get ahead of your debt

Three Ways to Get Ahead of Your Debt in 2021

It might be a surprising fact to learn that the world wants you to go into debt. Congratulations you are pre-approved! Buy now, don’t pay for a year! These are basically tricks to make you slave to an interest payment. Before you know it, your payments are not even budging your overall balance. You may even be getting deeper into debt. We would like to give you 3 ways to get ahead of your debt.

1. Know Your Numbers

One of the easiest ways to get ahead of your debt is to make a monthly budget. Some people worry that budgets are too complicated. But this is simply not true. Budgets give you freedom. A budget is making a plan for where your money goes before you spend it. In fact, many people find “extra” money once they make a budget and stick to it! Here are couple of useful tips for creating a monthly budget:

  • Be realistic. A good budget starts with tracking all of your income and actual spending. The more accurate your budget is the more effective it will be. If this is your first time making a budget, start by tracking all your income and spending for one month to get a realistic idea of where your money is going.
  • Do the budget together. Budgets are more successful when everyone in your household is on the same page. If you have a spouse or partner, sit down once a month and have a family budget night. If you’re single, find an accountability partner who will help you stick to your spending goals.
  • Try an online budgeting tool. The only tools you need to start budgeting are a pencil and a piece of paper. But to make things even easier, consider using a free online budgeting app. There are plenty of apps to choose from. If you’re looking to get started, check out Mint or EveryDollar.

2. Find a Side Hustle

Picking up a side hustle is another way to keep debt at bay. If you’re not familiar with the term, side hustles are small jobs that people work alongside their full-time job to earn a few extra bucks. These days many people are using side hustles to boost their monthly income in fun, creative and easy ways. Side hustles are a great way to get ahead of your debt for several reasons:

  • They boost your monthly income. Earning extra income will make your budget more flexible and give you more money to pay off existing debt. If you’re already debt-free, you can put your extra money towards your saving goals, or give yourself a bit of extra pocket change.
  • They are flexible. Unlike a part-time job, having a side hustle gives you the freedom to decide when and how much you want to work. There are hundreds of different ways to make a few extra bucks depending on your skills, lifestyle, and schedule. Not sure where to start? Check out this website for some inspiration.
  • They can be fun! Having a side hustle doesn’t have to feel like work. Many people have started side hustles by turning their hobbies into paying gigs. If you like to make art, consider selling some of your creations on Etsy. If you’re interested in making videos, why not start a YouTube channel? The possibilities are endless!

3. Live Below Your Means

You may have heard the expression “to live within your means” at some point in your life. But have you ever considered living below your means? Spending less than you earn is an extremely effective strategy for managing debt, saving money and reducing financial stress, no matter how much money you make. Making small sacrifices to your lifestyle can have a big pay off when it comes to getting ahead of your debt. While it may seem daunting at first, here are a couple of easy places to get started:

  • Keep an eye on your credit card statements. These days it is easy to lose track of the things we spend money on. Especially when it comes to online purchases and subscriptions. Are there any subscriptions auto-renewing that you no longer use? Maybe it’s time to stop paying for that Amazon Prime account.
  • Try a no-spend challenge! Living below your means requires you to change your mindset towards money. Think about it. How many coffees do you really need to buy each week? One of my favourite ways to evaluate my spending habits is doing a “no spend challenge”. Each year I choose 1 month where I only spend money on essentials and nothing else. This helps me to reflect on how I spend my money. If 1 month sounds too scary, start small. Try a “no spend” week or see how long you can keep $20 in your wallet.
  • Take advantage of all things free. We often considered things like gym memberships or going out for coffee with friends to be essential. But many of these expenses can easily be replaced with free alternatives. Instead of spending $100 a month on a gym membership, consider doing online workouts at home for free. Next time you want to hang out with your friends, why not suggest a walk instead of going out for food? The little things in life add up.

We Are Here to Help

The tips we’ve discussed so far to get ahead of your debt are great strategies to use no matter what your current financial situation. But we realize that sometimes the burden of debt can be too much to fix with changes to your financial habits alone. In these situations, a Consumer Proposal or assignment into Bankruptcy can be the best way to find a fresh start. If you want to jumpstart getting ahead of your debt we would recommend seeking some professional advice.

Whether you’re struggling with debt or looking to take control of your finances, we’re here to help. At our office, we offer a free, confidential, and judgement-free consultation where we will take a look at your financial situation and offer some suggestions as to how to proceed. This meeting will equip you with the information you need in order to make the right moves for your future. Reach out to one of our convenient offices to book your free consultation now.

Derek L. Chase, CPA, CA, LIT

Being able to offer debt help assistance to individuals and corporations on a more intimate basis was a driving force in completing a “second CPA” by becoming licensed by the Federal Government as a Licensed Insolvency Trustee (previously Trustee in Bankruptcy) in 1997. It is extremely satisfying to be able to witness lives change for the positive due to a restructuring of financial affairs.