Tips on Turning Your Bleak Financial Situation Around

Turn your financial situation around

If you are one of the many individuals who are living pay cheque to pay cheque just to make ends meet, then it’s time to turn the situation around.

Easier said than done is probably what you are thinking.   This is certainly true but nevertheless it is possible.

The biggest problem is in general we lack patience.  The majority of us want to see fast results in anything that we do.   If we are going to do home repairs we want them done almost instantly.   If we are planning for a vacation we want that day to arrive now.   If we are going to budget we want to see the results now.   In most of these and every other circumstance things don’t happen instantly.

Yet we still go through with home repairs, we don’t just stop them because they aren’t happening quick enough.   We don’t stop our vacation plans because it‘s too far off in the future. We do have the tendency though to throw in the towel when it comes to the budget.   We are not getting financial relief fast enough.

One of the biggest money eaters is our credit cards.  At first we start off using them as a convenience, then before long we are using them as a necessity.   Now you have to pay for things like your hydro or home fuel with your credit card because there isn’t enough cash left over at the end of the month to pay for these.   How did this big turn in events happen?

Once you ran up your credit cards with the convenience purchases you were also running up the amount of interest you have to pay.   Those great bargains that you bought on your plastic are costing you a whole lot more than you planned on.

What we are saying here is nothing that you probably don’t already know.   The last thing you need is someone brow beating you about how you ended up in this financial situation. It is a very common problem and it is extremely easy to get into this type of mess.

Start your financial turn around by putting the past behind you.   Look at it as a new beginning.   Just like a baby you need to learn to crawl before you can walk, and that is the concept you need to adopt with your new budget approach.

There are two different approaches you can take to start reducing your debt.

Approach #1:

You are going to take your credit card that you owe the most money on, and this will be your priority to reduce.

Create an imaginary scene in your head. Here is an example.

Think of this credit card as being a big mound of sand.   Buried at the very bottom of this is a treasure chest.    Each month you make a payment on this card pay extra.   No matter how small it is do everything you can to squeeze out what you can to make this extra payment amount.   Each time you make this payment think of it is a using a spoon to remove one spoonful off the pile of sand.

Shortly you are going to see the interest charges drop a little. So you are paying more on the actual card debt.   Study your credit card and when you see you have got it down to a lower level of interest, now look at your payments as being made with a hand shovel.

Continue until you reach the next reduced interest level and now view your payments as removing the sand by the shovel full.

Sounds a little silly maybe but just viewing the progress of the sand being removed will encourage you and drive home that the little increase in payments is really going to make a difference.

The treasure at the bottom of the pile by the way, is all the extra money you are now going to save because that credit card debt is paid off.   Now you can go onto focus on the next card.

Approach #2:

If you really have difficulty sticking to paying off a debt long term, then start by paying out the credit card with the lowest debt.   This will encourage you to continue on, and you can then roll over those payments onto the next card.

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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant


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