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4 Steps To Help Canadians Get Out of Debt

By Debt.ca on April 30, 2012 No Comments

Debt scares, and most often, it makes life unbearable. But it doesn’t have to get to this level because there are several ways to correct your situation and get your financial life back to normal. If you follow the below steps with special attention to your personal circumstances, you will be on your way to getting out of debt.

1. Establish your total debt

Start by determining how much you owe, especially on your credit card. To do this, bring all your statements together and add the totals. From experience, we can say with confidence that this sounds so simple but it is the hardest thing to do in the journey of getting out of debt. Those who are already making efforts to get out of debt will tell you that it is the hardest step. Once you arrive at that single figure, take a sigh of relief and smile. You are now on your way to becoming debt free, and you will love the process.

2. Organize your debt

Organize your debt from the largest amount to the smallest amount. Most debt experts will advise you to start by paying off the debt that bears the greatest interest. Some of these payments might be the small amounts that you borrowed during emergencies, but it is important to pay these debt amounts off first because they carry high interest rates because of their volatility.

3. Analyze where your money goes and identify where you can save

If you take the time to carefully look at where your money goes, you will be shocked to discover that there are dozens of expenses you can eliminate and still be able to manage your life. Find out how much you spend per month and which particular expenses you can actually live without. For instance, are there some TV subscriptions you can sacrifice for a period of time? Can you cut down on the number of visits to the pub? Experts recommend that the best way to go about this is to write down all the little things that consume your money throughout the month, right from your car loan repayment to massage treatments. Once you have it all written down, you can now highlight the bills you cannot do without and kick out the ones you can actually afford to live without for a few months while you are trying to get rid of your debt. With good focus and wisdom, you could end up cutting your expenses in half and direct the savings to a reputable debt settlement company.

4. A credit counselor may be right for you

If you are having trouble managing your expenses and payments after going through the steps above, you may consider approaching a credit counselling service firm or expert. A credit counselling expert will explore the various debt relief options available to you. A specialized credit counselor will also be able to work through your budget, help you set specific goals, and design a special repayment plan for you.

As mentioned above, one of the things a credit counselor is likely to do is suggest a debt repayment arrangement. In this arrangement, the counselor will engage your creditors to possibly lower your rates and effectively reduce your debts. The only disadvantage with this approach is that it will reflect in your credit report, meaning it may limit your chances of obtaining credit in the near future. For that reason, it may be wise to consider a debt settlement. However, if your focus at this moment is to get out of debt, then you may not worry so much about your credit at this time as you will have the ability to improve your credit once you are completely out of debt.

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