November is Financial Literacy Month. Have you ever felt overwhelmed by your finances? You are not alone. Sometimes it lasts just for a moment when our debit card is declined or our credit card bill seems to be a bit higher than we had expected.
Sometimes it feels like it will never end like when you have been consumed by unexpected car repairs or that line of credit that just never seems to get paid off. The most important thing to know about dealing with your money is you have to deal with it. Financial situations don’t disappear; in fact they get worse if you ignore them.
The first thing you need to do is set a budget. To set up a budget you need to know what you are spending. Look at your bank statements, track your cash, keep receipts; we guarantee that what you discover about your spending will surprise you.
Looking at your spending will tell you:
1. Does my spending match what my budget outlines?
2. Is my budget realistic?
3. Am I covering my expenses?
These questions may seem simple, but they are the indicators for how you will pay for things, how much debt you will carry and how money can affect your quality of life.
Then to get yourself on the right financial path you need to set your financial goals. The most helpful guide to where you are on your budget is to see if you are getting closer to your goals. For instance, if your goal is:
- To be debt free; financing Christmas with your credit card will work against you.
- To own your car outright; driving through car lots may prove to be too tempting.
- To save; living paycheque to paycheque will stop you in your tracks.
By budgeting and setting financial goals you will find your finances a little bit easier to manage. What happens though when you have finished this process and cannot make ends meet? This is where you need to seek financial advice. When seeking financial advice remember it takes time to assess your situation, you will need time to go through your finances and time to determine where you are headed.
Indicators that you should seek financial advice:
- You are feeling overwhelmed with your financial situation.
- Your income has changed and you can no longer meet all your monthly obligations.
- You need help creating a budget to better manage your cash flow.
- You want to get advice and/or learn about all the options available to help you better manage your finances.
- Your financial situation is affecting your relationships.
- Your financial situation is constantly on your mind and affecting you at work.
If you seek advice through a non-profit credit counselling agency, you will receive a budget and action plan. If your financial situation warrants, you will receive the option of a Debt Management Plan. A Debt Management Plan is a volunteer agreement between you and your creditor negotiated by credit counselling; creditors adjust their terms so that the consumer is able to pay the debt back (on average within 4 years) by making monthly payments through credit counselling to the creditor. A Debt Management Plan is different than debt settlements. Debt settlements are where the creditor is offered a lump sum payment for less than the outstanding debt, debt settlements should only be pursued when there is a lump sum available and where the settlement takes place within a short period of time.
This article is provided by Credit Counselling Services of Atlantic Canada.
You can also get helpful information from:
- LISNS pages on 'Consumer Information and Debt issues' for information about credit reports, collection agencies, payday loans, and dealing with debt.
- Nova Scotia Securities Commission - nssc.novascotia.ca/
- Financial Consumer Agency of Canada - www.fcac-acfc.gc.ca/
- Superintendent of Bankruptcy Canada - osb.ic.gc.ca
- A licensed insolvency trustee. Contact the federal Superintendent of Bankruptcy to find a trustee, or look under 'Bankruptcies' in the telephone book.
- Nova Scotia Debtor Assistance Program, a program offered by Service Nova Scotia
gov.ns.ca/snsmr/access/individuals/debtor-assistance.asp, or call (902) 424-5200 or 1 800-670-4357.