February 27th 2018 - by Amanda Huinink
Getting yourself stuck in debt is frustrating. It can feel like it’s taking over your life. We know it’s hard to break the cycle and focus on a positive financial future, but we are here to help you make the changes you need to start saving and get to a debt free life. Below we have listed a few tips and personal habits that will help you pay off your debt sooner.
1) Cash only budget. For a lot of Canadians, credit cards are what got them into debt in the first place. Credit Cards give you the ability to swipe your card on purchases without actually having the money to pay for them. Try putting away your credit card and only allowing yourself spending money for the week (once all your expenses & savings have been put aside). This will help you limit the amount you spend. When you actually see the money in your wallet and want to spend it all on one thing, you may think twice about how much you want or need that item.
2) Pay more than just the minimum. To get on top of your debt without letting it spiral out of control, it’s necessary to pay more towards your credit card balance than just the minimum balance each month. Get into the habit of making numerous payments towards your credit card balance every month and whenever you have extra money at the end of the week or month, make sure that is going towards lowering your debt.
3) Set yourself a goal. Pick a realistic date that you would ideally like to have your debt paid off and what you can afford each month. Once you have decided that you can afford $200 a month, find out what date that would put you at as being debt free and focus on that goal. Try to challenge yourself to pay off more each month so you can knock your goal out of the park and beat your goal date.
4) Consider a consolidation loan and hide your credit cards. Credit card debt is expensive! Not only can your balance creep up on you each month but then you get dinged on interest rates of 19% or 20%. Think about hiding your credit card for a while and paying off your debt with a lower rate consolidation loan. Your payments would be set up automatically from your pay cheque, so no need to think about them and you are paying down your debt at a much lower rate, which not only saves you time but lots of money in interest charges. The important part of using this route to get your debt paid down is to make sure you are no longer using your credit card anymore. The worst case scenario would be to get a new consolidation loan at a low rate to pay off multiple credit card balances then in turn rack them back up again.
5) Don’t forget to save money! It’s important to focus on getting your debt down, but you don’t want to completely neglect your retirement fund. Maybe you have to lower the amount you save each week until you can get your debt paid down or even paid off, but every little bit counts. Make saving part of your automatic payments/transfers that disperse on your payday. Get used to the idea that the money you want to set aside for savings is not disposable to spend somewhere else.