The debt ratio of Canadians is $1.65 for every dollar earned – so we are spending more than we are making. We expose ourselves to more stress if we fail to pay our bills, put food on the table or save for the future.
Here are five strategies to help pay off your debt faster so you can use your money for what’s more important:
Set a budget and stick to it
To prevent debt from swelling more, curb non-core spending. Knowing what you need to spend each month will help you make responsible spending decisions.
Start with the debts with the highest interest rate
Make a list of all your debts (credit cards, student loans, car loans, bank loans, and personal loans, etc.) to get an overview of your situation.
Reimburse at least the minimum amount on all your debts on their due date, and assign the rest of your money to repay the debts with the highest interest rate (usually those on your credit card).
You’ll get out of debt more quickly and save money. Some financial experts suggest repaying loans with the lowest balance first.
The satisfaction of writing off your debts from the list can motivate you to respect your plan. You will have to find which formula suits you best.
Consolidate your debts
If you have an excellent credit rating, consolidate your debts in the bank or get a line of credit.
You repay your debts immediately and have only one monthly payment to make, usually at a lower interest rate. This simplifies your situation, which can help reduce your stress.
Find a way to earn a little more money
If possible, consider taking another job until you have re-established the situation or eliminated your debts. Selling an asset, you do not need is another option for earmarking more money.
You repay your debts immediately and have only one monthly payment to make, usually at a lower interest rate. This simplifies your situation, which can help reduce your stress.
Talk with your creditors
Some creditors are flexible and will give you more time to repay or lower their interest rate. In some cases, the company issuing your credit card may even transfer your debts to a lower interest rate credit card.
Explain the situation honestly to determine the choices you have.
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To get rid of debts, you need discipline, planning and time, but you can do it faster than you think if you:
Through planning and control, you can balance your accounts and get out of the red. Keep in mind that organizing and cutting certain expenses is essential for this to occur.
Another crucial step is to have an emergency reserve for unforeseen, such as a health problem for example.
Financial Coaching is a methodology that, through techniques and tools, can help you with a better understanding of your debts, mapping your real situation, developing planning and focus and commitment to get out of this situation and thus balance your life financial management.
