Debt Consolidation Program

A DCP with FiKonnect also includes having a certified Credit Counsellor on your side, who’s like a friend who just happens to be a financial expert! Together, you’ll explore your attitudes about money while you learn simple money management skills that can last a lifetime. You’ll discover how to:

1. Build a personal monthly budget and stick to it.

Creating a monthly budget can be one of the most important parts of a debt management plan. This budget can help you track and control your monthly expenses so you can work towards other financial goals – such as getting out of debt!

• Sort Your Necessary and Unnecessary Expenses. When money is tight, it might be necessary to make some major cuts to your spending. Identifying which expenses are “necessary” and which ones are “unnecessary” can help you prioritize properly. What constitutes a “necessary” expense? Things that cover your most basic needs (food, shelter, utilities, etc.) and ability to work (car, work clothes, etc.) are generally considered necessities. Meanwhile, things you can do without or use purely to kill time can be sorted into the “unnecessary” column.

• Eliminate Unnecessary Expenses. After sorting your expenses by necessity, start making cuts to unnecessary expenses. This could include doing things like quitting smoking or refraining from drinking alcohol, skipping on buying new clothes if the old ones still fit, or cutting back on games or other leisure activities. You’d be surprised how much cutting down on these expenses can save you! Of course, you don’t have to lead a completely Spartan lifestyle. You may find that you have some room in your budget for the odd luxury if you save enough.

• Establish a Priority for Other Debts. Once you have a plan in place for taking care of your food and shelter needs, it’s important to consider your other bills and debts. Making calls to your creditors and asking for help with creating a flexible payment plan can help. For any creditor that wouldn’t (or couldn’t) be flexible, try to budget so you can at least make your monthly minimum payment.

• Prioritize Your Necessary Expenses. Make a hierarchy of your necessities and order them by priority so you can make sure they’re each taken care of. At the top of the list should be food and shelter – the things everyone needs. If meeting rent or mortgage payments is a concern, it can help to contact your landlord or lender to discuss payment options. This can be especially important during times of economic distress. As for food, it’s important to stick to the “basics” to cover your dietary needs. Inexpensive, long-lasting canned food and dry pasta can be a great way to minimize costs and maximize storage life. Couponing can help stretch your food budget even further.

• Keep Track of Your Expenses. When planning your monthly budget, it’s easy to miss certain daily expenses that can add up over time. So, when you first start crafting your monthly budget, be sure to record each of your purchases or other expenses as you make them, note any recurring expenses (like subscription services) you might have, and add them all together. You might find that there are some pretty frequent expenses that you might have forgotten about. By tracking your expenses, you can include these expenses in your budget and even find ways to cut them back.

2.Set Financial Goals You Can Achieve

You might already have a general financial goal in mind like “pay off my debt” or “buy a home” in mind when considering a debt consolidation service. However, there’s more to financial goal-setting than that.

When you create a goal for yourself, it can help to follow a specific goal-setting framework, like the SMART framework. SMART is an acronym for:

• Specific. Goals should be as specific as possible so you know what you want to achieve.

• Measurable. Goals should have some kind of clear, objective measurement so they’re easy to track.

• Achievable/Attainable. Goals should be realistic so you know you can meet them. Otherwise, it could become demoralizing if they go unmet by too wide a margin.

• Relevant. Is the goal meaningful to you? While financial goals are almost always “relevant” to your situation, it helps to pick a goal that will keep you motivated.

• Timely/Time-Based. Is there a set time for accomplishing your goal? Keeping a due date in mind can help keep you motivated so you can give yourself an extra push if needed.

For example, a SMART goal for debt management might look something like: I want to pay down my $30,000 debt by 33% by the end of next year. Depending on your budget, this goal should be achievable; it’s specific and measurable; it’s relevant to the person, and there’s a due date to help keep things on track.

Setting some short-term goals can help to keep you motivated by breaking things up into more manageable tasks that contribute towards your long-term goals. For example, taking that goal of paying off 33% of your $30,000 debt by the end of next year, you can turn that into paying $833 towards my debt each month for 12 months.

3. Learn how to make your money work for you.

While paying down debt is a good start, it can also help to find ways to make the money that you have work for you. For example, setting aside some room in your monthly budget to invest in a Registered Retirement Savings Plan (RRSP) or TFSA can help you get set for retirement later on.

Money saved in an RRSP is compounded over time – making it kind of like the good twin to credit card debt. Money put into an RRSP is “pre-tax” and will grow tax-free until it is withdrawn. At the time of withdrawal, the money is taxed at the marginal rate.

Canadians who want to save money for retirement or who need to have a fund to cover a big emergency but are on a low income should consider a TFSA.

However, it’s important to note that the taxes for an RRSP withdrawal are taken from that withdrawal – if you withdraw $1,000, about 20% of it will be withheld for tax purposes, resulting in a payment of $800 (or less). So, if you’re withdrawing to cover an emergency, it’s important to take this into account.

How much money could you save in a DCP versus managing debt on your own? Check out our Debt Repayment Calculator to find out now!

If your monthly debt payments – not including your mortgage or rent – are higher than 20% of your income, this is a sign that you could be in financial trouble. At FiKonnect Debt Solutions, we welcome anyone in Canada who needs advice on how to best handle their money and reduce or eliminate balances owed to experience true debt relief.

Our clients come from all walks of life and are eligible for help, regardless of their income level or employment status. There’s no pressure or judgment and everything we do for you is confidential.

Once we understand your full financial situation, you can either enroll in a DCP or we can help you explore alternative solutions, such as securing a debt consolidation loan that will suit your unique financial situation, needs, hopes, and dreams.

A debt consolidation loan is a money management tool that allows you to combine or consolidate your unsecured debt into a single loan from a single lender—helping you experience faster relief by gathering the combined sum of your unsecured debt into a single loan with a set interest rate.