5 Ways To Get Out of Debt Faster
Realizing that you need to pay off debt is the first step in taking care of your finances. No matter what kind of debt you’re in, paying it off can take years or even decades.
Fortunately, some strategies exist that can make paying off debt faster and a whole lot less painful. If you’re ready to get out of debt, consider these 5 strategies:
Don’t spend money you don’t have. Adopting this mindset will help you rule your finances, rather than letting them rule you. Ensure that you’re living within your means. If you limit yourself to working with what’s in your debit account, you’re off to a great start.
Make the minimum payments on all debts. Making the minimum payments on time consistently for all of your loans will not only keep you from defaulting and incurring late fees, but will also boost your credit score.
Figure out how much more you can pay monthly. Take your monthly income, subtract out living expenses (rent, bills, food, transportation, account buffer) and see what you have left. The more you pay off now, the less interest you’ll be paying in the future, and the more you’ll save overall. If you can afford paying more than the minimum payments, commit to paying an extra amount of money every month.
Pay loans with compound interest first. If you have a debt with compound interest (like most credit card debt) as well as debt with simple interest (like most student loans), try paying off your credit cards first.
Make a fail-safe system. Automating your payments, keeping your loan money separate from your day-to-day money and rewarding yourself when you reach set goals are all things you can set up to make paying off your loans easier. The less you rely on your limited amount of willpower, the more likely you are to stick to your plan.
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.