5 Ways To Pay Off Debt Faster In 2019
Many people in Canada have debt, from loans to mortgages, and credit cards. It is a surprisingly big part of our culture in 2019. Did you know that personal or household debt is a global phenomenon? Debt functions in ways that can really help you fast-track your plans or make big purchases. However, it can also be a major issue if you are not careful. Plan well with our 5 ideas on paying off debt faster:
1) Look into debt resources
Considering how widespread debt is, it's interesting that people don't talk more about it. Maybe you don't want to bring it up at the dinner table – but if you are struggling to pay off your debts, don't forget that you might have resources amongst your friends and family. A trusted confidant could help remind you that you aren't alone, or even give you valuable advice to help you get on track with your finances.
Also, many countries offer free services from debt advisors and other experts. These professionals work in a non-judgemental way to help you make informed decisions about what to do next. They may even have ideas or resources that you didn't think of. If you are having problems paying off debts or think you might have problems, don't forget to contact the lender and discuss your options with them. It is in their best interest to get their money, and often can work with you to make a payment plan that's easier to manage.
2) Prioritize what debt to pay first
If you have more than one place where you owe money, it is important to decide which debts are the most important to pay off first. For example, legal fees and urgent payments for your home should take priority. If you have an emergency debt situation, it is recommended that you seek professional advice on what steps you can take.
The Money Advice Service lists priority debts as: court summons, electrical or heating when they are under threat of being turned off, possible bankruptcy, and home or mortgage bills. After these are settled or you have a payment plan in place, then other bills such as loans to family or friends, overdrafts, and other loans would be next in line.
Debt consolidation is another way to streamline your payments. Essentially, this is taking a lump sum loan and paying off all other debts with the funds. The benefits of a debt consolidation loan are easier payments (one payment to make versus many) and potentially a lower interest rate, helping you pay off faster and easier.
3) Track those expenses
It seems obvious, but guessing how much money you have each month and where it goes is not necessarily the most accurate way forward. Like a food diary for weight loss, keeping an accurate list of how your days add up can be an eye-opening experience for many.
For that reason, paying off debt faster means taking stock of how your money is allocated. Reaching for a notepad is one option. However, for this to be the most effective, you really should track every cent. Take for example, buying an expensive coffee on your way to work. One cup won't break the bank, but purchasing one every day will add up over time.
There are many expense tracking apps available with various features to help you keep tabs on your spending. Also, many banks offer integrated services where you can track all transactions easily. Most importantly, don't forget cash transactions. A lot of people spend the coins in their wallet without giving it a second thought. Taking a piggy bank full of coins to deposit at your local bank branch can give some perspective of how quickly they add up to real money.
4) Shop smart, but don't fall into sales traps
When money is tight, people are often drawn into sales and special offers at stores. However, some of these purchases would have not been made at all if there wasn't that huge sale sign making you feel like you'd better act now. Essentially, you are not saving money if it is an extra purchase no matter how good the deal is.
When shopping at the grocery store, it is safer to stick to a set list and resist the urge to buy what isn't on your list. However, if the product is on your list and it is a on sale – then go for it! Also consider buying generic or store brands when possible as this can add up to significant money saved over time. Saving money wherever possible can help you direct it to paying down your debts and bills faster.
5) Socialize on the cheap
Imagine that you are out with friends and family. You are having a great time and then the bill comes. We can get caught up in the fun and feel generous, maybe it feels like it is your turn to foot the bill? Social activities generally cost way more than you would think.
If you are trying to pay off your debts and get your finances in order, every little bit helps. Consider choosing cheaper options when socializing, such as home-cooked meals or everyone bringing their own refreshments. Sit some events out if you tend to overspend, saving your spending money for special occasions only.
Another option is to budget beforehand. Set a max amount that you can spend. Sometimes it could be the safest to have a set amount of cash and keep your card firmly in your wallet throughout the day or night.
Getting serious about paying off debt means choosing needs over wants. After prioritizing how to pay off your debt, be firm in your decisions to save money so you can get on track to becoming completely debt-free. You've got this!