Dealing with debt: taking charge of your problem

If you found this blog you must have been surfing the net to learn more about bankruptcy and bankruptcy alternatives (for dealing with financial problems) in Canada.

This is going to the be the first in a series of self-help messages to either set you on the straight and narrow or warn you that it's time to seek some professional help.

How are we going to do that? Well, you need to do two things for us before we can begin.

First, we would like you to take a few minutes to write down everyone one that you owe money to. It doesn't matter if it's your mortgage, a car lease, an overdraft at the bank, a credit card, your buddy at work, a cell phone account - whomever and whatever you owe needs to go on this list.

Second and this may be more difficult, we want you to write down how much money comes in every month (your take home pay, baby bonus, pension income, allowances, etc) and how you spend that money (the rent, the groceries, car insurance, cigarettes, coffee at Tim Hortons, etc.). If you're like most Canadians, you don't keep detailed records of how you spend your money so a lot of this could be guess work. That's okay, but the more accurate you are with your numbers the better the end result will be.

If you don't have any idea at all where your money goes then try this exercise: for the next two weeks carry a little pad of paper around with you and write down everything that you spend money on. If you buy gas write it down, groceries write it down, a candybar off the canteen truck write it down - get the idea? You'll be amazed at how quickly the money gets spent and where it ends up going.

Once you've got these two tasks completed you'll be ready to proceed with the next step - drafting a budget. You've probably heard of budgets in the news - governments seem to live and die by them, but can never get them right. Simply put, a budget is a plan for how you will spend your money.

The next blog will deal with the mechanics of preparing a budget - watch for it in a couple of days.

Posted by Ted Michalos, CA trustee @ 3:25 PM

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