Sunday 18 September 2016

Going Debt Free

The majority of the population in Canada I would say live a robust lifestyle full of necessities and non essentials. Mortgages in large cities such as Toronto, Vancouver and Victoria are more than double what they used to be ten years ago and people are finding themselves in more and more debt. How can we climb out of this mind numbing debt you ask? My husband and I were in what we thought crippling personal debt ($20,000 +) and we were wondering how on earth we would be able to get out of this debt if something didn't drastically change. Here's what we did:

1) First and foremost we absorbed most of our debt into our mortgage by remortgaging and taking extra money off our mortgage to pay our line of credit off. Some people will say this isn't the best way to do it because you are adding year/interest on to your mortgage but in our case it was the best possible outcome. With paying off our line of credit we were able to alleviate our interest payments on our line of credit (minimum $50 per month) and also any credit card interest we accumulated as we were able to pay off any extra money we had on our credit cards. Credit card debt adds up quickly if you don't pay them off right away as most credit card companies charge anywhere from 17%-21% which is extremely high. By keeping a balance on your credit cards every month 17%-21% adds up very quickly.

2) We created a monthly budget. This helps to keep you in check with your spending and if you do a budget right you can actually begin to save money every month to save for something bigger like a vacation or property. Create a budget that is reasonable and obtainable otherwise you will get discouraged and will not achieve your monthly goals. There are many websites around that can help you in creating a reasonable budget based on how many family members you have in your household/your income/etc. such as http://www.mymoneycoach.ca/budgeting/budgeting-calculators-tools/budgeting-spreadsheet. In our budget each month we will be putting money in our savings account for big trips and also to put extra money down on our mortgage each year.

3) Save for big purchases. Instead of using a credit card to buy a big purchase make sure you have enough cash for that vacation or big screen TV. We planned a trip to Vegas but we made sure we had the money to pay off our credit first before we purchased the trip. This should go for anything you do in life, don't spend money you don't have. Save first then spend.

4) Making gifts. I am quite a craft person so I like to make homemade baked goods and crochet items for baby showers/weddings/kids birthdays etc. if I can find time to do so. People always appreciate homemade items more then store bought gifts any day.

5) DIY- I love Pinterest and I love doing things myself. I get most of my ideas from online and have created awe inspiring and creative artwork/ crafts/ decorations/etc. around the house. If you are really handy you can even do household work by fixing items in your house yourself. If you are even unsure of anything or something you are doing could be dangerous always leave it to a professional.

I wouldn't say we are completely debt free in anyway right now as we still have a mortgage but slowly year by year as we are able to pay down extra money on our mortgage eventually that will be gone too. Right now all of our personal debt is gone and we can finally move forward in a positive way and living life to the fullest without worrying if we can afford to eat out or see a movie this week. We have incorporated it into our monthly budget now. You still have to live and enjoy life but do it in away that doesn't break you or the bank.

I hope this helps someone out there achieve some of financial goals and if you have a question or comment please comment below! Happy budget making everyone!

-Brie