Three things to avoid when money is tight

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If it doesn’t feel like your paychecks can ever cover your bills, here are three things to avoid and what to do instead.

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Q: I am a single father of three teenagers. My wife passed away about five years ago when my youngest was seven and until recently I managed to make ends meet. My parents, or sometimes my sister, helped when they could, and that helped us to make ends meet. But since costs have risen so dramatically, we’re all a bit stuck. The bare minimum I could afford before is now a constant struggle. I just don’t make enough money to pay all the bills. What can I do? ~Jeremy

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A: The significant increase in the cost of living has impacted almost every Canadian household in one way or another. The hit at the supermarket or gas station is often the most noticeable, but higher payments due to rising interest rates are not to be overlooked. However, for families who were tight on money before inflation hit, our current economic climate has only made things that much worse.

When it doesn’t feel like your paychecks can ever cover your bills, there are a few things that will make your situation worse very quickly. Here are three important things to consider and what to do instead:

Relying on credit until things get better

We can never know with absolute certainty what the future will bring, and as the last three years have shown us, even our best guesses could be way off the mark. Using credit and debt leaves us at the mercy of others. Creditors might raise interest rates, increase minimum payment requirements, impose fees, or even decrease the amount of credit they make available to us. In addition, when we rely on credit during a tight budget, our available credit is often depleted before we can earn more again.

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7 tips for dealing with the high cost of living and money problems

When we use borrowing to pay for everyday living expenses, the interest and fees that add to what we borrow mean we can end up owing more than we realize sooner than expected. If you need to use your credit card, overdraft facility, or line of credit to make ends meet, supplement your income as sparingly as possible—and only for what is really necessary. Sketch one emergency budget with reduced costs and track your expenses carefully. While it won’t be easy to decide what to cut, do your best to balance your spending with your current income level. It will be much easier for you to get back on your feet.

Debt Repayment Mistakes Keeping You in the Red

Use payday loans when you are really short on cash

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High-interest loans, like the ones you get at payday loan shops or through online instant cash deals, seem like a good idea when you really need cash right away. In a few weeks, however, when the loan and interest have to be paid off in full, you might start to ponder; or worse. It’s almost too easy to apply for another high-interest short-term loan, and before you know it you’ll be so indebted that the only way you can get from one payday to the next is by continuing to borrow short-term.

A short-term loan might be a viable option if you have an important bill that needs to be paid. But you can’t borrow out of a constant budget deficit. The only way to manage is to adjust your budget and planned expenses. Contact your creditors to ask if they can offer payment facilities. Do the same with each of your utilities. Temporarily reducing fixed expenses while you look for ways to increase your income and permanently reduce expenses makes management easier.

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5 reasons to avoid instant loans

One way to reduce your bills could be with a debt consolidation loan. It would lower your payments. Another option could be to refinance your mortgage. That could give you money for bills and other expenses. Each of these debt relief options come with terms that you must understand before signing the dotted line. Other debt relief options maybe suits you even better. Contact a credit counselor at a non-profit credit counseling agency in your area for help locating some of the lesser-known consolidation options. When you have all the information, you can make an informed decision.

8 Common Money Mistakes That Will Keep You Broke

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Throw caution to the wind

It can be tempting to throw caution to the wind when our circumstances seem so overwhelming. Avoid justifying that you already owe so much to justify additional spending, for two main reasons. Creditors don’t see this in a favorable light when you need their help restructuring your debt. Also, this type of self-talk only reinforces your negative thoughts and feelings. Repeating the mantra that you don’t have money diverts your thinking from more positive options that could move your situation forward.

Instead of berating yourself for your circumstances or feeling ashamed of your situation, use the energy you have left to determine your next steps. Find out who to talk to to get another job or more hours and/or more pay with whoever you have right now. Take care of your essential responsibilities and make sure your kids are safe and well fed. Connect to community resources and get any assistance you could need. Anyone can get into trouble – let it be part of your journey and not the destination.

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Your health is more important than your credit

The bottom line is what to do when money is tight

When faced with a money problem, try not to let stress and worry cloud your judgment. Accept any help that is offered to you. When you’re back on your feet, you can reciprocate or pass it on. Make sure to take care of the essentials first, e.g. B. Your rent or mortgage and housing expenses, groceries, transportation for work and school, and medical expenses. Avoid getting into deeper debt or finger pointing. Instead, focus on solutions and what you can do to cope with everyday life. Prioritize your bills and consider all of your debt management options. This could be a time when you need it Communicate your situation to your creditors instead of making payments. The well-being of you and your children is the most important thing, so you must focus on that.

Related reading:

No income, low income – now what?

Money tips that keep you from going broke

How to pay off debt without money

Scott Hannah is President of the Credit Counseling Society, a non-profit organization. For more information on managing your money or debt, contact Scott by E-mailcheck over nomoredebts.org or call 1-888-527-8999.

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