How Canadians can solve their debt problems
According to a new report released today by the OECD, Canada is leading the world when it comes to household debt.
The group calculated household debt levels compared to the size of the overall economy in 28 OECD nations, and found that the household debt-to-GDP ratio in Canada was higher than in any other country studied, at 101 per cent. [CBC]
This stresses the need for Canadians to get a handle on their debt and learn how to better manage it. If you are having trouble paying your bills and debts, here’s some sound advice:
- Be honest, be proactive! If you know a payment will be late, call your credit card company (or mortgage broker or bank), right away and setup a payment schedule. In most cases, being proactive won’t hurt you, and most companies are willing to work with you.
- Understand credit: understand what makes up your credit score and what will affect it. Here’s a free guide on understanding your credit.
- Keep cards paid off: try to pay off your credit card balance each month, not just the minimum payment. But, in any case, pay something. Try not to be overwhelmed by the grand total of your debts, just chip away a little at a time.
- Pay your payments on time: just one late payment can affect your credit in a negative way, and will also raise your interest rate in the future.
- Budget: simple advice, but set a budget and make sure you stick to it. It also may be helpful to create a repayment plan for your bills/debts.
- Control spending: at the first sign of overspending on your card(s), stop using them. If you really can’t control yourself, give your credit cards to a friend for safekeeping until you get them under control again. This also isn’t the time to be splurging or taking on any purchases that aren’t necessary.
If you’re feeling overwhelmed by your financial situation or the burden of your mortgage, please contact me right away so we can talk about it. Also, here’s a great article on how to cope with debt-related stress.