<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=375088249364044&amp;ev=PageView&amp;noscript=1">

6 Ways to Eliminate Debt That You May Not Have Considered

by:
Sandy Daykin

If you find yourself with an overwhelming amount of debt for any reason, you're not alone. For your average Canadian, expenses have gone up drastically in the past few decades while wages have remained stagnant. Maintaining a decent standard of living, especially when something unexpected happens, is increasingly difficult without going into some kind of debt.

Being in debt, however, doesn't mean you lack the ability to improve your credit if you desire to do so. All you need is some solid advice. Unfortunately, the average person can’t typically offer effective help when it comes to this subject. Common sense advice like, "just pay your bills on time," or "get a second job," won't do you much good. At Credit Canada, we have six actionable pieces of advice that actually improve your financial situation.

1. Negotiate with Your Creditors

If you already have one or more accounts for which your creditors are calling or mailing you on a consistent basis to collect their debt, you may be in a position to reduce your balance by making an agreement. Banks and collection agencies are almost always happy to get something rather than nothing, so they will often lower the amount you owe in exchange for some kind of automatic payment plan or lump sum. If and when you come to a debt settlement agreement, make sure you get something in writing that shows the creditor will fulfill their terms.

2. Consolidate Your Debt

Excessive debt doesn't usually come from any single creditor or account. You're likely to have outstanding balances from credit cards from multiple banks, and each of those cards is likely to have a different interest rate. It's confusing and frustrating to try and pay off multiple accounts with different terms and rates. You can make things a lot simpler by participating in a debt consolidation program through Credit Canada. By combining two or more unsecured debts into one account, you'll get:

  • a lower overall interest rate
  • a single credit account that's easy to manage
  • simple, quick and easy payment methods
  • funds in a secure trust account

3. Develop a Detailed Budget

You don't need to be financially irresponsible to need a budget. In fact, the most successful business people in the world got where they are because they have detailed accounts of their income and expenses. Once your debt is consolidated into one or just a few simple accounts, creating a monthly budget becomes a lot easier. At Credit Canada, we recommend that people use some kind of electronic accounting system to keep track of all income and expenses. We can recommend specific options, or you can find one online that suits your needs.

4. Cut Your Expenses

When some people hear that they need to reduce their expenses, they immediately think they have to downgrade their lifestyle. While this may be true for individuals and families who've already explored alternative ways to save money, you may have yet to realize how easy it can be to cut back without sacrificing comfort or fun. Even switching out one take-out meal per week for a home cooked meal can save up to $100 per month. Once your debt is paid, you can enjoy the finer things with a peace of mind.

5. Open Your Own Accounts

It's unfortunate when it happens, but sometimes the people we trust most are responsible for our excessive debt and bad credit. In these situations, it's important for you to start establishing your own credit history. Even something as simple as a low-balance credit card that you use to pay for gas can drastically improve your credit history over time. Now that you've gone through the process of developing a detailed budget, you'll know exactly how much you can afford to put on the new credit and still make monthly payments.

6. Keep Active Track of Your Credit History

With almost all banking and personal data now being stored on servers throughout the world, identity theft is a bigger problem than ever. This may end up being a big concern for you after you've paid off all your debt. After all, what good is all your hard work getting good credit going to do if someone can ruin it all again by stealing your identity? The sooner you're able to identify and report fraud to the appropriate agencies, the less likely criminals will be able to successfully ruin your credit.

While these six debt elimination steps are very useful to most people in your situation, a credit counsellor can suggest the method that is best for your personal and unique situation. We can set you up with a credit counsellor who will carefully evaluate your finances and guide you toward a financially sound future.

Free Debt Assesment

Topics: Debt Management

Print This Article

Leave a Comment