How to better manage your debt and save money
(Reading time: 3:30)
Pension contributions, union dues, and don’t forget the tax. Your paycheque makes a few ‘stops’ along the way before it finally gets to you.
As an education member, you know all about having to stretch your paycheque to go a million different directions. Sometimes making the minimum payment on your credit card or loan might be all you can afford by the time you paid for the basics (such as mortgage/rent, food, utilities, etc.).
If you’re coming up short each month, you are not alone.
According to the latest MNP Consumer Debt Index, 49% of Canadians are just $200 or less away from financial insolvency as COVID-19 threatens to burst the country’s consumer debt bubble. While you’re lucky to have a generous pension plan in place, it’s being able to better manage your finances in the days and years until then that concerns you the most—particularly when it comes to paying down debt.
Here are 10 tips to maximize your cash flow so you can better manage your debt and save money:
#1: Always pay bills on time.
Late fees are one of the biggest wastes of money and can also negatively affect your credit rating. Ensuring that you always pay your bills by the due date will prevent you from doing either of these. Getting statements sent to your email and setting up automatic payments are additional ways to help you pay in time.
#2: Stick to a budget.
You’ve probably heard this advice time and time again—and there’s a reason for that. Creating a personal budget is one of the easiest and most effective ways to better manage your debt and save money for future goals because it forces you to become more disciplined with your finances.
Read more about how to build a budget that works.
#3: Stop paying for things you don’t use.
Are you really using that gym membership? Do you ever watch all those channels in your cable TV package? What other services are you paying monthly fees for but rarely use, if ever? If you’re not using it, lose it—and instead put that money towards paying down debt faster (which in turn will save you money in interest).
Here are 5 tips for saving up to $500 a month.
#4: Make money from the things you don’t use.
Chances are you have a treasure trove of items just sitting around collecting dust—from old furniture in the garage, to clothing you haven’t worn in years. Put it to better use. Sell it to help you pay down debt. And let these items be a reminder, next time you think about buying something you don’t need.
#5: Think before you buy.
It bears repeating: before you make a purchase, think about whether the money would be better used elsewhere (such as an emergency fund or your child’s education). Even if you’re charging fringe purchases of $50 to $100 a month to your credit card on stuff you don’t really need, that money could be gaining compound interest in the right investment, instead of increasing your card’s interest payments.
#6: Lower your credit limit.
The old adage, “prevention is the best medicine” definitely applies when it comes to better managing your debt. As you begin to pay down your balance, consider lowering your credit limit to prevent yourself from being tempted into racking it back up.
#7: Become a ‘do-it-yourselfer’.
Instead of ‘charging’ that home renovation to your credit card, ‘take charge’ by doing it yourself. You are an educator after all—which means you’re resourceful by nature (plus if you’re like most education members, ‘HGTV’ and ‘Discovery’ are probably your most watched TV channels on TV). From painting walls to installing a new bathroom and kitchen, doing your own home improvement projects can be a big money-saver.
#8: Cash in on coupons and loyalty points.
If you’ve been charging purchases to a loyalty card, don’t forget to tap into those rewards. Plus cash in on coupons and online sites, such as Groupon, that offer discount rates on everyday items. Because why spend more money than you really have to?
#9: Never pay full price.
From smaller items such as groceries to bigger purchases like appliances and electronics—it pays to wait for sales and to always comparison shop. You can also save on furniture and appliances by buying display or floor models. Sales associates may also have some wiggle room to lower the price, so don’t be afraid to negotiate. Also consider shopping at discount stores and local markets for further savings.
#10: Get educator-specific advice.
Just as every financial situation is unique, so are the financial needs of education members.
From pay grids to pension plans, Educators Financial Group understands it all. That’s because we’ve provided financial advice exclusively to education members since 1975. If you’re looking to better manage your debt and save money in the process, call on us. We’re here to help.