Common Money Problems and The Right Ways to Fix Them

Money problems are never far away. Even high-income earners can wind up facing financial difficulties due to debt, over-spending, loss of income, and surprise expenses. Anyone can face money troubles at some point in their lives, but those with more resources will find it easier to get out.

The smart way to weather the storm is to get expert advice in difficult financial situations and find realistic, affordable ways to turn things around. If you’re facing these problems, talk to a financial expert such as a Credit Counsellor from a not-for-profit credit counselling agency. There are resources out there for budgeting, debt consolidation, saving, and more.

These are some of the most common money problems families face – and some suggestions for getting out of them.

#1 Too Much Credit Card Debt

Credit card debt is bad debt – a drain on your finances no matter what. Credit card debts are always considered negative because:

●      They carry high-interest rates, usually in the double-digits and even in the 20s;

●      They’re not used to buy an appreciating asset the way a mortgage on real estate is usually treated as building equity. Instead, credit card debt goes toward consumables, services, or goods that depreciate. When you carry those balances from month to month, you’re making your purchases more expensive;

●      Only making minimum payments takes years to pay off credit card debt, costing you more in interest.

One solution is debt consolidation services. A Debt Consolidation Program can roll multiple credit card payments into a single monthly payment at a reduced (or zero) interest rate. Reduced interest gives you an opportunity to make more headway on the principal. Get debt consolidation advice if you’re buried in credit card bills.

#2 You're House Poor

 When you’re house poor, you own a home, but between your mortgage payments, property taxes, and maintenance, your budget is tight and there isn’t a lot for discretionary spending. Fortunately, your mortgage payments are going into an asset that should appreciate, but in a bad housing market, you could be underwater – in which you owe more than the home would sell for.

 There are a few options when you’re over-extended by real estate:

●      Limit discretionary spending;

●      Adding income by getting another job;

●      Downsizing into a rental, a less expensive neighborhood, or a smaller home.

#3 Over-Spending

Over-spending is a money problem that can affect anyone, regardless of their income. This is when you live beyond your means and rely on credit cards when your take-home pay isn’t enough to cover the expenses of your lifestyle.

Sometimes over-spending comes from “necessities” – housing costs, transportation, food. Often there are more affordable options for these essentials that are worth exploring. Then there’s discretionary over-spending. You can curtail that kind of spending without making major changes, but it will require discipline. Track and limit your spending with a personal monthly budget.

Whatever your money problem, there is a way out. Talk to a financial expert like a certified Credit Counsellor and ask about the best strategy for you.