Tips for getting your household debt under control

Is the heat of household debt getting you down this summer? If so, you’re definitely not alone. The Canada Mortgage and Housing Corporation (CMHC) recently revealed that Canadian households owe more in debt than the entire value of Canada’s GDP. Many Canadians are struggling to get their debt under control, and rising interest rates and costs of living certainly aren’t helping. However, you may be able to make some improvements with a few simple adjustments! Here are some tips for getting your household debt back under your control this summer.

Pay more than the minimum amount

This can seem like a hard thing to do if you’re already dealing with debt. However, if you’re able to configure your payments so that you’re making more than the minimum contributions, this will help you get out of debt quicker. For one thing, making larger payments means you will be knocking out bigger chunks of debt each time you pay. The principal amount you owe will start to drop at a faster pace. Plus, the sooner you are able to clear out your debt, the fewer payments you will need to make. This means you will owe less interest in the long run, because you are reducing the amount of time needed to pay off what you owe.

Download budgeting apps

Budgeting apps are a more efficient and organized version of using a pen and paper or Excel spreadsheet to track your debts. In a digital format, you can quickly add in your income, expenses, debts, and payments for an accurate and up-to-date picture of your finances. Budgeting apps allow you to see where you spend and save, and how you can organize your money in a way that works for you. For example, some apps use the envelope system, where you spend your money out of digitized envelopes dedicated to one category of expenses, such as groceries or utilities. Other apps help you connect all of your accounts and subscriptions so you only need to look in one place to view your expenses and due dates. These apps ensure you don’t miss any payments, and they help you save and avoid overspending. In terms of getting your household debt under control, apps are a great way to organize your finances. You can view a list of our top app recommendations here.

Consider automating your payments

If you’re a forgetful person who is prone to missing due dates, automating your payments can be a life saver. Missed or late payments can bring down your credit score and result in late fees, which can contribute to your debt levels. When you automate those payments, it means the money you owe is sent to lenders on time, every time. Once you set up the proper dates and amounts you owe with each payment, you don’t need to think about manually making your payments. Many online banking services allow you to take advantage of automatic payments. This helps you dodge those late penalties, so you can save more of your money.

Put a stop to new debts

If at all possible, stop new debt in its tracks. As you’re working to get your current debts under control, it’s best to avoid piling onto them. The more debt you take on, the more you will owe to various lenders, and the harder it is to organize your money and prioritize your payments. You don’t want to bite off more than you can chew! This means it’s best to delay any big expenses, such as a new car. You should also avoid taking out new credit cards so you aren’t tempted to spend more, and you will not owe more money in interest each month. Sometimes, certain costs are unavoidable. However, do your best to avoid further debt if it is in your power to do so.

Reach out to a broker

If the previous options aren’t making a large enough difference, it’s time to contact a mortgage broker. It might be in your best interest to investigate options such as debt consolidation. This combines all of your debts into one lump sum, with one interest rate. It allows you to make one payment per month, all with the same rate, so you don’t miss any payments or have to deal with sky-high interest rates. You will still pay back the same amount over time, but it will be organized in a way that helps you clear out your debt. Debt consolidation is a longer-term solution, so it’s important to speak with a broker before committing to this type of product. 

You should always evaluate your options when working to get your household debt under control. Whether you’re best suited for a budgeting app, automatic payments, or debt consolidation, it’s important to take the time to explore what’s right for you. As brokers, we can help you determine what that solution might look like. It’s essential to use professional guidance so you can be confident in your financial decisions.

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.