Managing your debts and loans in challenging times
NC) If you’re having trouble managing your finances because of the COVID-19 pandemic, you are not alone. While some people are managing to pay their bills and meet their commitments, many Canadians are grappling with major financial pressures.
If you find managing your debts and loans to be challenging, here are some actions you can take to help bring things back under control.
Identify your debts. Make a list of all your debts. This can include your mortgage or rent, car, utility bills, credit card balances, student loans, etc. Next, indicate the total amount due for each debt, the interest rate, the minimum payment required and the due date.
Review your budget. A budget is a plan that helps you manage your money. It helps you determine how much money you take in, spend and save; figure out how to balance your income with your expenses; and achieve your financial goals.
The Financial Consumer Agency of Canada has an online budget planner tool that can help you create a budget and effectively monitor your financial situation.
Make a plan to repay your debts. Once you’ve identified all your debts, choose a reasonable payment schedule that you can meet. Next, you can begin creating your plan. Start by paying down the debts with the highest interest rates. That way, you pay less interest and will be free of your debts sooner.
For some people, getting rid of smaller debt first gives them the satisfaction of repaying debt more quickly. This may motivate you to pursue your goal of becoming debt free. However, evaluate this carefully, as this option could cost you more in interest over time.
Avoid taking on more debt. If you must borrow, take out only what you need and make sure you know how much the different credit products cost before making a decision.
Find more information at canada.ca/money.