Did you know that a recent poll found that 46% of Canadians are only $200 or less away from financial insolvency? If you fall into this category, you’re likely desperately trying to get out of financial trouble.
Unfortunately, depending on your situation, this can be easier said than done. That’s why we made this guide.
In it, we’ll be going over some of the common sources of financial trouble. Then, we’ll discuss some universal ways to dig yourself out of any types of debt you have. Let’s dive in!
Find the Source of Your Financial Trouble
If you don’t identify the source of your financial issues, then it’s kind of like treating your symptoms while ignoring the underlying source of your illness.
It might provide a temporary bandage, but ultimately the symptoms will return if you don’t address them. Now financial troubles can come from a variety of different sources.
And while some have common solutions, each will require its unique plan. Here are some of the underlying money problems that often cause financial trouble for people:
- Unemployment or low income causes you to use credit for everyday expenses
- An unexpected accident or illness causes high medical bills
- Moving on your own for the first time causes you to spend more
- A new baby is more expensive than you initially budgeted
- A recent divorce causes you not to be able to afford your usual standard of living
- Retirement causes you to be cash-poor but asset rich
- Emotional attachment causes you to hang on to property or vehicles you can’t afford
- Addiction causes you to spend more than you have on drugs or alcohol
It’s important to note that certain sources of financial trouble will be easier to deal with than others. For example, moving on your own for the first time just requires you to adjust your expectations.
You need to live on what you earn, not what you’re used to when you lived with your parents. This is typically much easier than say dealing with addiction.
Addiction requires you to seek treatment and professional counseling before you can get out of financial trouble. Otherwise, you’ll continue digging yourself into financial debt until there’s no hope of recovering.
Budgets Are a Must
Certain sources of financial trouble will require a specific strategy for getting out. But, almost all of them can benefit from a well-organized budget. A budget is a monthly breakdown of all your expenses.
Operating without a budget is like driving in the dark. It makes it easy to hit hidden snags that can derail your finances. A proper budget operates like headlights.
It illuminates potential threats and allows you to avoid them instead of colliding. However, an accurate budget will take some work for sure. You don’t want to be operating on guesses and estimates.
Instead, you need to be tracking all your expenses from the past few weeks or months. That way, your budget for better or worse reflects reality.
You want an objective record of your spending that way you can identify patterns that you can cut out of your life. Notice you’re spending too much on takeout? Try some cheaper home-cooked meals instead.
Or, you might be spending too much on movies and entertainment each week. These are all observations that a budget can help you find.
Remember that a budget is often the first step toward improving your financial situation.
Prioritize Certain Expenses
Certain expenses are more important than others. Take credit card debt or student loans for example. It’s important to prioritize paying off this type of debt first. Why?
Because they come with high-interest rates that can quickly bury you in further debt. Don’t get us wrong. It’s still vital to have a roof over your head and food in your stomach.
So, you don’t want to go homeless or hungry to pay off these debts. But, if you have the chance to pay off the debt over say, a new home project or a new car, always go with the debt.
Getting to a place where you’re debt-free is the key to getting a grip on your financial troubles. Not sure how to get a hand on your debt?
Consider getting in touch with a credit counsellor. They can help you identify a solution for your specific financial troubles.
Small Changes Can Make a Big Difference
All too often, people try to identify huge changes they can make to get out of financial troubles. This might involve getting a new job or moving to a new place.
While these can be valid ways to deal with financial problems, it’s better to identify small changes first. This might involve reducing your expenses or setting aside a little money each week to pay for debts.
Remember that every drop in the bucket makes a difference. And just because small changes might not feel like they’re doing much doesn’t mean they aren’t effective. Have you ever heard of the snowball effect?
Think of it in the context of your finances. A few small savings can quickly grow into a massive snowball if you just let it do so uninterrupted. So, make small changes and stick with them.
Need Financial Services? Contact Kingcash
We hope this article helped you learn some ways that you can get out of financial trouble. It’s important to note that financial recovery often isn’t a quick process.
It’s going to take some twists and turns in the road before you’re back on the right track. So, if you need some quick cash in the meantime, consider going with Kingcash.
We’re a quick cash loan service that works with you to find the right type of borrowing plan for your needs. So, if you’re ready for the flexible payback periods that you need, then make sure to contact us today.