Consumer debt is on the rise in Canada. If you’re one of the many people who are struggling with financial difficulties, then understand there’s nothing to be ashamed of. Finding yourself in debt isn’t uncommon.
Everyone’s financial situation is different, but what can be said for many is that maintaining a household financially isn’t an easy job. With that being said, there are ways to learn how to get out of debt. From money-saving tips to financial advice, it’s to start discovering how you can take back control of your finances.
Are you not sure where to begin? We’re here to help!
In the guide below, there are several different ways to start getting yourself out of debt. Continue reading to get started down the path to financial freedom.
1. Understand Your Budget
The first step you want to take is understanding your current budget. What does your budget look like? If you’ve never sat down and tried to figure out what your exact monthly budget is, then now is the best time to do so.
If you’re not sure where to begin, there are a few online tools that can help you begin to create a budget for yourself. You’ll want to compare all of your expenses versus your income. After subtracting your monthly expenses from your monthly income, how much money do you have left?
Don’t forget to subtract amounts for gas, groceries, and other household necessities as well. After doing this math, the difference is how much money you have each month to spend freely. Then, be sure to keep track of all your spending.
Check your bank statements each month and know exactly where your money’s going.
2. Make a Debt Priority List
Now, before you start spending the extra cash you have each month on anything you want, it’s time to consider your high-priority debt. Make a debt priority list that places the debt with the highest interest rate at the top and then work your way down to the one with the lowest. The debt with the highest interest rate should be paid off first.
You’ll do this by putting more money towards the debt than what’s required. Even if it’s only $5 or $10, pay extra on the high-interest debt to get it paid off fast. You’ll still need to make the minimum payments on all other debt in the meantime.
Once one debt is paid off, start working on the next highest interest.
3. Change Spending Habits
Changing your spending habits can help you save money each month. When you make better spending decisions, you have more money left over each month after paying all your bills and expenses. There are a few different changes you can make to ensure better spending habits.
Couponing is a great way to save money when grocery shopping or shopping for household items. Many stores have both manufacturer coupons and store coupons that can be combined. Most stores will also accept competitor coupons as well.
If you see an item marked for a lower price at one store, bring proof of this price, and the store you’re at should price-match it. Couponing might seem overwhelming at first, but once you get the hang of it, it’ll become second nature. Start searching in-store catalogs, store apps, and different couponing websites to get started.
Consignment shopping is another great way to save money while still getting to shop around for fun items. You can find lots of great clothing items and many other items at reduced prices in consignment shops and thrift shops. Conduct an online search for a few of these stores in your area and then go check them out!
You might enjoy them more than you think. You never know what treasures you might find there.
Cooking at Home
Eating out on a regular basis is a good way to throw money away, and let’s be honest, a home-cooked meal tastes much better. To simplify the process of cooking more often at home, consider coming up with easy and delicious meal recipes before heading out to the grocery store. You can find many great recipes online.
Buy a week’s worth of meals (dinners) at the grocery store and remember that some meals might last more than one night, which means lunch or another dinner!
Knowing Needs vs Wants
The last healthy spending tip we have to give is knowing what your needs are versus your wants are. Do you really need that new speaker or is it simply a want? Before you spend money, ask yourself each time if it’s a necessity.
In most cases, it’s not. Write the item down on a list to remember it and once you’re out of debt, reward yourself with it!
4. Cut All Luxury Expenses
There might be some expenses in your monthly budget that can be cut. Think about what expenses are a necessity and which are luxuries. For example, paying for cable each month is an unnecessary expense.
Cable television is a luxury that isn’t required. It’s time to cut it or put it on hold until you’re in a better place financially. The same is true for any theme park tickets you pay monthly on, gym memberships, and any other type of membership as well.
There are many exercises you can do at home in the meantime. If you need to purchase workout equipment to use at home, then allow yourself to do this. It’s a one-time payment that’ll save you money compared to a gym membership. There are lots of fun things you can do around town that are free and will make up for letting go of your theme park tickets.
Take the time to look into different events and free places to go around your neighborhood.
5. Consider Library Movie Rentals
If you love renting movies and having a family night or going to watch movies in the theater, then don’t panic. You can still enjoy watching movies with your family or friends for free! Public libraries have a large collection of movies for rent. The best part about it is that you can rent them for free!
That’s right, public libraries allow you to rent movies for free as long as you have a library card. Don’t forget to check out what books they have available as well.
6. Plan Each Grocery Trip
When it’s time to do your grocery shopping, be sure to plan each grocery trip. Create a list of all the grocery supplies you need. Don’t allow yourself to be tempted by snacks and other items.
Stick to your list. These are your necessary items and nothing more. Try your best to go into the grocery store with tunnel vision.
Get each item on your list, look at nothing else, and then check out. This will prevent you from unnecessary spending. It’s also a good idea to discover which grocery store in your neighborhood has the cheapest prices or best deals and do your shopping there.
7. Discover Free Entertainment
For families with children, it’s not always easy to save money. Children are expensive, and you want them to experience all the great things life has to offer. When you’re financially struggling, there are still ways to let your children have fun without spending lots of money.
You can take the children to the park, go on a walk or hike, attend free concerts, and look up other free things to do in the area. Some parenting websites will give a list of free or inexpensive things to do each weekend with the children.
8. Look Into Debt Consolidation
What is debt consolidation? Debt consolidation is a form of debt refinancing. To do so, you’ll take out one large loan to pay off many other loans.
Is debt consolidation right for you? If you have several high-interest loans, then debt consolidation could be a good option for you. The one large loan that you take out to pay the other loans will have a much lower interest rate.
This allows you to pay off all other loans and be left with only one loan to pay back with a much lower interest rate.
9. Create Goals for Yourself
The last tip for paying off debt is to create goals for yourself. What are your financial goals? Where would you like to see yourself financially in 5 or 10 years?
What steps will you need to take to ensure you’ll reach these goals. Remember, taking small steps that lead to one big step is the best way to plan it. You must remain realistic with yourself by understanding your budget and knowing what you’re financially capable of.
For example, do you want to have $5,000 dollars in savings and be debt-free by a certain timeframe? How much money each month can you set aside in your savings and how long will it take you to reach that goal? These are some ideas to keep in mind.
Learn How to Get Out of Debt Right Now
You can learn how to get out of debt today by following the helpful advice listed right here in this very guide. Be sure to use all of these tips for the best results.
Is your debt or low credit score preventing you from taking out a loan? Can a loan help you pay a necessary expense that’s due right now? At 24 Cash, there’s no credit investigation or required documents.
We’ll quickly approve you for a loan, as long as you meet a few simple requirements. Are you ready to see how we can help you?
Request a loan today to start the application process!