Found 8 posts tagged as "Debt"
Money Talks News just featured a guest post from a social worker who wiped out $37,000 of debt in one year. How’s that for inspiring? Or maddening, if you're the envious type. As someone with an outstanding mound of student debt, I find it personally inspiring. Here are some reasons why.
You're barely making the minimum payments, your credit card is tapped, and you haven't contributed to your RRSP in years. After your budget is balanced and you've cut all costs to where it hurts, now what?
It's time to get a second job. Don't be shocked by this harsh reality -- many Canadians today are moonlighting, or working a second job in addition to their regular employment.
According to Statistics Canada, the number of Canadians working at two or more jobs or businesses has more than quadrupled since 1976. Multiple-job holders account for 5.3% of all workers, and one-third of all moonlighters took a second job to meet regular household expenses.
I should know -- I've been moonlighting at multiple gigs ever since I graduated from university with a massive student loan hanging over my head. When I started my adventure in juggling multiple jobs 15 years ago, my intention was to get the debt monkey off my back fast, and then go back to living the life of a single-job worker. But after paying off my $17,000 student debt in six months, I kept working the night shift. Why? I liked banking the additional dollars, but I mostly loved the freedom that having a cushion of savings afforded me.
Canadian personal finance blogger Krystal Yee also spends her days, nights, and the odd weekend working multiple jobs. By day the 28-year-old works as a graphic designer; by night she morphs into a freelancer who writes for multiple media outlets, including her blog Give Me Back My Five Bucks.
"The extra income has allowed me to save more in my emergency fund and retirement accounts, purchase my first home in Vancouver, and travel," she writes.
By the end of the year Yee expects to boost her income by a staggering 50% -- that's an additional $25,000 over her regular full-time salary.
The secret to her financial success requires some serious dedication. Here's how she gets the job done:
Josie says: "My husband has made my life miserable with his miserly ways. Of course I want to pay off our debts but I don’t think it’s worth sacrificing all personal spending. I’m only looking for a little bit of money each month but he won’t budge. Advice?"
Take a bit of comfort knowing that finding that sweet spot between debt reduction and an enjoyable lifestyle is everyone’s balancing act. The key is to allocate every dollar brought home so that you can actually see the monthly impact (large or small) of each purchase, both luxury and necessity. The other thing you can do to lessen your miserly pain is to make sure your debt reduction strategy has a clear timeframe.
Jack says: "I graduated last year and have run up my credit card which my parents have refused to help me pay. Now I’ll be stuck paying 20% interest on almost $10K. I need help."
I hate to say this, but based on the information provided, a $10K bailout from your parents isn’t going to do a thing for you unless you change your approach to spending.
Without a proper spending strategy for Your-CO, you’ll be right back in $10K credit card debt in no time. There is no magic pill and no sum of money to get out of debt and stay that way. In your case, the $10K sum is simply a short term fix for a symptom of a much larger problem – the western disease you have been infected with commonly referred to as consumer debt.
Here’s a scary piece of business: I understand that today, a pre-approved credit card comes with the standard university frosh kit. Unfortunately, they don’t include a proper user manual for this extremely useful tool.
Andrea writes: "My closet is full of a certain premium ‘yoga’ brand that’s got me into consumer debt. What do you suggest?"
The short answer
Unless you’re getting a proper endorsement deal, why would you waste your money? There’s not much you can do about yesterday, but loads to think about for tomorrow to help change your outlook and future purchasing behaviour.
The real issues
I am often stumped by two questions: “Why do people buy what they buy” and “Why would anyone pay extra to sport a logo?”
There are some brands I totally get, like Louis Vuitton. This is a luxury brand; their purses (for example) will likely last a lifetime – these are heirloom-quality, handmade pieces. I also get the concept of wearing a logo for money. Eearlier this year, Angelina Jolie accepted a $10 million endorsement deal to market the LV brand.
 No one likes getting dumped, least of all banks. But if the relationship with your bank has soured, then maybe it's time to start a new romance.
That's exactly what Martin Dasko did. Dasko, a Ryerson University student who blogs about finance at Studenomics, says he broke up with his bank after 13 years because he was tired of paying high bank fees.
"At the end of the day it's all about money. Interest rates and bank fees are what enticed me most," says Dasko.
Peter Anderson also lost love for his bank. After a fiery 4-year relationship, Anderson publicly broke it off online by sharing his experience in Closing my account.
"I was frustrated with the unhelpful, poorly trained customer service reps," says Anderson. "It was stressful just dealing with the bank. Their unusable website interface caused me endless headaches."
Reasons for breaking up with a bank can vary. Both Dasko and Anderson say the process wasn't as painful as they had expected and regret not switching accounts sooner. To help you prepare for a painless bank break up, they offer these tips:
We're up to our eyeballs in debt -- a whopping $100,000 for the average Canadian family, according to a recent report. Canadians also owe far more then they earn.
The report, released by the Vanier Institute of the Family last month, says the debt-to-income ratio is a record 150%. That means for every $1,000 in after-tax income a Canadian family earns, they now owe $1,500.
In previous reports tracking the health of Canadian family finances, the institute found that the debt-to-income ratio has been steadily climbing over the past 20 years. In 1990, the average family debt reached $56,800 with a debt-to-income ratio of 93%, making the current $100,000 figure a substantial increase of 78% over the past two decades.
So now what? Here's where to find our biggest debts, and a few straight-forward ways to tackle them.
1. Mortgages.
How big is your mortgage? Just over half of Canadian homeowners (55%) carry a mortgage, with the average totalling $172,000 in late 2010. With Finance Minister Jim Flaherty warning of higher mortgage rates in the near future, maybe it's time to deal with that looming debt over your head.
Bottom Line: Mortgages account for two-thirds of Canadian household debt and are one of the biggest strains on the family budget. Using your prepayment privileges and getting on an accelerated bi-weekly payment plan are two strategies that could help you pay down your mortgage sooner. See 5 Ways to get mortgage-free faster for the details.
If you're in the market for your first home, be sure to read 5 Smart rules for first time home buyers -- maybe you can avoid taking on a massive mortgage before interest rates go up.
2. Consumer credit and loans.
Like mortgage debt, the use of personal loans and credit are on the rise. In 2010, the average household's consumer debt reached $36,350, an increase of of 87.9% over the last 20 years.
Bottom Line: Paying with plastic can be a costly habit, especially if you're only paying the minimum every month. Get savvy about the new credit card rules, increase your minimum monthly payment to decrease your interest charges, and don't get trapped by these 5 Costly credit card tricks.
3. We're not saving.
While debt is on the rise, households have seen a steady decline in savings over the years. In 1990, Canadian families managed to stash away $8,000 -- a savings rate of 13.0%. In 2010, the number dropped to 4.2%, averaging $2,500 per household.
Bottom Line: Spending ten minutes today could save you over $1,000 this year, and also try any of these 50 Ways to save $1000 a year if you need a bucket list of ideas to get your savings started. Just be sure to stick your money in a Tax-Free Savings Account to keep the Tax Man from biting into your returns.
Your Turn: Has your savings rate taken a hit during the recession?
Kerry K. Taylor writes at Squawkfox.com, a blog where frugal living is fun. Kerry is the author of 397 Ways To Save Money: Spend Smarter & Live Well on Less.
Canadians are falling deep into debt, living paycheque to paycheque, and saving very little for emergencies and retirement. This poor state of our personal finances is highlighted by a national survey by the Canadian Payroll Association (CPA), where 59 percent of Canadians were found to be living paycheque to paycheque and would be in financial difficulty if their pay was delayed just one week.
If you're one of these cash-strapped Canucks looking for a few extra funds to make ends meet, there are some solutions. The financial fix may not make you rich overnight, but these strategies may help you bank some savings when times are tough.
1. Start a simple budget.
If there's nothing left from your last paycheque and you're counting the days until your next, then maybe it's time to become serious about your cash flow challenges by starting a simple budget. Don't let the B Word scare you off -- a budget is just a plan that lists your expenses and exposes the places where you spend.
Start by following these 3 Steps to Starting a Simple Budget, and download the free spreadsheet too. For those who prefer a software solution to a budgeting problem, check out these 6 Free Budget Software Choices for Everyone.
2. Track your spending.
You can't complain about your lack of funds if you don't know where your money is going. To get back on the positive financial track, grab a notebook and write down the little (and big) things you spend your money on every day. You may just see a pattern to your spending habits and find places to cut costs. Learn How to Track Your Expenses and don't miss the free Tracking Expenses Worksheet to get you started.
3. Stop the senseless spending.
Is your home bursting with stuff? If your closets are stuffed, your credit cards are maxed, and your spending worksheet resembles a thick book, it's time to cut your spending. Sorry to be the bearer of bad news.
Take a hard look at your budget and find the places to cut back. Maybe you are wasting money on your car, or need to find ways to cut your food bill. Wherever your spending is straining your budget, get tough and cut back.
4. Make more money.
Working a few extra hours a week or finding a part time gig can do wonders for a budget that won't balance. No one likes to spend more time on the job, but sometimes you have to bring home more dough to cover the costs. See 7 Ways to boost your income and How to sell your stuff with free online classifieds for some money raising ideas.
5. Increase your minimum payments.
Paying the minimum balance on your credit cards, student loans, and other debt can be a tough battle, but it's a wise move to protect your credit score. Increasing your minimum payment by even a little can save you hundreds, even thousands, in interest charges and end your debt sooner.
Your Turn: Why are so many Canadians in debt? How do you manage between paycheques?
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