FEELING THE PINCH OF HIGHER RATES? HERE ARE SOME TIPS FROM DEBT-MANAGEMENT PROFESSIONALS

Go over your expenses

thoroughly. Review bank and credit card statements line by line, tallying the monthly expenses along with other costs that occur from time to time throughout the year, says MNP licensed insolvency trustee Lana Gilbertson. While it’s best to go over an entire year’s spending, at the very least take three months of costs to get a good sample.

Build a budget based on your

income and expenses. Obviously, you want the budget to balance so you’re not spending more than you earn each month. But that’s not the true goal of a budget. It should also aim to find savings —by cutting costs or increasing income — to pay down debt faster and save for the future.

Seek ways to reduce your debt

costs. Paying down debt faster is one way to decrease the burden of debt, but Credit Counselling Gary Tymoschuk says consumers should also strive to move highinterest debt to low-interest debt facilities, like a line of credit or a consolidation loan. Moreover, individuals with multiple sources of debt should focus on repaying the highest interest-bearing debt first. Over the long run, this reduces interest costs and speeds up repayment.

• Create a debt-repayment plan.

Besides a strategy to pay down high-interest debt first, individuals should also set out a plan that provides for a monthly amount against each debt source, along with a time frame for becoming debt-free. Gilbertson adds plans should also make a monthly allotment for emergencies, eliminating the need to go back into debt for unforeseen costs. Outside of a mortgage, she says a plan should aim to eliminate debt in five years. “Carrying it any longer is exhausting and secondly, it’s very expensive because of interest costs.”