As more and more Canadians are seeking debt consolidation to manage their finances, it’s an indication that many people have a problem managing their money. Credit cards and other lines of credit are among the highest consumer debts giving many Canadians sleepless nights. What most people don’t know is that by getting rid of certain habits, they can easily keep their finances under control.
Today, we’ve narrowed down some 8 poor spending habits that could be the reason for your financial woes. Before you rush to consider any form of debt settlement, find out if you are guilty of any of these.
You might be wondering, why do you need to do this when all you wanted to learn was how to handle your debt settlement? Well, this is what you always need to remember, your debt is someone else’s investment. What this means is that if you borrow $10,000 at an interest rate of 8 percent, at the end of nine years you will have paid back $10,000 in interest alone. You will have doubled the investment for some lucky investor. Always remember that every dollar borrowed costs you an extra dollar.
Now, why does this matter? It matters because from now onwards, you need to have the value of what you are borrowing established early on before you sign the papers. Always consider the lifetime cost of what you are paying. For instance, a $200,000 mortgage with an interest of 5 percent will take 14.4 years to double. That means if after 15 years you are still paying your mortgage, then you will have paid $200,000 in interest alone. What this basically means is that you should try and clear your debt as quickly as you incur them.
Think of how much that would be if you doubled it. Realize that that amount could knock off your debt tidily, lessening your worries down the road. Ask yourself, do you need a $500 watch or could you redirect that $500 to settling your debt?
Credit counselling programs encourage people to change the way they think about money by not simply spending just because money is available. Most people will get $300 and start thinking of how much stuff they can buy with it. Smart people will tell themselves that the $300 can be put towards settling a loan and saving the future $600.
Being disciplined with your money is what it is all about. Staying conscious of the alternative ways to spend your money, outside of just buying stuff will help you keep on course as far as settling your debt and obtaining financial stability.