Here's how to get out of it!
Debt is one of the most common financial stresses affecting Canadians. We create debt by making purchases before we have the money to pay for them – "buy now and pay later!" Although we get the benefit of enjoying the things we purchase immediately rather than later, we usually end up paying more money for the purchase in the long run. If purchases are made using credit card debt, we could end up spending almost 30% higher for the goods and services we buy.

Over time, impluse buying using debt can add up significantly. If you're not careful, you can accumulate more debt than you can afford to pay, creating serious financial stress and a risk to your credit rating (worthiness). Here are some tips on handling this situation (read below for futher discussion).

• Document Your Current Position
• Say Enough is Enough-Get Rid of those Credit Cards
• Talk to a Financial Advisor -Consolidate
• Become a "Detective"
• Control Your Spending Habits
• Take Care of those Pennies
• Document Your current Position

Before you can solve a problem, you need to clearly identify the problem and find out where you stand. You need to know what money you take in/earn each month and where your money is going. Start by gathering all of your financial records, including credit card statements, bank statements, finance company statements, pay stubs, monthly bills, and cheque record books. List all of your debts and loans including the current balance, monthly payment and interest rate. Next, record your take-home pay, list your cash outlays, including monthly living expenses, bills and the total debt payments you are making, Be sure to include life insurance and property insurance payments and other items that may be automatically deducted from your bank account. You can click here to access a budget calculator.  If your cash outflows exceeds your net take-home income, you need to speak to a financial services officer immediately.

"Enough is Enough" – Get Rid of Those Credit Cards
If you are drowning in a sea of debt, eliminate those credit cards and don't use them and don't apply for new ones. Consumers perpetuate their financial problems when they start paying off debt using other debt (i.e. using cash withdrawals from credit card "A" to make the payments on credit card "B"). This financial situation is serious and will NOT disappear unless you take control.

Eliminating your credit cards is a very difficult but important step. You are better off building a savings account for "emergencies" rather than relying on credit cards to fill this need.

Talk to a Financial Services Officer – Consolidate
Once you have documented your financial position and destroyed your credit cards, a recommended step is to talk to an experienced, qualified Financial Advisor. Together, you can develop a financial plan to gradually eliminate your debt, and your financial stress, and start enjoying life again.

The Financial Advisors at Winnipeg Police Credit Union are very experienced at helping people to get their finances back on track. If a consolidation loan is required to reduce your interest costs, monthly payments AND financial stress, they can refer you to a lender here at the branch.

Become a "Detective"
Sometimes, there are some sources of cash that are available if you look for them. Some examples are life insurance policies with cash values, unused articles that can be sold at a garage sale, home equity etc. You won't know if there are any sources available to you unless you look for them.

Control Your Spending Habits
Debt is often created by implusive buyers who "can't pass up a sale". Before you go shopping, make a list of the items you really need and then stick to it! Don't allow yourself to get drawn into buying things you don't really need. This often leads to overspending and the creation of more debt.

Take Care of The Pennies
A big mistake many people make is to use the monthly income surplus they have "freed up" from the consolidation of their debts to make new payments on new debt. These people have not learned the all-important lesson of living within your means.

Once you have consolidated your debts to lower your monthly payments and interest costs and controlled your spending habits, the next important step is to establish the habit of saving money each pay period for those emergencies when they arise. An effective way to do this is establish an automatic transfer from your chequing account to a savings plan. Treat these savings deductions like a "payment" – except you are now paying yourself! Another important piece of advice – avoid the temptation of spending your savings to satisfy those buying impulses.

If you follow all of the steps identified above, you will relieve yourself of significant financial stress, start building a successful financial future and start to enjoy life again! For more information, call us at 204-944-1033 or email us at info@wpcu.ca ! We're here to help you.