3 Important Ways to Focus on Debt Relief in 2017Dec 20, 2016
Would you like to focus on debt relief in 2017? If reducing your debt and focusing on your financial health and well-being is a top priority for you, you are certainly not alone. With Ontario’s average household debt sitting at $20,793 and the increasing costs of living in Ontario — including rising hydro prices —and more and more families are experiencing financial strain. Making debt relief a top priority for the year ahead is important, and can help to prevent future financial problems.
When setting goals that will help you manage your finances and debt, it can be difficult to determine where to begin and what is needed in order to ensure that you stick to your resolutions. Here are three important things you should do in order to help you follow through with your plans for debt relief:
1.) Get to know your debt.
Before you can deal with your debt effectively, it’s important to understand where you stand. How much do you owe? How much time will it take to repay your loans? How much interest will you pay? You can find the answers to these questions by plugging your information into a debt repayment calculator.
In addition to the amount you owe, it’s also important to understand the types of debts you owe. Debts typically fall into two categories. There are debts that are considered “good debts” as they are tied to an appreciable asset and often have a low interest rate attached. Comparatively, “bad debts” are those that are not tied to any appreciable asset and typically have higher interest rates.
2.) Increase your financial knowledge.
Determining how much you actually owe and the type of debt you carry provides valuable information that will guide your plans for debt relief. Similarly, increasing your financial knowledge will also help to guide and enrich your plans. There are many ways to learn more effective ways to reduce debt and better manage your money. Online resources, such as the Financial Consumer Agency of Canada’s Financial Literacy Database provides a wealth of information related to personal finance and debt management, including topics like debt consolidation.
Debt relief professionals are another option. A Licensed Insolvency Trustee can work with you to review your debt and can provide information that will help you to better understand your options for reducing the debts you owe.
3.) Create debt relief goals.
Once you understand your debt and the effective ways to deal with it, it’s time to make a plan. Rather than simply resolving to find debt relief, it’s important to actually set concrete short, medium and long-term goals. It’s also important to ensure that your goals are SMART. SMART is a goal setting framework that encourages you to set goals that are specific, measurable, achievable, realistic and time-framed. Goals created using this framework are easier to stick to as they provide clear direction and keep you motivated and accountable.
Are you setting debt relief goals for the new year? Share your thoughts and goals for taking control of your money and debt in 2017 with BDO Guelph using the hashtag #BDODebtRelief.