In the wake of the global pandemic in 2020, we’re all still adjusting. For some of us, our finances took a serious hit. It’s up to us to turn that financial situation around and live in prosperity. If you’re struggling with personal debt, don’t let it continue to hold you back. Take control of your finances, pay off your loans, and get back on track.
Don’t feel ashamed here – you’re not alone in struggling with your debt. Statistics show that Canadian households experienced a record-breaking debt-to-income ratio in 2022.
The good news is that there are several ways to reduce your overall debt and regain some financial freedom. It’s going to take some time and effort, of course, but you’ll be grateful you took these steps. Keep reading for your complete guide to taking control of your personal debt.
Start by Organizing All of Your Current Debt
If you’re feeling overwhelmed by the amount of personal debt you have, that’s okay. The first thing you need to do is breathe and relax. Then, it’s time to take a wide look at your overall financial situation.
What are all of the open credit accounts that you’re in the process of paying off right now? These accounts can take many forms beyond just the typical credit card. You might have financed living room furniture or opened a line of credit to get your car fixed, for example.
Gather all of the information about these accounts together. What amount do you owe each creditor every month? What are the due dates?
Once you have a clear picture of your current debt, you can start making strategies to lower it. In order to know what debt reduction strategies you can afford, though, you also need a concise monthly budget.
Budget Your Monthly Income and Expenses
If you don’t have a month-to-month budget already, now’s the time to create one. Making a budget can help you live within your means and find extra funds to reduce debt.
This task should be pretty straightforward. Add up every single monthly expense you can expect such as utilities, phone bills, etc. This does also include your monthly credit payments.
Then, take a look at all of your sources of income and how much they pay you each month. This might be a flat rate from a salaried position, which makes budgeting easy. Or, if you do freelance work or juggle multiple side hustles, this might be more of an estimate.
With a clear outline of all of the debt you owe and a well-defined budget, you can make smarter financial choices. One good practice to pay off debt sooner is to pay more than the minimum amount whenever you have room in your budget.
Pay More Than the Minimum When You Can
Creditors make money by the interest payments you make each month. The sooner you pay off an account, the less you’ll end up paying the creditors overall. That’s why paying more than the minimum payment (when you can afford it) can be so useful for paying off debt.
Some people swear by a technique called the “Debt Snowball.” This strategy would mean you pay off the smallest account accounts first. Then, you’d use the allocated money you were paying towards these accounts to pay off the larger ones.
Let’s say you have three debt accounts open. You owe $2,500 on one, $3,000 on another, and $10,000 on the last.
With the Debt Snowball, you’d close the $2,500 account as soon as you can by paying more than the minimum each month. Once that’s done, add the amount you were spending on paying it off to the minimum payment of the next largest account until it’s closed- and so on.
Refinance an Eligible Loan
In some cases, refinancing a loan could lower your monthly payments. This in turn would allow you to pay off the rest of your debt faster. Plus, refinancing usually means you can negotiate a lower interest rate and save more money in the long run.
Some of the most common refinanced loans are car loans. Check with your car loan provider to see if this is an option for you.
Use A Small Loan to Jumpstart Your Finances Again
Sometimes, you might need real help in getting back to consistent debt payments. Or, you’ve been working hard on your debt solutions and a budgeting error has landed you in a bind. A quick cash loan might be useful here.
This doesn’t mean that you should consider adding thousands of dollars to your total debt. Rather, seek an easy-approval loan from a reliable lender for just a few hundred dollars.
Use this extra money to take care of any essentials, of course. If you can, though, it might be wise to use one loan to pay down or pay off a different loan. This is especially true if it means you can avoid continuing to pay an extremely high interest rate.
Have Friends and Family Members Hold You Accountable
Many people struggle with their finances because they lose self-control and spend money that they shouldn’t. If you’re serious about paying off your debt, though, perhaps you should seek some support.
Talk with close friends or family members who you trust. Tell them about your financial goals and how you’re going to be smarter about money from now on. If you’re comfortable with it, encourage them to hold you accountable.
That way, the temptation to splurge on a shopping spree won’t be as powerful. Your loved ones can encourage you to instead hang out with them at home instead of spending any money.
Start Paying Off Your Personal Debt Today
No matter where you’re at in your financial journey, believe that you can make improvements. You deserve the peace of mind that comes with financial stability. Don’t let the stress of personal debt keep you from enjoying your day-to-day life.
Instead, we encourage you to reach out to our team. We pride ourselves on working with people like you who might need some financial guidance or assistance. Learn more about how our quick cash loans can help get your finances back on track.