Debt is a major cause of stress for Canadians. You’re not the only one who has to worry about loans, borrowings, or credit card debts.
Canadian households have about $80 billion in credit card debts with banks in February 2022. This is an increase of 8.9% from the previous year.
However, Canadians performed poorly in 2019 when their credit card debt amounted to $89.6 billion in December 2019.
Canadians are looking for quick and reliable ways to get out of debt. But how do you do that?
Here are some practical ways to avoid getting drowned in a sea of debt.
Arrange and Calculate All Your Debts
You may be paying a range of debts. The list might include credit card payments, loans, EMIs, and more.
Therefore, you should have a clear idea of what you owe to whom. You cannot expect to get out of your debt if you don’t even know your liabilities.
So, sit down with a pen and paper and write down all the loan amounts you owe. Additionally, note down the interest rates and the resulting amounts you will have to repay.
Don’t Take Any More Debts
This should come as a no-brainer to most of us. However, some people have the habit of borrowing money just to prepay their existing debt.
This is a very foolish practice as you end up increasing your debt. Worst of all, you may land in trouble if you have no way to earn money to repay your debts.
The way out? Don’t get lured by personal loans, no refusal loans in Canada, or 24/7 loans online.
Pay the Highest Debts Firsts
Some of your debts may be higher than others. For example, house loans, short-term loans in Canada, or Instant loans in Ontario may have higher amounts.
Additionally, a higher loan amount means high upfront fees and interest.
As a result, it is a good idea to pay the loans with high amounts first. It will give you more relief and not regret applying for quick loans in Ontario.
Pay More Than the Maximum Amount
You don’t always have to pay the whole amount for loans in Canada. You may be able to pay a minimum monthly amount against a loan amount for the duration of the online loans in Ontario.
The same applies to credit cards, where you can pay a minimum monthly amount.
Now, financial managers recommend paying more than the minimum amount. It goes a long way to clear your debt and reduce future payments.
Moreover, you may add more repayments to your account to bring down your debts.
Refinance Your Debts
Canadians often end up taking on a lot of debts. The good news is you can consolidate your existing eligible loans into a single loan for better repayment rates and conditions.
You may be able to consolidate your debt in your existing bank. Otherwise, competitors may even offer you more favorable terms like lower interest rates.
Additionally, you may not need any cash advance to consolidate your loans. It is also good for unsecured personal loans and bad credit instant decision Canada.
You can consolidate different types of loans under debt refinancing. The options may include unemployment loans with no job, installment loans, e-transfer loans in Canada, and an online loan.
However, you may need good credit scores and credit history.
Create a Budget
Debt may become a cause of depression and irritability. It may even prevent you from participating in the pleasures of life.
However, that also doesn’t mean you have to give up living a comfortable life or applying for a loan.
All you need to do is make a bit of compromise to save money to repay your debts. The best way to do this is to create a family budget. Write down all the things that you need to survive, like food, groceries, and so on.
Look to cut out unnecessary expenditures for a while to get out of your debt. Additionally, stick to the budget and account for your income for an accurate estimation.
Get E-Transfer Loans
Emergency cash immediately in Canada can be a suitable temporary option to reduce your debt. You can take out a cash amount to repay your current debts and attain a better financial situation.
However, these loans may have some conditions. For example, you may have to go through employment verification during the loan.
However, it is necessary to study the terms and conditions of the loan provider. Many organizations offer loans with no credit check, which may have high repayment rates.
Additionally, they may also avoid any verification during the application process. These are unscrupulous players, and you should stay clear of such entities.
Get your e-transfer loans only from reputed and trusted providers.
Boost Your Income
You should ideally take debt that you can pay back comfortably. Taking more than you can repay will surely land you in a financial emergency.
So, if you have more debt than you can manage, look for ways to increase your income. You don’t have to give up your regular job or even seek an advance from a friend.
Instead, you can boost your income in many ways. Some of the examples include:
- Joining affiliate marketing to earn commissions promoting products
- Starting your blog and inviting advertisers
- Start selling products online and earn 24 hours
- Do jobs like data entry or become a virtual assistant
- Look for part-time work at restaurants and shops
You will be able to repay your debt quickly when you have more income. Additionally, you will be able to sleep peacefully at night.
Choose Affordable Ways
You may want to stop living a luxurious life if you want to get out of your debt. Therefore, you may try general brands instead or international or premium brands.
Additionally, choose affordable ways to travel by public bus and trains. Canada has an excellent network of roads and railways to help you travel comfortably and save your money.
In addition, you will be helping the planet by reducing carbon footprint and congestion on the road.
Moreover, make use of everything you buy. Don’t let food sit in your fridge and turn rotten. These small ways will help you save enough money to reduce your debt.
Renegotiate the Terms
Many loans take years to repay, like home loans. Additionally, a person may take several loans from a bank for different purposes.
All of these loans may have varying terms and repayment rates. In such cases, you may try to renegotiate the terms with your bank.
They may offer you more helpful solutions and ways to pay your loans efficiently. Additionally, they may lower the repayment rates or even grant you a longer repayment period.
So, set up an appointment with the bank manager and discuss your debt conditions.
Sell What You Don’t Need
The modern economy has brought about a shopping spree. We are buying more things compared to even five years back, powered by online sales and home delivery.
However, we buy many things on impulse that we don’t need. For example, you may not use your hoverboard more than a few times unless you are an enthusiast.
Therefore, it is a good idea to sell off things that you don’t need. There are many online platforms that allow you to sell pre-owned goods at good prices.
You can upload your household products and wait for offers to drop in. Next, you can use the money to repay your debt.
Get Rid of Your Credit Card
Banks make it seem like credit cards are magical instruments. You can buy the world using your credit card and never have to worry about reaching for your cash.
However, credit cards trap you in an endless cycle of debts and repayments. They are not for everyone, especially those who cannot manage their money efficiently.
Additionally, why would you need a credit card when you have got the cash in your bank! You will have to pay back the amount in any way and may even attract interest and late fees.
Don’t listen to banks and give up your credit cards. It will be a sure way to bring down your debt and not occur any more of it.
Start Using Digital Payment Methods
Using cash is an inconvenience for many people. Additionally, you may not always have enough cash to buy what you want.
As a result, credit cards or EMI options gained popularity due to cashless transactions. However, they still incur debt and need you to pay interest.
Today, you don’t even need to pay using credit cards for added convenience. You can use digital apps on mobiles to make instant payments from your banks or wallets.
The money is deducted directly from your bank, and you owe nothing afterward. Moreover, these digital payment apps offer attractive discounts and cash-backs.
Seek Assistance from a Debt Counselor
Not all of us are good at managing our money. Many people even go crazy trying to repay their debts and meet all the repayment terms.
If you find yourself in dire conditions, you can approach a debt counselor. They can give you helpful tips to lower and repay your debt without breaking your bank.
Additionally, they may also teach you to handle your money better so that you don’t take excessive future debts.
Talk to Your Family
Most Canadians don’t take loans for themselves. The money is also used for their families and children.
For example, a home loan will benefit the whole family by giving them a safe living space.
Therefore, your family should know about what you are going through. Don’t shoulder the whole burden of the debt by yourself. It will impact your mental well-being and even lead to stress or depression.
Therefore, talk to your family about your outstanding debts. They may be able to offer helpful clues to save money or generate more income.
Your spouse may even take up a part-time job to share some of the burdens of the debt. Even your children may contribute if they are earning members.
Pay Your Bills On Time
We have to pay a range of bills every month. You have to pay for utility bills, internet charges, phone plans, Netflix subscriptions, and more.
Some people may feel like deferring the pay payments as they are submerged in debts. However, that is a wrong move as your bills will keep piling up.
In addition, you may have to pay late fees and even get your service disconnected. Moreover, these pending bills will add to your debt, making it more unmanageable.
Always pay your bills on time to stay in control of your debt. You may also enjoy rebates by paying your bills earlier than the due dates.
You can also have monthly review meetings with your debt management practitioner, and review your progress with your family regularly. You can use these meetings to further control your spending and even set up weekly targets.
Add Extra Earnings to Repay Debt
Many people adopt a windfall strategy to debt. The idea is to use any expected income to pay debts.
So, the money you inherited from your parents can pay a substantial part of your debt. Similarly, you may also rely on cash gifts, professional bonuses, and more to lower your debt quicker.
However, leave some of the money for yourself to have a fun time.
Track Your Earnings
You should take a loan that you should be able to pay back. Therefore, it is necessary to track all your earnings from all applicable sources like work and business.
You should do this for the whole year to get an idea of your cash flow. It will allow you to understand how much debt you can afford to take from the market.
Additionally, you will also understand if you will be able to repay the debt comfortably.
Some people have a habit of overspending. Techniques like credit cards and EMIs have made the matter worse for them as they cannot control their spending spree.
Naturally, such tendencies are more likely to generate huge amounts of debt. However, it is a mental disorder and cannot be taken care by your own.
Think about visiting a psychologist to discuss your issue. They will be able to recommend tips and techniques to stop spending more than you need.
Consolidate your debt and opt for a debt management plan
Seek to consolidate all your debts so that you can get an idea of exactly how much you own. Once you have got an idea of the total sum you owe, you can now opt for a debt management plan where you along with a debt management company work out a plan towards repaying all your debts spread over a specific period.
Set Aside An Emergency Saving
Most of us rely on our month-to-month income. As a result, very few of us have savings or even feel the need for it.
However, emergency savings of funds can be helpful many times. It can pay for medical expenses not covered by your insurance.
Additionally, you can use your emergency savings to pay off high amount debts. It will leave you with smaller loans with low interests that are easier to pay.
Additionally, the savings can pay for unexpected fees and rates that come with late payments. Therefore, make a habit of putting aside a few dollars every month when you receive your check.
However, don’t use funds from other programs to pay for your debts. For example, never use your retirement fund to pay your debts. It will make your old age more uncomfortable and inferior.
File for Bankruptcy
You may file for bankruptcy only in extreme cases. It is the last option when you have no income to pay your debts.
However, Canadian laws also permit you to lower your dues, like credit card bills under Chapter 13. Therefore, you may seek legal assistance to manage your overwhelming debt.
Choose your options carefully and use the guidance of your mentor for the best results.
Debt is a rising problem among Canadians. The long years of the pandemic and job losses have made the situation worse. You should try to pay your high-amount loans first and use any additional income to reduce your burden. Plus, you can take up a few side gigs and try to consolidate your debt. Lastly, don’t borrow more than you can afford to pay to sleep peacefully at night and maintain a good financial position and credit score.