How to Solve Debt Problems

When you are awake at night thinking of your debt problems….

When you are starting at your mail, wondering what bill to pay first…

When you are thinking of visiting a payday loan lender just to get through until next week…

Consider these nine key strategies to solve your debt problems.

  1. Make All Your Minimum Payments. Paying the minimum won’t reduce your balances, but it will preserve your credit rating. Make a list of every outstanding debt and set up a process to keep up with at least the necessary minimum payments.
  2. Stop Using Credit. Stop building your credit balances even higher. Use cash instead of credit. Consider the convenience of debit as an alternative to credit cards.
  3. Take Control of Your Spending. If you can’t control your spending, leave your credit cards at home. If your credit card company offers to increase your limit – say no. If discretionary spending is running your repayment plan, track your expense and cut back. Use gift cards to set spending limits at any one store.
  4. Pay As Much Money Towards Your Debt As You Can. Paying down debt means paying less interest charges, freeing up money for other needs. The more you apply to debt repayment, the more money you’ll have available for other things.
  5. Pay Off High Interest Debt First. Save money on interest costs by paying down high-interest debt like credit cards first. Paying less interest frees up money to pay off debt faster.
  6. Double Down on Your Payments. Once you pay off one credit card, apply that payment amount to your next debt. By doubling up on your payments, your overall debt load will fall much faster.
  7. Put Any Extra Cash Towards Debt. Apply any extra money you receive, like a tax refund, Christmas bonus or a gift of money, towards debt repayment. You’ll benefit in the long-run because you will reduce your interest costs.
  8. Should You Cash in Your RRSP or Savings? Cashing in existing retirement savings to repay your debts can have unexpected financial costs and may not be the best strategy as this is money that should be reserved for your retirement. Most RRSPs are protected in a bankruptcy or consumer proposal. We recommend speaking with a Licensed Insolvency Trustee before you take this step.
  9. Talk With a Licensed Insolvency TrusteeDid you know Licensed Insolvency Trustee (LIT) are the only federally regulated debt experts in Canada? An LIT is qualified to provide you with a range of options to deal with your debt and make a plan to build a better financial future.

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  3. How to Get Help with Debt
  4. How to Get Debt Consolidation with Bad Credit
  5. Pursuing the “Do Nothing” Strategy

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