“Debt.” Does the word make you want to curl up into fetal position and cry?
If so, you’re not alone. We carry a lot of shame about poor money management. The number of people who come to us, as financial planners, with their heads low and whisper about how badly they’ve messed it up is ridiculous. Feeling shame, and hiding from those feelings, only perpetuates the problem.
We’re not going to tell you to give up your daily latte if it makes you happy. We are going to ask you to look at the list of things you spend money on, and figure out which ones are for survival, which are for happiness, and which are for growth.
If any of your spending items don’t fall into these categories (survival, happiness, or growth) on a high level, then you’re spending out of habit, not out of choice.
The most important thing is to set aside any guilt you might be feeling and take some kind of positive action. You would be amazed at the amount of mental freedom and clarity you can feel just by addressing your debt and making a plan. Find someone to talk to. You’re much more likely to stick to your plan if you’ve told someone about it. It doesn’t matter who, really, so long as you feel comfortable being completely honest.
It’s an unfortunate reality that women carry more student debt than men, and have a harder time paying it off (in part, because we tend to make less money, on average, than men do).
This is stuff you can handle. It’s stuff you can tackle. Be honest. Hiding the truth about your finances pushes you further behind. Face it head on, so you can do something about it.
Quick tips: things you can do right now to start taking control of your debt:
- Get an idea of your credit profile. It’s better to know than not know. Keep in mind that repeated credit checks can negatively impact your credit score, but it’s important to know where you stand. Your credit score will affect your mortgage rate, car loan, or anything else you may borrow money for. Some companies, like Borrowell and Grow, can do a “soft pull” on your credit score, that won’t have an effect on your score.
- Call your credit card company. You may be paying for benefits you’re not even using. Ask them what their absolute lowest rate is, and tell them you want that. Cash back, air miles, etc. can work for some people, but if your goal is to get out of debt as soon as possible, you’ll want to be paying interest at the lowest rate possible in order to get ahead.
- Consider a consolidation loan, with fixed payments and terms. It’s easy to make minimum or interest-only payments on open credit products like credit cards and lines of credit. A fixed term loan arbitrarily creates your light at the end of the tunnel, where paying off your debt is HAPPENING, it’s not a choice you have to keep making every pay period.
- Request a free consult with a money coach. Cash-flow specialists like Money Coaches Canada are focused on moving you into a better financial situation – and they’re not selling any product other than their advice. It’s in their own best interest for you to succeed.