If you’re like many Canadians, you struggle month to month to keep on top of your debts. Truth be told, there’s a good chance that you are buried under more debt than you can handle. There’s no one-size-fits-all solution to getting out of debt, but there are several tips that you can use to reduce your debt load more quickly.
Exceed the minimum
You will never pay off your credit cards if you habitually make only the minimum payments. Paying even just a little bit more than the minimum can help to carve out your debt more quickly.
Beat your budget
It’s always a good idea to have a budget each month. That way, you know how much you can afford to spend on the extras in life once you have covered the necessities and put a bit away for a rainy day. However, a better strategy is to try to beat your monthly budget. Play a game with yourself. Can you spend less than you plan to spend? Chances are that if you really examine your spending habits, there is room to trim the fat. Use that extra cash to put toward paying down your debt.
Tackle the big debts first
It can be tempting to get smaller debts out of the way first, before diving headlong into your bigger ones, but it’s actually a smarter financial strategy to take care of the bigger debts first. Figure out which debt (probably a credit card) is charging you the most interest and pay that one off first. Once you pay that one off, transfer the money you were using to pay off that debt to your next-biggest debt, and so on. Eventually, your smallest debt will be the only one left and you’ll be able to see the light at the end of the tunnel.
By used when you can
There are lots of opportunities to buy things used. Clothes, furniture, toys and even your car can be bought used. Buying second-hand can save you a lot of money, money that can be put toward your debts.
The reality is this: Some expenses can’t be eliminated entirely. Things like groceries are necessities, but there are ways to save money even on the necessities. Shop strategically. Look for deals on things you already buy, and stock up when those items go on sale. Use coupons. Sign up for online deal websites. By stockpiling your pantry and freezer you can skip one or more trips to the grocery store per month, which can quickly add up to more money you can put toward paying down your debts.
Write everything down
One of the best things you can do for your financial situation is to keep accurate records. Write down how much money you are bringing in and how much goes out. This is the best way to keep track of your expenses and find ways to cut back.
Consolidate your debts
If your debts are drowning you, there is help available. A consolidation loan is a good option because it brings together all of your loans into one payment and one interest rate. That can help you to pay down your total debt load faster.
Refinance your mortgage
If you own your home, you can take advantage of the equity in it to help pay down some debts. Take to a mortgage broker Hamilton residents, to see if refinancing your mortgage is something that could be possible. That will give you extra money to put towards your debts.