For obvious reasons, we speak often about utilizing your money to improve your business. Working regularly with entrepreneurs all over Canada, we are very interested in helping the nation’s small businesses grow and excel to higher levels. Naturally, our conversations with these owners centre on ways to use our merchant cash advance program to increase their company’s profits.
However, life can’t always be work, work, work, right? When thinking about the difference between your earnings and your expenses, it’s important to consider the various ways you can have fun with your money. After all, what’s the point of making money if you can’t enjoy yourself with it?
In yesterday’s edition of Metro Canada, Lesley Scorgie discusses the concept of having a “financial weak spot”. Scorgie, admits that her own weak spot is books. Apparently, she cannot help herself when passing by a book store. She insists, however, that this is a weakness that she can afford.
The point, of course, is that if you can afford your financial weak spot, there is no problem. However, if you are not making enough money to splurge on items that are not considered necessities, it may be time to seriously rethink your spending habits. Too often, people find themselves in debt by racking up unnecessary expenses.
As Scorgie writes: “Satisfying an impulse to buy something you don’t need can be dangerous; increased spending often leads to unnecessary bad debt.” She notes that a recent report by the Certified General Accountants Association of Canada found that household debt in Canada is on the rise.
Shockingly, Canadians owe a total of a whopping $1.4 trillion! This is two and a half times more debt than the nation had collectively accrued twenty years ago. Spread evenly among each Canadian, each person is in debt $41,740, points out Scorgie. Credit card and lines of credit are the main culprits for this debt, she says.
Scorgie offers a few tips on how to avoid bad debt – the kind that is expensive, restrictive and unable to work as an investment that may grow in value such as a mortgage or investment loan. Bad debt, she notes, is often “incurred through impulse buying”. Her first tip is simple: “remove the temptation to spend”.
Don’t go into stores selling items that you cannot afford and just as importantly, do not need. She advises that you take your name off of promotional lists and keep just one credit card with a manageable limit.
“Second,” writes Scorgie, “pay off bad debt fast. Don’t incur additional debt while tackling the existing. Negotiate and/or consolidate debt to get lower interest rates and a manageable payment plan. Focus on paying the highest interest debt first because it costs the most.”
In other words, you should cut costs where possible and pay off debt with the objective of never accumulating any more. Try to have fun without impulse buying and you’ll be well on your way to a debt-free life.