"I want to control my finances, but... it feels like they control me!"

Chances are you have debt and for many of us when the monthly statements start to arrive it feels like our debt controls us and not the other way around. You know you should be saving but where is that money going to come from? There are ways to take control of your debt and build a savings plan.

Step #1: Get a handle on what your financial situation is right now. Start with taking the Financial Cardio and Flexibility tests. You know you are in good cardio financial health when it’s the end of the month your bills are paid without breaking a sweat and you are not out of cash. Financial flexibility means that you are able to move through the month without pain from your loan and credit card payments. To take your Financial Fitness tests, go to mycreditunion.ca and click on the Get Financially Fit icon.

Step #2: Now that you know where you stand it’s time to figure out the best way to improve your financial fitness. The goal is to pay off your debt as quickly and as efficiently as possible so you can improve your monthly cash flow. It is time to set a budget or re-visit the one you currently have. A great tool to use is the Go Figure Family Budget Calculator on our website. To access the Go Figure tool go to mycreditunion.ca, click on Member Tools, then The Go Figure Financial Resource Center Calculators and Family Budget links.

Step #3: Tracking your expenses. Take your first month and fit all your expenditures from your cheque book, bills and receipts into a budget category established in Step#2. Complete this for the last few months to see where you followed your budget and where you had a tendency to go over.

Now go to your highest non-essential category (i.e., entertainment, clothing) – is there a way to decrease the amount? Once you have the process in place, review your expenses to figure where to reduce spending, increase debt reduction and savings. Keeping to a budget is a sure way to get financially fit – it is not meant to take the fun and pleasure out of life. Make sure you have set aside enough to enjoy yourself.

Step #4: Decreasing your debt and improving your cash flow. Start by making more than the minimum payment each month. Even a little more will help slowly bring down the balance. Make sure you are paying more on the cards which have the highest interest rate so you pay less interest overall. Call your credit card companies and ask for a lower rate. Changing how you use your card is the hard part, but try to pay off new purchases as they show up on your statement, in addition to your budgeted monthly payment.

You can also borrow in the form of a consolidation loan which combines all your balances into one loan and one payment. Typically it has a lower interest rate, a fixed term and the payment is less. The hitch is that in order to stay ahead you cannot start carrying credit card balances again. By improving your cash flow you can be in a position where you do not need to rely on your cards to make ends meet, pay for an unbudgeted expense or go out for dinner.

After 6 months, redo the Financial Cardio and Flexibility tests to see your improvement. You will be surprised how little changes can make big differences. Once you feel you have a handle on your budget and payments you can start looking at the rest of your financial fitness. As your financial advocate we are here every step of the way. We C.U.^™ so you can get financially fit!