How Can I Reduce Debt?
There are many basic tips and tricks that you can follow that can help reduce your debt, reduce your spending and save for a rainy day.
Learning how to budget and manage your finances through reducing your debt can help you get out of, and stay out of debt.
Ways to reduce your debt to improve your financial situation could include:
Making a Budget: By listing your income and expenses while preparing your budget you can get a clear idea of what you are spending your money on.
You can find many expenses to cut out when you see how much you are truly spending each month on coffee, dining out, or buying a daily pack of cigarettes.
The first step in reducing your debt is preparing a budget so you can prepare your spending accordingly.
After your budget has been planned, you must follow your budget if you are serious about getting out of debt.
Take any funds leftover to put towards your highest interest debts.
Slowly but surely, you will see your debts dwindle down.
Combine Your Debts: If your credit score is still good enough you might be able to be approved for a consolidation loan that allows you to combine your debt into one easier to manage loan, often with a lower interest rate.
Having only 1 monthly payment allows you to risk missing payments on other debts, which can have a negative impact on your credit score.
Contact Your Creditors: It is possible to make arrangements with your creditors to reduce your payments or interest rates.
You can contact your creditors to offer a proposal of lowering your monthly payments, a longer time to make payments on your debt, lower your interest rates, or some combination of all of these.
Work With Your Mortgage Lender: If you are having trouble paying your mortgage the Canada Mortgage and Housing Corporation (CMHC) recommends that you contact your lender to try and work out a solution to the problem.
Your lender will likely be willing to work with you, especially if you contact them early and are earnest about dealing with the problem.
Selling Your Possessions: If you have assets that you own outright you should consider selling these assets to pay down your debt if your debt problem is serious enough.
If you feel these tips will not reduce your debt enough you can speak with a Licensed Insolvency Trustee (LIT) about your debt relief options such as making a proposal to your creditors or filing bankruptcy.