Get Rid Of Debt Once And For All

Get Rid of Debt.

Get Rid of Debt

The average Canadian household debt is $96,000 ($107,000 for American households).

Can you believe that? So many people are spending more money than they make, and it’s leaving them with huge debt piles.

Are you are ready get rid of debt once and for all? Here’s what needs to happen:

Determine just how much debt you actually have.

Who do you owe? Credit card companies, friends, family? Do you have a car loan, mortgage, bank loan or buy now & pay later loan? Write every single debt down. Include the amount you owe, the minimum monthly payment and the interest rate (if applicable).

Add all of your debt together to get the big number. Try not to pass out.

Track your spending.

In order to see exactly where all of your money is going, you need to track your spending for at least 1 month (3 is ideal). Many people don’t realize how much they spend on little things every month, like coffee, snacks and magazines. Track every penny. I bet you will be surprised to see where some of your money is going.

Trim the fat.

Do you really need to buy a coffee every day? Cut back to once a week and put that savings towards your debt. Are you going out for lunch every day? Again, cut back and put your savings towards debt.

It’s important to make these sacrifices to get out of debt. Once the debt is gone, you can consider doing these things more often again (but not if it will put you back in the hole!).

Get your interest rates lowered.

Call up your creditors and ask them to lower your interest rate. If they say no, ask to speak to a manager. If the manager says no, tell them that if they can’t help you, you will consider transferring to a credit card company with lower rates.

There are so many credit cards out there, that many will lower your interest rate just to keep you as a customer. If they won’t, look around for another card you can transfer to (one with a low interest rate).

Determine which debt to pay off first.

You should always pay off your debt with the highest interest rate first. If you have a bank loan at 10%, a credit card at 15% and a car loan at 12% – you should pay off the credit card first, then the car loan, then the bank loan.

If there are no interest rates involved, such as a loan from a family member or friend, pay off the smallest debt first so you can start to see some progress sooner.

Make money money to put towards your debt.

In order to pay off your debt, you need to make more money, or spend less than you make.

The easiest thing to do is to simply cut back on your monthly spending. Can you cut your grocery budget back from $500 to $400 per month? Maybe you can get by on $100 a month for entertainment instead of $200. Some things you may even be able to cut out all together include alcohol, lunches out and magazine subscriptions.

After you have scaled back your spending, try to make some extra money to throw towards your debt.

Here are a few money making ideas:
Sell things on Ebay or Craigslist & Kijiji.
Have a yard sale.
– Deliver newspapers.
– Do some baby/petsitting.
– Clean houses on the weekend.
– Work overtime.

The goal is to become debt free no matter what the cost. The feeling you have when you are out of debt can not even be described. It is amazing.

Some people think that debt is a normal way of life but it doesn’t have to be that way.

With some hard work and determination, you can get rid of debt once and for all.

Do you have any tips for becoming debt free?

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Comments
  1. Anita says:

    Great post! Tracking your expenses really helps you figure out where you can cut back and save. We did that and cut back on some things and didn’t even notice the difference.

  2. Our debt has increased over the past 3 years after closing a failed business. I used personal lines of credit to purchase the business and after closing it, of course I was stuck paying those back. As I paid the bills each month of course I saw what our total debt was, but I didn’t know what to do other than to keep paying as much as I could each month. Finally this past January I did an Excel spreadsheet that included all debts and expenses, as you mention above. Each month I record our spending. Sometimes we come in close to what I predicted we should spend and some months we are still over. We are a work in progress when it comes to budgeting and debt repayment, but at least we are working on it more.

  3. Maurene says:

    We keep a “piggy bank” on our dresser. Every night we empty our loose change into the piggy bank. At the end of each month we roll it up, and put it toward one of our credit cards as an extra payment. This seemed silly at first, but after almost a year, we have seen a huge decrease in our balances.

  4. Jen Gibbons says:

    To stay on track and get out of debt, don’t just keep track of your spending, plan ahead and use a spreadsheet to create a budget. If you are going to trim back your spending put a budget on it and that’s it for the month that you can spend. If you need to put it in jars or envelopes to stick to it, then do that. Balance a budget that includes any & all expenses you can anticipate such as birthdays, or weekly pizza night etc. so you can know exactly where you are spending money. Also, make sure to budget a bit for savings even if you are trying to pay off those credit cards because there are often unforseen expenses you may need to cover which you don’t want to have to rack up more credit debt if you don’t have to so put it on your list of ‘bills’ to make sure you are putting a little something away for savings.

  5. Ashley says:

    Great post and thanks for re-posting. Just an FYI that there is a typo in the article under which debt to pay off first.

  6. Tina says:

    Sorry your money making ideas are bit laughable.

  7. Erica Ashley says:

    Thank’s Ashley, I’ve fixed the typo.

  8. Erica Ashley says:

    Why are they laughable Tina? I babysit and clean houses for extra money. If you are determined to pay off the debt you do what you can.

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