Is your financial past standing between you and the home of your dreams? If you’re ready to make a change, here are some tips for you to build a plan that can kick debt to the curb.
Assess your Financial Situation
The first step to kicking your debt to the curb is to take a long hard look at your situation. Make a list of everything you owe and to whom along with the terms of repayment and interest rates.
Set Yourself Financial Goals
Before you begin to set yourself a tough repayment plan it’s a good idea to sit down and work out some financial goals for the future. For example, work out how soon you realistically want to have all of your debt paid off. How soon you want to get onto the housing market or buy a new car. These goals will help you to build a plan that can get you where you want to be.
Create a Comprehensive Budget
Take stock of your income along with your outgoing spending. Using the goals you have previously set for yourself, create a comprehensive budget. This budget will include all of your household bills, food costs, commuting costs and any other necessities that you need. Subtract all of this from your monthly earnings and use the rest to pay off your credit cards. This doesn’t mean you have to live a life that only consists of working and sleeping, be sure to factor in some cash to have a little bit of fun each month so you won’t be tempted to stray from the plan and returning to your wild spending ways. The important thing is that your discretionary spending is included in the budget, not simply nebulous expenses you can’t account for.
Get Rid of the Credit Cards
Having a regular relationship with credit cards is likely what got you into this mess in the first place. Make a clean break with those little devil cards and save yourself the hassle of getting into more debt in the future. Keep one or two cards with a reduced credit limit to help ease temptation of spending while maintaining a good credit rating and close the rest. Start paying down the credit card with the highest interest rate first while maintaining minimum payments on the others, and work your way down the list paying off each card one at a time.
Do you really need to buy a fancy coffee every morning? Does a prepared salad really taste that much better than one you made at home? Do you pay for a magazine subscription yet throw each new copy directly into the recycle bin? By cutting down on these seemingly small expenditures each day you will be amazed by how much you can save. Save your cash for the necessities and try to get out of the habit of needlessly spending. Set yourself a weekly cash allowance for those little things, it will help you think twice if you really need to buy it.
Once you reign in your debt, you can start saving toward a down payment on a home. It will take some work and dedication, but with enough time and determination you will get on the right track. Once you’re financially ready to buy a home in Ottawa, your mortgage broker from The Mortgage Advisors can help you find the right mortgage solution.