A Foolproof Guide to Paying Off Your Debts – What to Know

There mere decision of getting out of debt is already the beginning of changing the course of life, but the necessary commitment that comes with such change should be upheld. The process of getting out of debt, unfortunately, goes beyond just paying off a few credit card debts. It takes careful consideration and a strong desire to change spending habits, as with developing clear goals and objectives that help you build budgets.

In other words, plenty of deciding factors come into play when paying off debt. It’s possible to make mistakes along the way, but it’s not impossible to learn how to get out of debt while avoiding mistakes. Doing so will help you avoid spiralling into a cesspool of wrong choices. In this quick guide are some of the best ways to deal with your debt: 

1 – Create a budget you can stick to

Gaining control of your finances means creating a budget you can follow. It can be challenging, so remember to develop a realistic budget. As you plan, take into account all the necessities: rent, allowances for healthcare, monthly groceries, insurance payment, and educational loans, including debt payment. 

In addition, pluck up the courage to get rid of your credit cards and begin paying only with cash. Doing so could help you reduce unnecessary expenses like entertainment, shopping, and dining out. The process will be difficult at first, but as you continue on with this practice, your actions will essentially follow smoothly towards a more sustainable lifestyle.

2 – Avoid debt relief programs that promise instant results

It may be tempting to seek out quick-fix solutions for debt problems, as the market may be filled to the brim with such offers. They rarely result in anything, however. Debt relief programs typically take three to five years to take into effect, so those claiming to fix problems overnight aren’t worth the attention. Moreover, patience is the key to debt solutions. As you ponder over signing up for debt relief programs, research on the company first. It is imperative to make sure that the organization you wish to sign up for is legitimate, complete with certifications and without any smear of complaints. DebtHelpers.ca is a trustworthy Canadian debt relief company accredited by the Better Business Bureau.

3 – Actively change your spending habits

If you don’t change your spending habits, the debt will only continue to rise. If you wish to break the habit of spending, start by tackling your eating arrangements. Instead of grabbing coffee and breakfasts at restaurants, why not have it at home? Moreover, opt to spend your lunch hour with a packed lunch. In the evening, enjoy a home-cooked meal and a show on the TV instead of dining out and visiting your local cinema.

Although seemingly small things, the impacts will immediately become apparent. Through these, you’ll eventually find extra dollars in your wallet, and you’ll be developing one or two extra skills up your sleeves. 

4 – Take it one step at a time

Unfortunately, it’s a reality that plenty of individuals deal with multiple sources of debt. There are credit cards, student loans, and mortgages to take care of, all at the same time. Many individuals try to address each debt per month. A month’s worth of salary for January, for instance, goes to mortgage alone. The next month tackles student loans, and the next one credit cards, and so on.

This habit needs to stop, as this tactic is counterproductive and will only lead to further debt. To remedy this mistake, review your set budget and trim everything down to only the essentials. Create a surplus budget of money that should go directly to the debt with the highest interest rate. 

Once again, do not focus on a single debt per month. Instead, focus on the debt with the highest interest rates and direct your money there. The other debts should be paid still, but only in amounts that you can spare. As soon as you eliminate one, go after the debt with the next highest interest rates and pay the rest in minimum—keep doing so until this is paid and so on.

The Takeaway

People are often reluctant to speak about their debts, much less ask for help. The biggest mistake of paying off debt is thinking you’re alone. Being in debt isn’t a punishment brought upon you by the universe—it’s merely an instance that you are capable of getting out of, one that involves discipline and will. 

If you’re ever in need of debt relief, get in touch with us to see how we can help. We’ve helped thousands of Canadians get out of debt to restore their lives, and we wish the same for you. Debt isn’t a shameful thing you must hide—reach your goal of being debt-free with us now!