5 Tips to Manage Your Debt

By: Submissions

Living debt-free as an adult Canadian with a nine-to-five job and no other source of income is often easier said than done. Many times, people feel the urge to ignore debts and live their best lives, even if for a short period, but instead end up plunging themselves into further misery. Everyone needs a practical plan on how to get out of debt faster. Here are a few tips for incorporating into your debt management strategy for 2021:

Borrow responsibly

Just because you are on a mission to go debt-free doesn’t mean you won’t need to borrow again. Credit will come in handy once in a while, but its impact will be determined by your borrowing habits. You should take the time to understand your needs, scan the market and familiarize yourself with various lenders and their interest rates, and identify the best one for you. Find more info at iCASH if you are looking for reviews and comparisons of some of the highest-rated lenders in Canada.

Understand your debt situation

Make a list of all the debts you have, and establish the gravity of their respective consequences. Prioritize debts that affect your home, like unpaid rent and tax. At the bottom of the list should be debts associated with overdrafts, credit card companies, and hire purchase agreements. The point is not to ignore some debts but to do away with the ones that will impact your life the most. Snowballing is another great way to manage your debts if you are looking to save some money in the process.

Create a budget

Once you get a clear and complete picture of the amount of money you owe in debt, consider formulating a budget plan. You can do it manually or use a digital tool to track your expenditure and calculate the amount that remains after you have paid major bills. This helps you figure out how much of your income to assign to debt repayments.

Research balance transfers

Balance transfers are an age-old technique for reducing borrowing costs. By transferring your current card balance to a lower-rate provider, you might dodge extra charges and do away with the debt faster. You might want to transfer to a zero percent credit card if you are certain you will clear the full amount within a specified timespan. However, before committing, you need to know how long the offer runs and make sure you are shopping around for the best deals.

Set up another source of income

The debt snowball technique and credit card balance transfers are some of the most straightforward ways to speed up debt repayment. However, nothing amplifies your efforts even more while doing minimal disruption to your lifestyle as much as earning extra cash. Virtually everyone has a skill or talent they can make money out of; find what you enjoy most and have an aptitude for, and monetize it.

Endnote

Debt is normal, and the only thing that makes it bad or good is your repayment strategy. Always plan ahead and have a backup plan if you bump into an unexpected turn of events. The above tips should help you get started.

By Russell Fenton

© 2021 Copyright Russell Fenton - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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