Statistics Canada reported that a significant portion of the population has high levels of debt.
The household debt ratio is 1.76 times the income. 26% of Canadians surveyed said they had increased their debt in the past year, primarily due to the cost of living and increased expenses.
What are the ways to reduce your debt and increase your cash flow?
Review your regular expenses and cut out those you don’t use or use very rarely – To do this, look at your credit card and bank statements for the last 6 months. (For example, 67% of Canadians have gym memberships but don’t use them. The same goes for TV channels and home phones).
Make a shopping list before you go shopping. It’s a good idea to browse store flyers to see what items are on sale in before you go. On average, Canadians make 40% of their purchases unplanned. This figure reflects the rise of impulse purchases, especially during the pandemic, when online shopping, including spontaneous purchases, had increased. Many have become more prone to rash spending due to stress and uncertainty related to the economic situation.)
Look-over your belongings and try to sell those that you don’t use. For example, in the summer you can have garage sales as well as using the Internet (Facebook Marketplace, Kijiji, Craigslist, eBay, Poshmark, Varagesale).
Consider Etsy, a platform that specializes in selling handmade items, vintage items, and craft supplies. If you have something unique or handmade, Etsy can be a great place to sell.
If you have a hobby or unique skill, try to use it to earn extra income. Perhaps this attempt will be your key to success and you build you a real business.
Pay close attention to your children over 12 and your retired parents. They may enjoy a new activity, such as helping you with your business or starting their own.
Be sure to keep a journal of income and expenses and make sure that expenses do not exceed income. This will allow you to plan future expenses correctly. “Buy only what you can afford” – there was a case where a family went on vacation and returned with debt on their credit card of 10 thousand dollars. This debt “hung” over them for years and it ended in divorce (35% of divorces in Canada occur due to financial difficulties).
Some of these recommendations may seem obvious, but the vast majority of people do not follow them and suffer financial losses. Your financial well-being begins with controlling your income and expenses, which can free up more money to pay off loans including a mortgage.
Below you can find more recommendations from our clients.
In the next article, we will tell you how you can use financial instruments to reduce your debt and its payments.
– Buying airline tickets – It is usually recommended to buy airline tickets three months before your flight. More precisely, for your specific route, you can look at Google Flights. Here you can see each selected company’s recommendations on when to make a purchase and how today’s price differs from the average.
– Buying vacation “packages” – You can book a flight and a hotel for your vacation in different ways: with the help of an agent, you can book a flight and a hotel separately, or you can buy a package. Each time it is advisable to compare all the options to choose the most suitable in one terms of price and quality.
The cost of a vacation in all inclusive resorts in Mexico, the Caribbean, etc. from December 20th to the end of March increases in price by about 50% compared to other dates. If you want to save money, it is advisable to reconsider your travel dates.
– Buying insurance – Before going on holiday, make sure to buy a proper travel insurance policy. If you travel unprotected, a simple doctor’s visit could cost you hundreds of dollars.
– Prescription drugs – In Canada, any prescription drug you buy will incur a service fee, which can range from $4 to $12 (or more). If this is a concern, choose pharmacies that charge a lower fee, and try to order more pills if you take them regularly.
If you wish to add some other advices please send us email at [email protected]
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