Warning signs of financial struggles. 

CTV recently announced 34% of Canadians are in a bad place financially.  These numbers have been steadily increasing over the years as people feel the effects of recent challenges such as inflation. Avoiding an in-depth look at your finances out of fear can be one of the first signs of trouble.  However, there are many other common signs that financial difficulties could be looming.

1. Making bare minimum payments – If you’re only making the bare minimum payments on your credit cards or line of credit, it will take a substantially longer amount of time to pay down the debt.  Because of high interest rates, a large portion of each payment goes towards interest, rather than the principal balance owed.  

2. Spending more than you make – By spending more than you make, it’s possible you’ll have to rely heavily on credit to get you from pay cheque to pay cheque, therefore accumulating more debt, and getting caught in a cycle that is hard to break.  People can fall into this cycle due to outside forces such as an increased living expenses due to inflation, or just not giving much thought to the little things, like grabbing a cup of coffee each day or lunch out. 

3. Borrowing money from credit cards, line of credits, etc. to pay monthly bills – As mentioned above, spending more than you make can lead you to rely heavily on your sources of credit to get by.  If you are doing this on a continuous basis, you could end up carrying a balance on your credit which becomes unsustainable and as a result, you could potentially lower your credit score. To maintain a high credit score, besides making payments on time, you don’t want to utilize more than 30% of your available credit.  Credit utilization impacts 30% of your overall credit score.

4. You don’t have a sufficient emergency fund – By creating an emergency fund, you give yourself a level of protection against unexpected expenses.  By not having an emergency fund, you leave yourself at risk to take on more debt.  If an emergency arises, and there is no emergency fund, you’ll likely have to rely on credit, adding to any balance you might already be carrying, possibly affecting your credit utilization, which in turn could have negative effects on your credit score.

5. Financial stress is causing problems in your personal life – Any stress can affect you both mentally and physically.  It has the ability to impact your sleep, energy levels, and even your self esteem and more.  Being under financial stress can cause issues in relationships and in most surveys, financial stress is the main source of stress in a relationship.

If you are showing signs of these financial struggles, you are not alone and getting help before they spiral out of control is the first step.

 
If you are looking for advice, or a second opinion about your debt, it does not cost anything to talk about your options.  Every financial situation is unique and viable options can differ from person to person.  A conversation free of judgment and cost, is the first step to determine options for debt that make sense for you.  For a free consultation, please call or text (506) 645-1814 or email jaime@tackledebt.ca; or visit www.tackledebt.ca.