5 Effective Ways to Reduce Debt
Any money you’re putting toward monthly debt repayments isn’t going toward your savings. The sooner you pay off your debts, the sooner you can put your money into an investment that will earn you interest.
Here are 5 effective ways to reduce your debt:
1. Pay at least the minimum on each debt
Each month, pay off as much of your debt as you can. At least pay the minimum you owe on each loan. This will protect your credit rating. If you can afford to pay more, pay down the loan with the highest interest rate first. As you pay off each loan, start paying more on the next debt in line.
2. Ask for a lower interest rate
Ask your lender for a lower rate. If the first person you talk to can’t help you, ask to speak to their supervisor. If you have a good record of paying on time, they may be willing to reduce your interest rate to keep your business.
3. Stop using your credit cards
You don’t have to cancel your credit cards or cut them up. But put them away somewhere safe and don’t use them to make any more purchases until you’ve cleared your debt.
4. Consider a consolidation loan
You may be able to reduce your interest charges by grouping all your debts into 1 low-interest loan. This works best if you stop accumulating debt while you pay off the consolidation loan. Two common options are a home-equity loan or line of credit. The interest rate will be lower, but keep in mind that you could lose your house if you don’t make the payments.
5. Trim your budget
Could you cut back on things like eating out and other optional purchases? Trimming your budget will free up more money to pay down on your debt.
If you’re looking for a credit counsellor in Toronto, get a quick assessment with us today or call us at 416.900.2324. We will help you develop a plan, reduce your interest costs and get out of debt over time.