Financial freedom seems like an impossible dream for most Canadians who are struggling under heavy debt loads rather than reaping benefits from their investment portfolios. But our website is called Anything is Possible, so naturally we believe that you can achieve financial freedom in your lifetime. It will require hard work and dedication as well as a good debt management plan, but you can do it. Read on to find out how.
Your first and most important step toward achieving financial freedom is to create a debt management plan. If you've got a decent grasp of finances, you can create one yourself, but if you don't, your best bet is to go to a non-profit financial counselor to get help. No one from your extended family even needs to know you were there, because credit consultations are completely confidential. The key points of your debt management plan should be living within your means (no new debt), making more than just your minimum payments, and saving.
A surprising number of Canadians who have good jobs are still in unmanageable debt because they haven't grasped the concept of living within their means. To live within your means, you must not spend more than you earn. To do this, you need to know how much you earn and how much you spend, so take some time and do up a budget for the last few months. Do the results surprise you? If you're spending more than you earn, it's time for cutbacks.
You can cut back in frivolous areas of your life such as entertainment and eating out, but the worst drain on your finances is always interest. Banks are always looking to make money off of you but credit card companies are the worst. If you have a lot of debt and a lot of interest coming at you from all sides, you should ask your financial counselor about debt consolidation. By combining all your debt into one loan at a reasonable interest rate, you actually have a better chance of paying it off.
In order to get off the debt treadmill and start working your way to financial freedom, you actually have to start saving money as well and paying down the principals on your loans. Even putting a few dollars every month will help you start earning dividends on your money that can be put back into paying down your debt and help you get free of it faster. An investment counselor can help you with the details. Ask your financial counselor to put you in touch with someone.
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