How to erase your debt
February 28, 2013
By Sheryl Smolkin
A recent CBC article reports that the average Canadian’s consumer debt load hit $27,485 at the end of 2012, a six per cent increase over the previous year’s level and the first time the figure has been above $27,000.
According to credit monitoring firm TransUnion, at the end of 2012 consumer debt had increased at the fastest pace seen since 2009, with average debt loads increasing by more than $1,500.
If erasing debts was as easy as spending money, there would not be so many Canadians struggling to take from Peter to pay Paul every month. It takes courage, commitment and perseverance to make a bare bones budget and stick to it.
If you didn’t catch Gail Vaz-Oxlade’s signature television series ‘Til Debt Do Us Part” when it originally aired, I encourage you to watch a few episodes online to get you started.
The Financial Consumer Agency of Canada also has the following tips to help you get your finances under control:
- Stop using credit: If you continue to spend beyond your means, it will be difficult to realize your goal of being debt-free.
- Find ways to cut spending: Review your budget and list ways you can cut down on your spending. Make coffee at home instead of buying it. Consider selling some of your assets or taking on additional work to bring in extra money.
- Pay at least the minimum by the due date: If you do not, you will harm your credit history and score. Paying off the debts with the highest interest rate first will reduce the amounts you pay in interest and reduce your debt more quickly.
- Contact your creditors: You may be able to negotiate a lower interest rate or a payment plan that works better for you.
- Set a reasonable repayment time: If your time frame is too long, debt fatigue will set in and you will lose focus. If your time frame is too short or unrealistic, your chance of success decreases and so does your motivation.
- Once a debt is paid, close that account: You do not need the temptation of that available credit to pull you back into debt. You will need to keep some credit and loan products in order to rebuild your credit, but only keep what you need and can manage responsibly.
- Commit to a payment schedule: Write post-dated cheques in order to keep to the payment plan and to show your creditors you are committed to repaying them.
- If your debt has gone to collection: See Tips for dealing with a debt collector.
If you are stressed because of your debts, struggling to make your minimum payments, and need a plan to get your finances back on track and get out of debt, the Credit Counselling Society in Saskatchewan can help. Other provinces have similar services.
Are you working hard to pay down debt? Send us an email to email@example.com and tell us about your successes and your set-backs. Your name will be entered in a quarterly draw for a gift card. And don’t forget that the Saskatchewan Pension Plan offers a flexible way to save affordable amounts for retirement.
If you would like to send us other money saving ideas, here are the themes for the next three weeks:
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