First Steps to Getting Out Of Debt

July 19, 2019
Are you tired of feeling like you’re drowning in debt? If so, you are not alone. According to the January 21rst, 2019 edition of the Financial Post, a recent poll found that 31% of Canadians say that they don’t have enough money to pay all their bills and debts, and that 45% feel they will need to go further into debt in order to pay all their essential monthly expenses.
First Steps to Getting Out Of Debt

Seeing as the perspectives seem so bleak for many of those who are in debt, is there anything that you can do to keep your head above the water? Better yet, is it even possible to get out of debt? Yes, it is. Here are a few steps you can take to help you get on your way to being debt-free: 

First Turn the Tap Off

Debt can be compared to an overflowing sink: before even thinking about mopping up the floor, you need to turn the water tap off. So, the first thing you need to do to get out of debt is to stop money from leaking out of your budget in the first place. 

Find the Leaks

Where is all your money going? Well, to find out you need to sit down and figure it out. Know how much you earn and what your expenditures are. Then aim to spend much less than what your income is. 

Do this by cutting expenses wherever you can. 

For example, you can reduce your spending by shopping only when you absolutely must, and by buying only what you truly need. Take advantage of rebates and coupons whenever you can.

Also, save money by negotiating better prices for necessities such as insurance, telephone, and cable service. 

Eliminate Credit Card “Leakage” ASAP 

The single most important source of money “leak” in many households is the interest paid on credit card balance. How can you fix this?

The first thing is to try to negotiate lower interest rates for your credit card. If that doesn’t work, shop around for a company that charges less interest, and have your balance moved to that card. 

Also, if you have more than one credit card, work to eliminate them all but one. 

It is important to realize that you will never get out of credit card debt by paying only the minimum amount required every month. The very least payment that you can get away with that will allow you to stop sinking further into debt is the minimum payment plus the interest charged for that past month.

Fix All Other Leaks One by One

Pay off all your other debts one at a time. Proceed with all your other debts in the same manner as with your credit card debt, meaning that you work toward eliminating whatever debt is costing you the most in interest first. 

Be Patient

Getting out of debt takes a lot of time and effort. But by consistently applying tips such as the ones mentioned above, and by persevering, you will gradually be making your way out of debt.