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Where to Start with Managing Debt

With the significant inflation of so many necessary aspects of Canadian life today, it is no wonder that debt has become such a common struggle for so many. Living beyond one’s means coupled with excessive borrowing from banks and other financial lenders has the inevitability of catching up to you. Speaking with experienced credit counsellors in Windsor like S Funtig & Associates is a great way to understand debt management.

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One of the most commonly recognized smart financial moves for good reason is budgeting. Tracking your expenses and allotting specific amounts from your income to cover the costs can certainly help you avoid debt. Another tactic is setting up a savings account devoted specifically to emergencies for when you need some extra money. Ideally, saving enough to cover several months of expenses will be significant in offsetting some money you owe.

Being aware of what your debt actually is, how much and to whom you owe it, is another crucial step to keeping it under control. Trying to ignore the problem simply won’t do anything besides cause the numbers to keep growing. Remember to include the monthly payments expected, as well as what you can actually afford, applicable due dates and interest. As you pay them off, update the list you put together to stay organized.

To avoid late fees and interest costs added to your debt, make timely payments as much as possible. Use your phone or computer to set reminders for yourself, about a week in advance of the hard deadlines, or use a good old fashioned datebook if you prefer—whatever will help remind you. Coordinate them with when you know your pay cheques from work come in to ensure you have enough money and don’t end up with overdrafts.

Always send payments as quickly as possible, even in cases where you passed the due date. Waiting until the next month can only make matters worse if your creditors report it. S Funtig & Associates are long-term credit counsellors in Windsor who can walk you through these helpful strategies. Further, if you happen to not have the full amount available to pay, aim to cover the minimum payment for now—it will keep your creditors a bit happier while ensuring you deter your debt slightly.

When making payments to multiple creditors, it is important to keep in mind which ones come with the highest interest rates. The longer you go without paying them, the more money you will ultimately owe, thus the higher priority they should take in your efforts to pay everything back. Any debts with a particularly low balance should also get high priority because you can most easily cross them off of your debt list and lower the number of creditors to whom you owe.

Ensuring any assets you have match with your liabilities is an important rule of thumb to remember. A home, for example, is considered a “long-term asset” because it takes most people decades to pay off their mortgage in full. Therefore, from a financial standpoint, it is not ideal to make payments with a credit card, which is considered a “short-term loan” because you are supposed to pay it off each month. Meanwhile, a “long-term loan” for a “short-term asset” is equally unwise. Contact S Funtig & Associates, credit counsellors in Windsor with expertise, for more information and financial advice.