Did you know that the total Canadian consumer debt exceeds $2.3 trillion? When broken down, this number equates to approximately $21,000 of debt for the average person.
Although being in debt can seem overwhelming at first, paying off a high balance is easier than most people anticipate. We at King Cash have put together a brief guide that has everything you need to know. Let’s take a closer look.
1. Learn to Budget Properly
Make a budget and keep track of your spending.
Knowing how much you make and where your money goes allows you to better manage how much you can afford to pay down toward your debt each month. Eliminating unnecessary expenses (such as streaming service subscriptions) can you go a long way when it comes to maximizing the amount of money you save.
However, there will come a point where you can no longer reasonably cut costs. From here, you should consider ways through which you can make more money. This could involve working overtime, starting a side hustle, etc.
2. Pay More Than Your Minimum Payment
Try to pay more than the minimum payment on any loans or credit cards that you may have. This will help reduce the amount of interest you owe over time and also reduce the amount of time it takes to pay off your debt.
In general, it’s best to pay as much as you comfortably can rather than your minimum required payment.
3. Consider Debt Consolidation
It’s possible to consolidate some of your higher-interest debts, such as credit cards, into a single lower-cost loan with a fixed rate.
This will help you better manage payments and potentially save money on interest over time. For instance, let’s assume that the average APR on all of your debt is 22%. If you take out a loan to pay off your debt that has an APR of 8%, you could potentially save thousands of dollars.
Look into negotiation tactics with your creditors.
If you can’t pay the full amount due, ask if they will accept a lower payment and/or negotiate a longer timeline for repayment. Keep in mind that this may not always work in your favor.
Creditors will take a large number of factors into account, such as your payment history, the total amount that you owe, etc.
5. Prioritize One Debt at a Time
Focus on paying off one debt at a time instead of spreading yourself too thin by trying to make payments to multiple debts simultaneously. This will help ensure that you are making progress on your debt repayment goals. Otherwise, you may find yourself becoming overwhelmed.
This could be due to the fact that the total amount of money that you owe barely seems to budge each month.
6. Seek Professional Advice
Seek financial counseling or assistance if necessary. Financial advisors and counselors can provide valuable advice on how to get out of debt, as well as connect you to resources such as loan modification programs and other forms of debt relief.
No circumstances, you won’t need to take this route, though. Professional financial counseling is typically best for those who owe a significant amount of money.
7. Consider Loans
Although it might seem counterproductive at first, taking out a loan to pay off debt can be a smart decision. Because loan interest rates are typically lower than those of credit cards, this strategy can help save you money in the long run.
It’s also possible to take out cash loans and no credit check loans to pay off smaller amounts of debt instantly. So, be sure to keep this opportunity in mind when looking for fast loans in Canada.
What Are the Most Common Reasons People Go Into Debt?
As you might assume, the most common reasons people go into debt are due to consumer spending habits and lifestyle choices. Some of the top causes include taking out loans for education or major purchases like cars, racking up too much credit card debt, and making late payments. Other contributing factors can include job loss, medical bills, bankruptcy, and divorce.
Regardless of where you go into debt, it’s essential to begin paying it off as soon as you can to minimize the total amount that you are liable for.
How Does Debt Affect My Credit Score?
When you have a high balance of debt, it can have a negative effect on your credit score.
This is because lenders and creditors view you as a high-risk borrower with the potential for defaulting on payments. The more money you owe, the lower your credit score will be. However, if you work diligently to pay off your debt, it can have a positive impact on your credit score.
How King Cash Can Help
We provide an easy-to-use money lending service that can help you get out of debt quickly. Our friendly and knowledgeable customer service team is available to answer any questions you may have along the way. Best of all, our competitive loan rates are designed to make debt repayment more manageable for you.
By following these tips from King Cash, you can begin to take control of your debt and get back on the path to financial freedom. With a little discipline and effort, you’ll be able to pay off your balance in no time and get your life back on track.
Looking for more information on how we can help? Feel free to get in touch with us today to see what we can do.