When was the last time you truly felt that you were financially stable? According to statistics, Canadian households collectively have around $2 trillion dollars in debt. Most Canadians will spend more than half of their paycheck to shoulder debt payments, leaving just a fraction for their needs and other expenses.
If every month feels like a fleet of bills and overdue debt payment reminders flying at you, then it might be time to re-evaluate how you manage your money. Here are 5 ways you can become better at handling your finances to get out of debt fast.
The first and most obvious strategy would be to downsize. Often times, we adopt certain lifestyle practices that might make everyday life more convenient or enjoyable, but at a steep cost. For instance, eating dinner out every other day might save you from a pile of dirty dishes, but it will put a pretty big dent in your wallet if you add up all that you spend.
Try to think about all the things you spend on – weekly massages, take-out, expensive coffees – and weed out everything that’s more of a luxury than a need. Then funnel what you save to pay off your debts or set it aside for an emergency expense.
You would think that the last thing you need if you’re trying to get out of debt is another loan. But taking out a personal loan to consolidate your debt can be a really smart move. Use a personal loan to pay ever other loan you have, and then consolidate your payments into one, easy payment. If you can get a lower interest rate on your personal loan, you might even be able to save on your payments all together.
There are literally close to a thousand mobile applications that can help you manage your finances better. Most of these apps will even create charts and graphs to give you a visual representation of your cash flow, making it easier to see where things go and how you can better optimize your spending.
Once you get a deeper understanding of how your money is spent, consider making changes gradually to alter your financial structure and make room for savings or debt payments. Your objective should be to pay off any loans on time, while affording your necessities and setting money aside for a rainy day.
Bet you didn’t know you could negotiate the interest rate on your credit card bills? You can. Banks may agree to lower your interest if you’ve been a client for a while, or if you’ve had a history of making bill payments on time. But that’s not the only bill you can ask for a deduction on.
Cable and internet providers will likely agree to lower monthly payments if you put up a good enough argument. For instance, you can point out other providers and their lower rates, or you can try to bank on your standing as a loyal customer. These companies usually have some sort of retention protocol to ensure that they don’t lose their customers, so you might be able to request lower payments if you play your cards right.
Any and every time you get some extra money, don’t tempt yourself and explore all the things you could spend it on. Instead, funnel it straight into your debt to pay off more and more of the total amount. Directing any extra funds into loan repayments can be an incredibly helpful strategy towards becoming debt-free. Soon enough, you might find your debts completely dissolved, with diligence and dedication.
It might feel like you’re drowning in debt, but you can learn how to swim. Implementing these simple yet effective methods to manage your money can make it easier for you to put your finances in proper perspective. And once you do that, you’ll find yourself paying off your loans and dusting debt off of your shoulder to achieve true financial freedom.