There was once a couple who made a lot of combined income. Both the husband and wife were doctors, and with such a large income all their financial concerns should have been over.

They weren’t. Despite their large income, the couple never learned how to properly manage their money. Their large income served only as an excuse to spend more and more money. As a result, they were dangerously in debt and their family was miserable.

Debt can strike anyone—rich or poor, young or old, educated or ignorant. Oftentimes debt is a result of our own personal choices, although occasionally it can strike us without warning in the form of a loss of a job, a medical condition, or another life tragedy.

No matter your situation, you should avoid debt wherever possible. Debt takes a major financial, physical, and emotional toll on families and communities.

Why is Debt So Dangerous?
Sometimes people don’t see a problem with ringing up a few extra costs to buy that gorgeous dress or that shiny new car. However, little choices like that can lead to big consequences like the following:

  • Loss and repossession: Of course, when you can’t pay your bills, you can’t keep the things you want. The creditor may repossess your home, car, or whatever other item you can’t pay for.
  • Poor credit: The inability to pay off your debts greatly decreases your credit score. This will limit the creditors who want to work with you and often results in higher interest rates in the future.
  • Physical and emotional burdens: It’s hard to live life happily with the burden of debt hanging over your head. This could cause health problems such as ulcers, heart problems, and depression.

How Do You Avoid Debt?
Sometimes debt is unavoidable, but the more you fall behind in your payments, the harder it is to catch up. Soon, you’ve dug yourself a deep hole that may seem impossible to get out of. So how do you avoid this situation?

  • Avoid consumer debt: Debt may be necessary for important things such as homes or education. However, it’s important to differentiate between “needs” and “wants.” Do you really need that fancy television or that glamorous boat? If it doesn’t fit in your budget right now, don’t go into debt to get it.
  • Don’t try to look like the richest family on the street: Oftentimes, people will compare their lifestyles to that of their neighbours, friends, or family members. One of the most common cases is young couples wanting to have the same lifestyle as their parents when it took their parents years to afford the same lifestyle. Don’t be a victim of this kind of thinking. Be satisfied with what you have.
  • Have a budget: Having a family is expensive, so it’s crucial to have a family budget. Determine how much money you will spend in different categories, such as food, clothing, toys, extracurricular activities, etc., and don’t go outside the budget if at all possible. Keep an adequate savings in order to cover extra costs in the case of an emergency.

What Do You Do If You’re in Debt?
If you’ve already dug yourself into the deep hole of debt, we can offer a ladder out. The experts at Harris & Partners Inc. can help you file consumer proposal or a bankruptcy review so your family can make a new beginning. Call us at today!