Money problems: how to spot them and how to tackle them

Posted on 1 July 2022

Written by Alan Spergel

Money problems are something most of us will experience at some point in our lives. The trouble is, they are not always the easiest to identify sometimes until it is too late. If you are not able to spot the signs of having money problems, you could miss how much financial difficulty you are actually experiencing. With rising levels of debt across Canada and salaries stabilizing while credit card debt, mortgages, and the cost of food increase, money problems are becoming increasingly common. If you are struggling with debt and do not act immediately, it can quickly spiral into a much worse situation. Some people do not act because they are scared of the reality, but that is why teams like our experienced Licensed Insolvency Trustees at Spergel exist. We have over thirty years’ experience of helping Canadians just like you who have experienced money problems. We know how scary it can be, and we are here to reassure and help you. Sometimes, simply understanding the fact that you have options can help. No matter how bad you feel your money problems may be, there is always a solution. In this article, we explain some of the telltale signs that you may have money problems, and share some of the debt relief solutions at your disposal.

How to spot when you have money problems

Below, we have listed some of the key signs that you may be experiencing money problems. By explaining the signs, you may be able to recognize more easily that you are struggling with debt and need support.

Living in your overdraft

Are you constantly in your overdraft, or regularly dipping into it out of necessity? Do you find yourself often paying interest for being in your overdraft, or facing additional fees? Living in your overdraft could be a telltale sign that you are having money problems. Your overdraft should only really be used in an absolute emergency, as you should be able to budget appropriately for emergencies. Using your overdraft regularly does not indicate good financial health – in fact, it could be costing you money that you could either be using to save or for other valuable activities.

Paying off your credit using other credit

If you are using other credit to pay off your credit, like paying off credit card debt using another credit card or your overdraft, this is often a red flag that you have money problems. In an ideal world, you should be able to fix any cash flow challenges well before your credit runs out. Where you can, you should not be letting a temporary financial difficulty spiral into a longer term problem by repaying credit with other credit.

Making the minimum payments on unpaid debt

It could be a sign that you have money problems if you are only managing to make the minimum payments on your unpaid debt. Minimum payments could mean that you are only making the interest payments, and not touching the principal of your debt. If you are not able to touch your debt, it has the potential to quickly skyrocket with interest that you are simply left unable to repay. With interest quickly accumulating and interest rates rising, the more your overall debt will end up costing you.

Borrowing from family and friends

If you find yourself routinely borrowing money from your family and friends simply to pay bills or other debts, it could be a red flag that your budgeting and finances are in disarray. Of course, many of us borrow money from our loved ones every now and again, but if this is a repeated request, it may be down to money problems. It likely means you cannot source the funds from elsewhere. This can be addressed by discussing your personal debt with a reputable Licensed Insolvency Trustee, who could assist you with your financial strategy. They can help you plan your finances and stop you from borrowing from family and friends each time you need cash.

Not requesting free debt support sooner

If you are only just looking for debt relief, well done for seeking support when it is needed. By beginning to understand your options, recognizing that you are not alone, and discovering how you can become debt free will help solve your money problems. You can easily arrange a free consultation with an experienced Licensed Insolvency Trustee – at Spergel, we welcome you into one of our many locations. We will review your financial circumstances and help you with your decision-making process. You’ll be asking yourself why you didn’t explore free debt help sooner – don’t worry, we get this a lot!

How to tackle your money problems

The good news is that no matter how bad you feel your money problems may be, there is always a solution. At Spergel, we are here to help you. Here are some key strategies to help you get out of debt as quickly as possible:

Identify your debts

The first step should be establishing all of the debts that you owe. It is a good idea to create a spreadsheet listing out all of your debts. For each debt, add the total amount owed, the minimum payment you need to make each month, and the accompanying interest rate. You should do this for everything including the following:

Make your minimum payments

Ensure you continue to make the minimum payments on each of your debts owed to avoid spiralling into further financial difficulty. Although it will not likely touch the principal of your debts, it will help to save your credit score from any negative impact.

Review your budget

Now that you understand all the debts that you owe, you need to determine your budget so that you can begin to manage your money accordingly. Figure out your income against the total outgoings you have each month. Establishing how to budget will help you to spend appropriately, and perhaps allow you to begin to save. It will also guide your spending in order to help you meet your financial goals.

Decide on a financial strategy

Before you can execute your plan of tackling your money problems, you need to establish your strategy. First of all, choose a reasonable payment timeframe to work towards. You then need to decide which debts you tackle first – you may wish to pay off your debts with high interest rates first once you have made the minimum payments on your debts. Alternatively, you may want to pay off the debts with the lowest balance first of all for a sense of accomplishment. You will want to pay off as much as you can to work towards eliminating your debt sooner.

Speak to your creditors

Working directly with your creditors or lenders can sometimes pay off. Being honest and communicative can help. You can let them know your financial situation, and what you are doing to try to repay your debts as quickly as possible. They may be able to offer you a reduced interest rate on your debts, an extension on your repayment period, or even help to consolidate your debts into one.

Speak to a Licensed Insolvency Trustee

Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief. They will help you with your money problems by working with you to review your financial circumstances. They will then make a recommendation as to the best form of debt relief for you to achieve a fresh financial future. These options could include:

  • A debt consolidation loan – a new loan taken out to condense multiple separate loans into one. This has the advantage of simplifying your monthly repayments, and often makes for a reduction in your interest rate.
  • Filing a consumer proposal – consumer proposals are a legal form of debt settlement. You can propose an affordable monthly payment to your creditors in exchange for a reduction in your debt by up to 80%. Other advantages of a consumer proposal include the ability to keep your assets, and protection from your creditors via a stay of proceedings.
  • Filing bankruptcy – bankruptcy offers a fresh financial future for those who need it. You essentially assign any non-exempt assets you may have over to your Licensed Insolvency Trustee in exchange for clearance from all your debts.

For speedy help with your money problems, book a free consultation with Spergel. Our Licensed Insolvency Trustees have been helping Canadians gain debt relief for over thirty years, and we can help you too. We will review your financial situation and offer advice on the best steps to take to clear your debt and begin a fresh financial future. Speak to us today – you owe it to yourself.

Alan Spergel

Alan Spergel

Alan Spergel is the founder and President of Spergel. A leader in our industry, he is also a former chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) and has served on Canada's Superintendent of Bankruptcy Management Board. He actively supports multiple charities, ensuring that Spergel gives back to our communities and has recently been appointed as Chairman of the Board of the Humber River Hospital Foundation. Outside of the boardroom, you can find Alan playing golf, tennis, or skiing and enjoying quality time with his grandchildren.

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