Steps 1 and 2
January is a month that's filled with the promise of a fresh start to a new year. Resolutions haven't been broken and calendars have yet to be filled, but if the same unpaid bills are piling up on the counter, you may need some help to free yourself from debt.
If you're drowning in red ink, don't head to the mall for a pick-me-up pair of leather pumps, even if they are on sale. "It's not time to pretend your debt is not real," says Laurie Campbell, executive director of Credit Canada, a nonprofit debt counselling organization. "Instead," Campbell advises, "look at this as an opportunity." It's your chance to take control of your finances and get the bill collectors off your back. Here's how:
Step 1: Look for warning signs
There are many signs that point out impending financial trouble, says Campbell. Some of them include:
• Only making minimum payments on your credit card
• Using your credit card for everyday expenses, or borrowing from one card to pay off another
• Feeling stressed about your finances
• Accumulating more debt than savings, month after month
Any of these signs can mean it's time to re-evaluate your finances, says Campbell.
Step 2: Collect your information
"Gather all of your bills from the last three months into one place," says Brad Desaulniers, president and CEO of the National Credit Counsellors of Canada. By physically grouping your bills, you can evaluate where your money is going, and assess how much you need to keep up with your financial obligations, Desaulniers explains. "You've got to do a situation analysis, figure out where you're at right now, and be ready to talk about that," he says.
Often, however, people are not aware of where their money is going, says Campbell. She suggests keeping a record of how every dollar is spent for one month -- count everything, from your morning coffee to your 3 p.m. snack. Then, when you set out to correct your financial ways, you'll have a clear picture of your spending habits.
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