How to Make Digital Tools Part of Your Debt Reduction PlansDec 19, 2016
Have you considered creating a debt reduction plan to tackle your debt? Vernon hasn’t been hit as hard as other major BC cities when it comes to real estate or cost-of-living, but many people are still struggling to get by. Across Canada, record-low mortgage and loan rates have made consumers rush to buy homes, renovate or take on more consumer debt; a trend that can’t be sustained for long. Some experts say that lenders should be stress testing a home buyer’s ability to pay higher interest rates to anticipate the future, but home buyers who are initially denied by major banks, seek private lenders to complete the sale. When interest rates do rise, some Canadians will see a significant monthly cost increase — those with already-high debt may feel real financial strain.
What you should know if you’re going cashless
Parting with digital money can be easier than parting with cash, especially with the rise in contactless or “tap and go” payment methods. If you have one or more mobile payment apps, think about how easy it is to tap your smartphone at the checkout. Multiple small digital purchases can also be harder to keep track of and easily forgotten. A greater focus on financial literacy can help consumers keep debt to a manageable level so that if and when rates rise, there will be less chance of financial distress.
How to lower expenses and reduce debt
- A budget can be the most important tool when determining financial health and planning for the future. Digital budgeting apps can take the guesswork out of budgeting and allowing the user to take it anywhere. Mint is a budgeting app that collects data from all your bank accounts and debt sources to formulate a budget and keep you informed about your spending and debt levels at all times. Wally is another popular budget app that allows you to take pictures of receipts and automatically categorizes those purchases.
- Cut costs in your budget that are unnecessary. Start by reviewing subscription services since they usually deduct from your account each month, then move to cable bills, cell phone plans and gym memberships. Take a look at daily spending. Do you buy lunch each day? You can save $50 a week by brown-bagging your lunch. Instead, look for the best grocery deals each week by using coupon apps such as Flipp or Checkout 51 to save money.
- Set up an automatic savings account through your bank that will deduct a set amount each paycheque to pay yourself first. You can also use your budgeting app to remind you when bills are due so you’ll avoid interest charges.
- Pay down debt. An app like Debt Free can help you efficiently pay down debt or you can implement the snowball method of debt repayment on your own. If you can, try to save while paying down debt so you won’t need to rely on debt in the future.
- Speak to a Licensed Insolvency Trustee about your debt plans. An LIT can suggest the best options to deal with consumer debt which may include credit counselling, budgeting, consolidation, or in some cases, insolvency through consumer proposal or bankruptcy. Seeking help as soon as you recognize debt is a problem will allow you more options for debt repayment.
Are you finding it difficult to afford your debt? Are you worried about meeting your monthly expenses if rates were to rise? Share your thoughts on Twitter by searching #LetsTalkDebt #BDODebtRelief