Talking about debt is never a fun conversation to have. It’s something many of us don’t enjoy facing. But, the more you ignore your debt, the bigger the problem will get. Debt doesn’t need to be a normal way of life, but for many Canadians, it is. According to Equifax Canada, the average Canadian debt per person is $73,532, up 2.2% compared to 2019. Here’s the thing though, you don’t have to settle for a life full of debt.
If you’re ready to become debt-free, these are the 5 steps you need to take to get started.
Before you read the brief summary of steps below, it is Important to note; you may not like the idea of taking some of these steps, but its not really about what you like and don’t like here. Its about getting free of the debt which shackles you down.
1. Your current debt
Sit down and compile all your current debts. Everything from credit cards, vehicle financing, mortgage, and even student loans if they are still lingering. Make a list of everything you owe money on and how much you owe on each of those debts and loans, and how much interest you’re paying for each one. Thinking about the money you owe can be overwhelming, but if you have a proper system to organize your outstanding debt, it can make it a little less stressful to look at and review.
2. Prioritize your debt
Now that you’ve compiled all your debts into a list, it’s time to start prioritizing them from most important to least important to pay off (not to say that some types of debt are not important, just that certain debts are better to pay off right away). To decide which debts are more important to start working on first, look at the interest rates. In most cases, you want the debt with the highest interest rates closer to the top of your priority list.
3. Review your current spending habits
Are you buying a $5 morning coffee every day from your favourite coffee shop? Do you find yourself spending money on things you want rather than need? If you’re currently sitting on a lot of debt, it’s time to make a few lifestyle changes to help pay that debt off. That daily $5 dollar coffee for example is costing you roughly $150 dollars a month alone, which would be otherwise money well spent paying off your debt. So, as you have just prioritized your debt, you need to prioritize your spending habits as well and create a budget for yourself. Stick only to necessities and dedicate more of your money to paying off your debt.
4. Find another source of income
Another great way to start paying off your debt is to find another source of income. Easier said than done of course but think of extra ways you can earn some cash. Maybe by getting a part-time job or starting a small business. Also, think about things you could sell. Whether it be an older car you’ve been meaning to get rid of or holding a garage sale to earn some extra cash, every little bit counts.
5. Ask for help
The biggest step of them all is asking for help with your debt. As we’ve discussed in this earlier blog, talking to someone and opening up about your debt can seem like a really difficult step to take, but you’d be surprised by how much help you can get if you just ask for it. Regardless of whether you have someone to ask for help or not, you always have our experienced team of debt relief specialists here at 4 Pillars. We can show you how to consolidate your debt and get you on the road to financial freedom! Book a free consultation at one of our three locations today by giving our Muskoka & Parry Sound office a call at 705-640-0187, our North Bay office at 705-980-0158, or our Sudbury office at 705-806-1252. A debt-free life is possible. Take the first step today!