The average Canadian owes $73,532, going by a recent Equifax report.
Despite your best effort, debt can get so overwhelming that you become uncertain about your ability to be debt-free. If you have been in debt before, you might understand the burdensome feeling that comes with it.
How do you lessen this burden amidst numerous other competing financial needs? Here are some tips to help you get on a debt-free path.
If you have several loans from different lenders, tracking different repayment dates and interest rates can be an uphill task. Consolidating debts means taking a one quick money loan to cover all your small loans.
This action does not make you debt-free, but it leaves you with one loan to repay. Be sure to look at the costs of the loan Vis a Vis repaying multiple ones.
Create a Household Budget
To create a debt repayment plan, you need to know where all your money goes. This is impossible to do without a household budget.
To get started, list down all your income sources and the amounts they bring in. then sum up all your expenses regardless of how negligible the amount might be.
The difference between the two amounts is your surplus income. The best outcome is when the amount is positive because a negative balance means you are living beyond your means.
If the figure is positive, you can purpose to use this entire amount to repay your debts. This move will help you clear your loans faster.
Cease All Borrowing
When getting on debt elimination, the last thing you want to do is take on more debts, unless it’s a debt consolidation loan.
If you keep borrowing more, you are essentially taking one step forward and one backward, meaning there is no progress at all.
If you find it very tempting to apply for new loans, consider freezing your accounts so that none can be availed to you.
Increase Minimum Repayments
The premise behind loan repayments is straightforward. The longer the long term, the more interest you pay, and of course, the longer you remain stuck with the loan.
If you are looking to be debt-free as soon as possible, consider restructuring your repayments to make larger payments so that you clear the loans sooner.
This might require you to make some changes to your lifestyle but being debt-free will be worth the sacrifice.
Debts take time to accumulate, so don’t expect them to go away overnight.
Your only goal should be to make small, consistent efforts towards a debt-free life.