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I am having money trouble…what am I doing wrong?

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Most financial troubles begin when people spend more money each month than they earn. If you are not careful, this is an easy habit to fall into.
 
You might decide, for example, to buy a new TV with your credit card. At the end of the month, there is not enough money left over to pay what you owe. So you pay only the very smallest amount you have to. This is called the minimum payment.
 
Why is this a problem? Now, you have to pay the interest charges on what you owe, as well as the cost of the TV. This may make it harder to pay your other bills. So next month, you may find it even harder to pay off your debt. In time, this can lead to serious debt problems. Here are some warning signs to look for. 
Six signs of money trouble 
  • You often have to pay bills late because you don’t have enough money.
  • You use credit card cash advances when money runs low.
  • You need to ask friends or family members for loans
  • You sometimes write cheques that bounce.
  • A collection agency is calling you about a bill you haven’t paid.
  • Your phone, electricity, or other services have been cut off.
Six things to do if you have money problems

It is important to deal with money problems quickly, before they get out of hand. Here are some simple steps you can take: 

1.  Keep track of your money: Keep your bank book up to date. Record the money that comes in and the money that goes out. Keep records of anything you buy with your credit card. Before you use your credit card, make sure you have enough money in your bank account to pay off the bill when you get it.

2.  Make a budget: Make sure you know how much money is coming in each month and how much is going out. When you know this, you make a plan for how you will spend your money, and follow your plan each month. To get started, you can use the Monthly Income and Expenses Calculator on the Canadian Bankers Association web site. You can also learn more about budgeting and managing money on this web site.

3.  Pay off high-cost debts first: Do you have more than one debt or credit card? Find out how much interest you are paying on each debt. Then, pay off the highest interest debt first, while you make smaller payments on the others. When you’ve paid off your most costly debt, start paying down the debt with the next highest interest rate. This will help you pay off your debts more quickly and avoid the highest interest charges.

 

4.  Put your debts together: Do you have many different debts? Are you finding it hard to keep up with all your monthly payments? And are you paying a lot of interest? Talk to your financial institution about how to put all your debts together into a single, lower cost loan. This is called consolidating your debt. The new loan will likely have a lower interest rate than your original debts, so it will be easier to pay off each month. Just be careful: once you consolidate your debt, don’t start overspending again. You’ll just create the same problem all over again!

 

5.  Set aside emergency money: It is a good idea to have some money saved for surprise bills. That way, you can use your emergency money instead of credit if you need to.

 

6.  Practice good money habits: Remember to pay all of your bills on time. Also, try to pay off the full amount you owe on your credit cards each month. This is the surest way to avoid money problems and make the best use of your money.

Do you need help managing your financial problems? You may want to look into credit counselling services. These services are available across Canada.



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Here are some related link(s):
[1] Money Trouble? It’s your own fault – msn.money  Although the title is harsh, this web site provides valuable help in addressing money problems.
[2] Managing Your Money – suite101.com This web site offers insights into managing your money by leading the web site visitor through a series of questions and comments.

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