How to Deal With Debt and Find Financial IndependenceNov 07, 2018
Managing and reducing personal debt and finding financial independence, easy to say, not always so easy to do. If you are a millennial wondering how to make this happen, you are certainly not the only one.
Our recent BDO Canada Affordability Index found that, although many Canadians of all ages are struggling to deal with debt, millennials (18 – 34 years old) were the top demographic to admit that they feel overwhelmed and are not sure how to deal with their debts. This age demographic also reported that they had put off major life milestones (buying a home, having children and even moving out of their parents’ homes) because of personal debt and general affordability.
While it can seem challenging when you are feeling squeezed by the amount of debt you owe, you have to know that there are steps, strategies, tools, tips and help available. Here are a few ways millennials can work on to find debt relief and financial independence:
- Create and use a personal budget
A budget is one of the most important and easiest personal finance tools around. For millennials who don’t currently have a budget, starting to use one can be a huge help when it comes to dealing with debt, avoiding adding more to your current debt load and working towards becoming more financially prepared for the future.
A budget doesn’t have to be complicated or difficult to create. All you need is a pencil, a calculator and a budget worksheet to get you started. For those that prefer a more high-tech option, an online budgeting app like Mint or Wally can help stay on track.
- Cutback where you can
While millennials admit that they feel stressed out by the amount of debt they carry, they also admit that they may not always be so great at distinguishing a need (such as housing and food) from a want (gym memberships, new clothes etc.).
For millennials struggling with the amount of debt they carry, finding small ways to cutback can really add up. Skipping the morning coffee, taking the bus instead of a ride share program or limiting the number of times you eat out every month can definitely go a long way when it comes to avoiding debt and allocating that extra money towards paying down the debt you currently owe.
- Look for a side hustle
Got some extra time on your hands? A side hustle is another great debt reduction strategy millennials can use to get ahead. Using the money generated from your side hustle to put towards your debt will not only mean you find debt relief faster, it also means you will save money in interest payments. As an added bonus, you might find that you really enjoy your side hustle, which could introduce new career possibilities.
- Seek help
Finally, if you find your debt really overwhelming, seeking debt help is always a good idea. Online resources can provide debt relief strategies you may have not considered, while debt relief professionals, such as a Licensed Insolvency Trustee (LIT) or credit counsellor can provide the insight and tools needed to create a debt relief plan that works.
Side hustle, cutting back or tracking your spending on Mint, how do you plan to deal with the debt you owe?