Insolvency can affect anyone at any age, and retired people are no exception. In fact, the average amount of debt among retired people has risen sharply over the last few years. Fortunately, the licensed insolvency trustees at Bernier & Associates in Ottawa understand how difficult it can be to deal with excessive debt, especially once someone has retired and stopped making an income. Here are a few tips on how to avoid ending up in a difficult financial situation like personal bankruptcy.
Limit major expenses
If you’re retired or plan to retire in the near future, try to avoid making a major purchase, such as a second home or recreational vehicle. Instead, consider selling your second vehicle, if you have one, or switching to a more economical model that’ll allow you to save a bit of money every month. If you need to make a major purchase, make sure to factor in your decreased income to avoid borrowing more than you can afford.
Pay attention to credit
Since many credit cards have an interest rate of close to 20 per cent, it’s best to use your card only occasionally and instead make purchases that you can pay for out right. Accumulated interest can quickly spiral out of control and become difficult to manage. Although a home equity line of credit can be helpful in some situations, this option should only be used in an emergency. In any case, make sure your expenses don't exceed your cash flow.
Keep track of your payments
It’s best to settle your home mortgage debt before you retire, as this will reduce your monthly expenses. You should also plan to pay for potential increases in the cost of living, your medical expenses and taxes on any income earned.
Are you in a tight spot due to inheriting an insolvent estate? Or perhaps you have excessive debt and are considering declaring personal bankruptcy? Regardless of the cause of your financial difficulties, the team at Bernier & Associates in Ottawa can help. We’re here to assist you in finding personalized solutions that’ll help get you back on track. Contact one of our licensed insolvency trustees for a free consultation.