5 Tips to Make Ends Meet without Using Your Credit Cards

Maintaining a balanced budget is not always easy. To make ends meet in difficult times, more Canadians are using their credit cards.

Credit cards can actually be helpful when you’re stuck. The problem is that this strategy often leaves you spiralling even deeper into debt.

• Your credit card debt increases;
• You pay more interest;
• You have to take more time to repay;
• You have even more difficulty making ends meet; and
• Your financial situation deteriorates even further.

Besides not actually solving the problem, this method of keeping your head above water may affect your credit rating.

Recognize the warning signs

You may have a debt problem if you often struggle to make ends meet. Recognizing the warning signs will help you identify your financial troubles.

1. You continue to fall behind on your payments;
2. You use your credit cards to meet your basic needs;
3. You make only the minimum payments required on your credit cards;
4. You attempt to obtain new credit cards to cover your daily expenses;
5. You have taken out a payday loan to make ends meet; or
6. You’re stressed about your finances.

These are signs of financial trouble. If you are also receiving calls from collection agencies, it’s because your situation is serious. Drastic changes must be made if you want to settle your debts.

5 tips to balance your budget without using your credit cards

To get on top of your debt, you need to draw up a personal budget. This can be difficult and tedious, but it is essential. Your budget will give you a realistic overview of your situation.

Next, you must take practical steps to make ends meet without using credit cards.

1- Do not use your credit cards

Cut them up. Freeze them. At the very least, leave them at home. The goal is to ensure you do not have access to them until your financial health is restored.

2- Cut non-essential expenses

Reduce your expenses to the bare minimum. Keep only what is essential, at least temporarily. For example, cancel your cable subscription. You can reconnect your services later, when you have a surplus of money after having repaid your debts.

3- Reduce your essential expenses

Set a goal of having more money. Shop around for your car insurance to find the best price. Reduce food waste by making soups with vegetables that are no longer at their freshest. Walk instead of driving whenever possible.

Every change, no matter how small, is important.

4- Be aware

Often, people in debt do not understand how they reached that point. Set a financial goal and be aware of the impact each expense has on achieving that goal. Account for all your expenses and know where your money is going. Do not leave anything to chance.

5- Increase your income

Find ways to increase your income and use those added funds to repay your debts.

• Get a second job;
• Consider selling items you no longer use; or
• Find a roommate or boarder.

Any additional incoming funds will help you make ends meet.

If you follow these 5 tips, you will certainly be on the right track to balancing your budget. This does not guarantee a quick resolution to your problems, but at least you will have regained control over your situation.

Repaying your debts

You have put your expenses in order. Now you can focus on paying off your credit card debt.

Remember that these debts are accumulated over several months or even years. The process for getting out of debt may be just as long. Be patient and stick to your plan.

1. Make the minimum payment on each card

If your debts are high, it is very likely that your payments will cover only the interest fees. In that case, your debts will not diminish, but at least you will be protecting your credit rating.

2. Apply any surplus money to repaying your debt with the highest interest rate

Prioritize debt repayment from the highest interest rate to the lowest. This method will help you to gradually reduce the monthly fees associated with your debts. When you have completely paid off the first debt, move on to the next.

Should you meet with a Licensed Insolvency Trustee?

As noted above, paying off your credit cards will take time. But how long is reasonable before you start considering other options?

The answer varies from one person to another, but in general, these indicators are reliable signs that you should seek help.

You should meet with a Licensed Insolvency Trustee (LIT) if:

• You have more than $5,000 in unsecured debt recurring month after month (e.g. credit cards, loans and taxes);
• You are unable to save money to repay your debts despite your best efforts;
• Even after cutting your expenses, you are unable to make ends meet; or
• Your finances are still generating a lot of stress.

If one or more of these statements is true, you should consult an LIT at Ginsberg Gingras. The first consultation is free with no obligation.

In a single meeting, we will prepare an overview of your situation and suggest alternate solutions.