It’s financial literacy month, which means it’s time for a financial health check! It’s no secret that everyone’s been impacted by the cost of living and interest rate increases, so here are some steps you can take to help manage debt and achieve your financial goals.
The Financial ABCs
First, let’s start with the financial literacy ABCs: Agent, Budget, and Credit. If you’ve got a mortgage and have been feeling the pinch lately, it’s important to consult with a mortgage agent and your financial advisor so they can help you explore options. Consulting your agent and advisor is always a good move, we’re here to help if you’re facing challenges!
Next up is budget… if you don’t have one, make one. If you’ve got one, go and review it. Plenty of online budgeting and savings tools can help you track and optimize your income and expenses. Plus, your bank offers statements that can be downloaded so you can thoroughly review things and see where they can be improved.
Third, when was the last time you checked your credit report? This is a key step in finding out what your financial health looks like to potential lenders which will inform your savings and/or borrowing strategy. Not only does your credit report allow you to see how lenders see you but you can also use your report to check for any signs of identity theft.
Struggling With Debt?
Are you struggling to pay your debts? Lots of Canadians are in the same boat given the historic rise in inflation, interest rates, food and living costs, etc. Although all of this is stressful, there are still lots of ways to help reduce the debt struggle. First, you’ll want to make a list of all your debts and decide on a payment strategy.
For example, you’re usually better off paying debt with the highest interest rate first as they’re the ones that cause the most strain. Next, you’ll want to talk to your mortgage agent or lender to discuss options. They may be able to offer temporary accommodations such as special payment arrangements or mortgage deferrals, providing some shelter and safety in trying circumstances.
They’d also be able to advise on whether consolidating, refinancing, or taking on a small second mortgage would work better for your specific situation. Taking on a consolidating loan allows you to pay one bill instead of managing each debt individually and generally has a lower interest rate. Just remember, you’ve always got options!
When it comes to taking on additional debt, it’s always best to do your due diligence. Before borrowing, you want to make sure to:
- Consider ALL your options by consulting with your financial advisor.
- Understand the costs and conditions before deciding on a certain product.
- Only borrow the amount you need instead of the maximum you can.
Making Money Moves
Did you know that it’s always in a lender’s best interest for you to be in good financial health? Lenders want people capable of paying back their loans and in the position to explore other financial products. If you’re currently experiencing financial difficulties, there may even be relief measures available to you like:
- Switching from a variable to a fixed-rate mortgage can provide stability and peace of mind.
- Making special payment arrangements or skipping a payment (in exceptional circumstances).
- Applying for a mortgage deferral so you can delay payments for a defined period.
You also want to make sure you’re taking proactive measures to help set yourself up for financial success and achieve your goals. First up, make sure to set up an emergency fund so you have money set aside for any unexpected expenses. You never know when an emergency may happen, so it’s better to have one than not. Start with something like $100 a month, it will go a long way!
Next, identify ways to increase your income through investments or a side hustle and make sure to manage this extra money wisely. Likewise, reduce your expenses where possible to aid in saving extra money or paying down debts. Look for and cancel unused subscriptions, scale back on eating out, and know that these don’t have to be forever moves but they will help you financially.
Staying savvy and doing the financial basics enables you to make better decisions for YOUR situation and goals. Contact the Kyle Miller Mortgage Agent Team to explore your options and take control of your finances — instead of the other way around!
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