time to find some credit counseling help.

Please note this is for informational purposes only, Heather Lang/CedarlaneFinancial Consulting/FundEX Investments Inc. have no referral arrangement with K3C  and are not responsible for any actions  beyond this information piece .

Visit www.k3c.org for a free assessment of your financial picture