I’m a bankruptcy trustee in Canada, and every day I meet with people who have money problems. The most common reason for money problems is not having a plan to deal with debts.
Without a financial plan, small problems become big problems. If you lose your job but you have lots of money in the bank, you have time to find another job. But if you lose your job, or get divorced, or have a medical problem, and you have lots of debts, you have no way to service your debts. So what’s the plan?
First, make a budget so you know where your money is going. Look for ways to cut expenses to save money.
Second, if you have a lot of debt, make a plan to deal with your debt. Consider all your debt relief options. This may include a debt consolidation loan to reduce the interest rate you are paying, or try debt settlement, or credit counselling, or a consumer proposal, or, if no other option will work, personal bankruptcy in Canada.
Finally, once you know where your money is going, and you have eliminated your debt, you can start a savings plan. The best way to protect yourself from future problems is to have money in the bank. So, today’s tip: start a savings plan.