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  • 00 Intro
  • How to Be Debt-Free (and Worry Free) | Our Comprehensive Guide

    The Definition of Debt: The state of owing money to another party in order to make purchases one could not otherwise afford.

    Remember when you got your first credit card? You probably felt like you were holding financial freedom in the palm of your hands. You may even recall how exciting it was to swipe that slim piece of plastic for the very first time. Perhaps you signed up for it in college or university because you were tired of your ramen noodle diet. (Plus, it came with a free Molson Beer Cozy!) Or maybe a car breakdown forced you to break down too, finally applying for one so you can afford the repair. Either way, you probably thought, "Financial independence is mine!"

    But one card turned into two cards, and two turned into twenty. Now, your fantasy of carefree spending has become a reality involving overwhelming debt, colossal fees, and collection calls. If this sounds like you, take comfort in knowing you’re not alone. Today the average Canadian owes more than $22,000 in non-mortgage debt! Non-mortgage debt many people have includes “bad debt” which refers to things like credit cards, auto loans, and payday loans, which generally have high interest rates and/or depreciate in value over time.

    The good news for you and millions like you is that help getting out of debt is available for you and your family. Here’s how to become debt free and enjoy debt free living, with valuable tips and tricks along the way.

    Help Me Get Out of Debt!

  • 01 Credit Card Debt Relief
  • Chapter: 01Credit Card Debt Relief

    It’s no secret that consumer credit card interest rates can climb higher than Mount Everest. Canadian banks are now charging an average of 20 to 23 percent on their most popular credit cards. That’s a full four to seven percent higher than our neighbours to the south! But to be debt-free, we can’t sit and wait as regulators hem and haw over the best way to improve the debt crisis in Canada. We have to take action now. Because every month that your balance isn’t paid in full, interest fees add up and your debt increases.

    That’s why it’s important to take a look at all your credit cards and identify which ones have the highest interest rates and balances. So grab that stack of credit card bills off the kitchen counter, take a seat (and a deep breath), and dig in. Our handy Debt Calculator can also help you gain a better understanding of your current debts, plus it’s free to use.

    You can’t move forward with credit card debt holding you back. So you’ll need to put away the cards if you want to get out of credit card debt. That means all of them—yes, even that so-called “emergency” card. Because as you know all too well, debt can add up faster than you can say “charge it”. So put them away, lock them up, or do it Canadian-style and freeze them in ice! By the time that ice has melted, you’ll have had plenty of time to re-think your spending patterns and the consequences of those actions. (And no cheating—put down that blow dryer!)

    Remember, it’s important to reward yourself occasionally too. If positive reinforcement can work on kids and pets, it can work for you as well! Each month that you don’t use your credit cards, treat yourself to something you’ve temporarily sidelined, but keep it within reason. Maybe it’s catching a movie, splurging on a designer coffee, or picking up a box of those Timbits you’ve been craving.


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  • 02 Student Loan Debt Help
  • Chapter: 02Student Loan Debt Help

    Unlike credit card debt, student loans are considered “good debt” because the value of an education is expected to earn you a higher income over time. Of course, that doesn’t mean Canadians aren’t having difficulty paying off student loans. Estimates put student loan financial debt at a whopping $22 billion, with tuition fees increasing each academic school year. If you’re still in school, take a lesson from recent college grads: 30% say they would’ve followed a more frugal budget, 28% would have worked more during school, and 25% would have avoided racking up credit card debt and taking on car loans. 

    Already graduated but having trouble paying off your student loan? According to the Government of Canada, you may be able to revise your terms with your lender, changing the amount you pay per month or changing the length of time you have to repay it. You might qualify for a student loan Repayment Assistance Plan where you can receive student loan forgiveness for a portion of your loan. You can also consider a debt consolidation loan, though there are several disadvantages you should be aware of, such as higher interest rates and paying more interest over time.

    If you’ve tried these student loan debt solutions without luck, you may want to consider a Debt Consolidation Program (more on that in Chapter 4). Because student loan debt is considered unsecured debt, meaning there’s no collateral on the line if you fail to repay, there's a chance it can be rolled into a Debt Consolidation Program if the student loan is already in collections. 

    Even if you’re unable to pay off your student loan through a Debt Consolidation Program, you should still consider a Debt Consolidation Program if you have other unsecured debt. It can provide help getting out of debt by rolling all your other unsecured debts into one lower monthly payment, which can make the student loan payment much more affordable and manageable.

  • 03 How to Make a Monthly Budget
  • Chapter: 03How to Make a Monthly Budget

    Now this is where things start to get real: determining how much money you have available in your budget to start paying down your debt. Creating and implementing a monthly budget allows you to clearly see how much money you have coming in versus how much is going out. It also gives you an understanding of just what you’re spending money on each month, which can be a real eye-opener for some folks. Armed with this information, you can start to look at expenses you can cut out completely, or at least cut corners on. Download our free Expense Tracker and Budget Planner tools to get started! 

    Need some thought-starters to start making cuts? From packing your own lunch to DIY manicures, saving money is easy when you’re open-minded. These ideas can also be very beneficial when considering how to become debt free on a low income.

    Here are seven ways to save money and help pay off debt:


    Sell unused items online.

    Got old hunting and fishing gear in the garage? Or outgrown kids’ clothes and toys in the attic? Turn them into cash with one of these 5 popular Canadian eCommerce sites.


    Buy generic grocery and household items.

    This may seem like a no-brainer, but many people are addicted to name-brand goods as much as they are to their credit cards. But want to know a secret? Most store brand products are the exact same as their name-brand counterparts, just different packaging. Plus, if the ingredients are similar, you’re not likely to notice the difference—and you could save up to 25 percent on your grocery bill. Apply this rationale to clothing and save even more!


    Use public transportation.

    We know, you love your truck. But do you need to take it everywhere? Consider public transit to go to work or school, and take advantage of warmer days to bike or walk.


    Reduce your mobile phone plan.

    Can you do without a few extra gigabytes of data? Or have you shopped around for a cheaper plan that’s got everything you actually need? If you cut your phone bill even by just $10 a month, that’s $240 over a 2-year contract.


    Insulate your home.

    Canada is known for its cold weather, and air sealing attics and basements can save you hundreds of dollars per year in heating costs (and keep you warmer). If you’re handy around the house, do it yourself to save even more.


    Cancel your gym memberships and magazine subscriptions.

    Could you do some of those exercises at home instead? Maybe a YouTube video could be just as helpful. And are you really reading those magazines, or are you just catching up on the latest news and gossip on your phone anyway? Get rid of any unnecessary subscriptions and memberships to boost your monthly savings.

    Still don’t think you can make a dent in your debt fast enough? Consider a part-time job; as an additional bonus, and depending on the company you work for, you could get discounts on food, clothing, or other essentials to help defray your everyday expenses. If you don’t have the ability to take on another time-intensive job, consider the Art of the “side hustle”—such as picking up work as an Uber driver or dog walker. Having a side job has become the mantra for today’s millennial generation.

  • 04 How to Pay Off Debt
  • Chapter: 04How to Pay Off Debt

    Once you’ve identified which credit cards are digging the deepest holes in your pockets, now it’s time to pay off debt! There are typically three ways to reduce debt and pay it off on your own:

    1. Snowball Method

    With the snowball method, you pay off the debt with the smallest balance first, regardless of the interest rate, while still making minimum payments on all your other debts and credit cards. Once that balance is paid off in full, you move onto the next smallest debt, and so on. Some people prefer this method for paying off debt because you can eliminate smaller debts very quickly, depending on how small the balance is, which can be very motivating, especially when you’re just starting to take back control of your finances. Having these quick wins upfront can help you stay motivated to continue to pay off your other debts.

    2. Avalanche Method

    With the avalanche method, you focus on paying the debt or credit card with the highest interest rate first, while again maintaining your minimum monthly payments on all your other debts and credit cards. Once it’s paid off in full, you move onto the next highest-interest rate card. This strategy slows the rate at which your current outstanding debt grows due to interest, although it doesn’t usually offer the immediate gratification of paying off a card balance quickly.

    Both the snowball and avalanche methods have their merits and supporters. It really comes down to your own personal finances, and to an extent, your personality. One important thing to remember when choosing either one of these approaches is to make additional payments whenever you can. Despite what credit card companies may have you believe, you can make more than one payment each month. So if you come into some money, put it towards the card. If you’ve already met the minimum payment that month, the entire amount of that extra money will go towards the actual balance of your debt! You could save yourself hundreds of dollars in interest costs.

    3. Debt Consolidation

    Debt consolidation is the process of combining your debts into one manageable payment. Of course, there are a number of different ways to do this. For example, you can consolidate your debt with a home equity loan, a line of credit, credit card balance transfers, or debt consolidation loans. Unfortunately, these methods of debt consolidation can ultimately put you further into debt because they require a lot of discipline, while others may not be an option due to poor credit or low income. 

    A Debt Consolidation Program is another option to help you reduce your debt. A Debt Consolidation Program is a customized plan and straightforward process to a stress-free, debt-free life. It involves combining all of your unsecured debt, such as credit card debt and payday loans, into one lower monthly payment. Other benefits of a Debt Consolidation Program include the interest on your debt is stopped completely or significantly reduced, and you will no longer receive collection calls. You will also receive free, one-on-one counselling with a certified Credit Counsellor who will support you along your journey to becoming debt-free, giving you budgeting advice specific to you and your needs. Best of all, you’ll finally see the light at the end of the tunnel. With most Debt Consolidation Programs, you can be out of debt within 3-5 years!

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  • 05 Find Debt Consolidation Companies
  • Chapter: 05Finding the Best Debt Consolidation Companies in Canada

    Once you’ve decided it’s time for debt help management, you need to be smart about it. Unfortunately, there are a lot of companies out there ready to take advantage of you when you’re in a financial crisis. To make sure you’re working with only the best debt consolidation companies, you’ll want to be sure to take each of the following steps:

    1. Ask About Fees. A reputable debt counselling agency knows you’re hurting, and won’t charge you much to get started. An initial set-up fee should cost no more than $50, and they shouldn’t charge more than 10% in administration fees. 

    2. Ask if they’re a non-profit organization. Non-profits aren’t out to make money—they simply want to help. Companies will typically indicate if they are a non-profit organization somewhere on their website. However, if this information is not easily found, calling the organization and asking should do the trick.

    3. Check for accreditation. Accredited agencies must meet industry standards set by the Association for Financial Counselling & Planning Education (AFCPE) and Credit Counselling Canada (CCC).

    4. Check their Better Business Bureau (BBB) rating. The BBB rates companies, including debt consolidation organizations based on complaints from the public, as well as government licensing, advertising policies, and more. You can check a company’s BBB status on the BBB website.

    5. Check reviews. You can easily find reviews online, and you may want to check if the organization has been mentioned positively or referenced in publications, as this could be a sign that the organization is one you can trust.
  • 06 Debt-Free Living
  • Chapter: 06Debt-Free Living

    Ever wonder how other people manage to live debt free? You may be surprised to know that it often has very little to do with their income or fixed income investments and a lot to do with their everyday spending habits and approach to money. (Wondering what is fixed income? Check this out from Savvy New Canadians.) Some of the wealthiest people—including business people and celebrities—have at one time or another declared bankruptcy. So here are some traits and habits that debt-free people tend to have in common, regardless of their financial status.

    • They’re Detail Oriented

    Debt free individuals scrutinize every loonie, keeping track of everything they earn and spend in order to be more responsible with their money. Many use an expense tracker to make this process easier, collecting receipts (physical and virtual) and reviewing them either daily, weekly, or monthly.

    • They’re Practical

    You know the Rolling Stones song, You Can’t Always Get What You Want? Well, people who are debt free live by that motto. They comparison-shop, purchase high-quality used items (including cars) over new, they don’t give-in to labels and designer-brands, and invest in quality items that serve multiple purposes for multiple seasons.

    • They’re Confident

    Being practical is actually a confidence booster for people living debt free. They feel good about their status as an independent person, so they don’t feel the need to justify themselves with material objects and other displays of wealth.  

    • They’re Patient

    They say “good things come to those who wait” and this is especially true for those who enjoy a debt-free lifestyle. They understand you can’t always buy what you want, the moment you want it. In most cases, they space out their purchases, giving themselves enough time to save up and avoid racking up a mountain of debt all at once. 

    If they want something that’s not in their budget, they’ll wait until they can afford it, until it goes on sale, or just say no altogether. 

    • They’re Goal Oriented

    You never know what the future may bring, but debt-free individuals do their best to plan for it, whether it’s something small like a vacation, a big expense like a child’s college fund, or a lifelong goal such as retirement

    • They Set Boundaries

    Debt-free people live within their means. They spend less than they earn so they can maintain a savings account and an emergency fund. To do this, they often make sacrifices, but they pride themselves on their ability to set a budget and stick to certain boundaries. 

    • They Educate Themselves

    This doesn’t mean taking extra courses in school (although it can). Debt-free individuals understand credit cards, their risks and benefits, and they use them wisely (if at all). They may have spoken with a certified Credit Counsellor, or at the very least someone older and wiser. They may also read or listen to money management books, follow financial blogs and news, or watch financial programs.

  • 07 Advice on How to Get Out of Debt
  • Chapter: 07Advice on How to Get Out of Debt

    Whichever approach you take towards eliminating financial debt, congratulations on your commitment to make it happen! The best part is that it’s not forever. We’re not suggesting you permanently cut the credit card umbilical cord for good—just until you’ve managed your debt. A good debt repayment process is designed not just to eliminate debt, but to also teach you the ins-and-outs of credit card management; that way, once you’ve unlocked or de-iced that plastic, you can wield it around town with the confidence of a responsible credit card user.

    Here are a few more tips to help you continue to “play your cards right” at the end of the debt repayment process:

    • Pay your balance in full every month on time. This will help you avoid those dreaded interest fees and also help raise your credit score.
    • Set up automatic payments. This ensures you never miss a payment, so you avoid late fees and protect your credit score. Remember, you can always make an additional payment, so if your automatic payment doesn’t cover the balance, manually pay the rest.
    • Download your credit card apps. As you know, it’s easy to get carried away with credit cards. Being able to view your charges in real-time with just a glance at your phone will help ensure you don’t go over your monthly budget.
    • Never—and we mean never—get a cash advance. That ATM ka-ching comes at a high price. Here are three reasons why cash advances are the ultimate no-no:
      1. Transaction fees. You’ll pay not just once, but twice. One fee from the ATM and another fee from the credit card company.
      2. Interest rates. The interest rate for cash advances is generally much higher than it is for purchases, usually hovering around 29 percent!
      3. Immediate interest accumulation.  Unlike making purchases on your credit card, interest starts adding up the moment the ATM spits out the cash. So even if you are paying your balance every month, you’re still going to pay interest on that cash advance no matter what.

    Finally, we always recommend setting up an emergency fund, so whenever a true emergency arises (like car troubles or losing a job—not buying the latest smartphone), you can pull money from your own funds without reaching for the credit cards. You might be surprised to realize that life without credit cards isn’t so bad after all, and that living without them reduces financial stress. If you ultimately decide to give them up for good, more power to you!

  • 08 Manage Your Debt
  • Chapter: 08Manage Your Debt

    If our debt help management strategies and ideas have inspired you to start managing your money differently, or even consider debt consolidation, congratulations! It’s a giant step and it takes courage. Of course, financial debt can be difficult to manage if you’re already feeling the pinch, so it helps to set some reasonable goals. For example, if your goal is to be debt free by the end of the month, that’s probably a bit too ambitious. After all, it’s called debt management for a reason, so if you’re ready for debt freedom, you’ll want to set SMART goals. SMART goals are:

    • Specific: Identify who needs to be involved in the goal, what you want to accomplish and why, where the money will go, and why the goal is important to you.
    • Measurable: Apply specific numbers to your goal (e.g., how much, how many, etc.) to help keep yourself on track.
    • Attainable: Make your goals challenging but achievable, otherwise you’re setting yourself up for further financial frustration and disappointment.
    • Relevant: Decide which goals are most important to you and focus on those first; secondary goals can come later.
    • Time-Bound: Set your target date for when you’ll achieve your goal, but make it realistic.

    When setting your SMART financial goals, be sure to review our previous chapters. Also, remember to check in on your goals from time to time. Things change and that’s okay. What’s important is that your SMART goals make sense for you and your future.

    Get out of debt. Get back into life.

    To speak to someone right now, call: 1 (800) 267-2272

    Or, request a callback from one of our certified credit counsellors. It's free.