If you have discovered this article, it is likely that you too are struggling with overwhelming debt and are in need of a solution. The consequences of unmanageable debt can be devastating, often placing additional pressure on your health, job, and relationships. The first step above any other related to your debt is to realize that no matter how bad the situation, there is always a solution. At Spergel, we have helped over 100,000 Canadians in all kinds of financial situations gain debt relief, and we are here to help you too. If you need advice on how to pay off debt fast, pay attention to the tips and information we share in this article.
Speak to a Licensed Insolvency Trustee
You may not be familiar with the term ‘Licensed Insolvency Trustee‘, but it is essentially a job title that was recently introduced by the Canadian government to replace the term bankruptcy trustee. This is because historically, bankruptcy trustees only handled the process of administering bankruptcy over other debt relief solutions like consumer proposals or debt consolidation. Licensed Insolvency Trustees are the only professionals in Canada legally able to administer all forms of debt relief. For this reason, they are also the best sources of advice when it comes to tackling your unique financial circumstances. At Spergel, our Licensed Insolvency Trustees have been helping Canadians gain debt relief for over thirty years. We are here to advise you on how to pay off debt fast.
Pay more than the minimum amount due
If you are able to, it is always best to pay off more than the minimum amount due on your debts. Minimum payments are required on debts like credit card debt, overdrafts, or even lines of credit. Of course, it is important to ensure you are making these minimum monthly payments. That said, if you continue to solely pay off the minimum amount on your debts, it will take a long time to repay them. Repaying debts in this way will also likely accumulate interest – and the minimum payments are probably only going to cover this interest. In order to actually decrease your overall debt, it is important to pay over the minimum payment. If you want to know how to pay off debt fast, put down as much of a payment as you can possibly afford each month .
Create a budget
In order to prevent gaining even more debt and to ensure any money you can reasonably afford is put towards paying off your debt, a budget is essential. By laying out exactly how much you are able to afford on living expenses and savings, it brings clarity that will help you to stay on track. The more you can put towards paying off your debt, the faster you will pay it off. The best way to start is working week by week, going through all of your expenses against your income. The key is in discipline, ensuring you stick to the budget you set out. For many, taking out the exact amount of cash they need as part of their budget can be helpful in avoiding overspending on credit cards. Learn more about how to create a budget as one step of paying off debt fast.
Consider how you can cut costs
An important part of knowing ‘how to pay off debt fast’ is knowing how to cut back. This means sticking to essential purchases only where possible, and dramatically reducing the amount of luxury or ‘nice to have’ purchases. Consider this when it comes to assets like vehicles – do you really need a car? If it is essential for getting to work and so on, does it need to be brand new? Would a quality car suffice instead? You can save a lot of money simply by opting for an older, more economic model, which instead can go towards repaying your debts for peace of mind. With essentials like groceries, try to stock up while there are sales in order to save. Make simple choices like deciding to stay in and cook instead of buying takeout or going to a restaurant. To repay debt quickly, you will need to second think all of the purchases you make on a regular basis. Try tracking your spending over the course of a month and be honest with yourself about where you can cut back.
Consider additional sources of income
Of course, the best ways to pay off debt fast are either increasing the amount you are paying off, or reducing the debt itself. Putting down as much additional income as possible is a great way to quickly reduce your debt. For this reason, many Canadians consider getting a second job in order to pay off their debt. This additional income can then be used to aggressively repay your debt. Even if you cannot commit to a second role, taking on overtime or additional shifts can achieve a similar result. If you can make it work, you could pay off your debt much more quickly. This is dependent on you putting all of your additional income towards debt repayment, instead of spending it. Do remember that it is a temporary measure, and once your debt is in a better place, you can give up the second role or extra shifts. Freelancing or monetizing your passions and hobbies are another great way of generating income, as can renting out a room or selling unnecessary assets that you may have.
Pay off your most expensive debts first
If you want to know ‘how to pay off debt fast’, you are best off tackling the most expensive debt first. This strategy means putting down the minimum payments on all your debts including credit card debt or payday loans, except for the most expensive debt. This is because it will be the debt with the highest interest rate. It makes sense, therefore, to focus your efforts and funds towards eradicating this debt first. Once this debt has been paid off, you can then move onto the second most expensive debt and tackle it in a similar way. This is known as the snowball method, and is great for paying off your debts in the quickest way possible. It is also good to feel you have made progress by paying off each debt at a time.
Consider a debt consolidation loan
If you have multiple different debts, each with different interest rates, your debt can quickly become overwhelming. One way to pay off debt fast is to consider taking out a debt consolidation loan. By reaching out to a reputable Licensed Insolvency Trustee, you can seek advice on a debt consolidation loan for your circumstances, and the best one to take out. A debt consolidation loan works by condensing your separate existing debts into a new loan. This means you can have just one manageable monthly payment going forward, often at a lower interest rate. They can really help in accelerating the speed at which you pay off your debt. Any money that is saved by reducing your interest rate should be used to go toward your debt.
If you want to know more about how to pay off debt fast, book a free consultation with Spergel. The sooner you begin to tackle your debt, the sooner you can pay it off. Our experienced Licensed Insolvency Trustees have been helping Canadians gain debt relief for over thirty years. We will review your financial situation to advise you as to the best pathway to pay off your debt as quickly as possible. You owe it to yourself.