Eliminate Your Debtby Martha Li
published January 21, 2009
It’s important to keep your personal finances in the best shape possible, especially during these recession-laden times. Here are five ways to get out of debt fast and help improve your financial situation.
1. Get an accurate picture of your debt.
The most efficient way to tackle your debt is to know exactly how much you owe and to whom. Make a list of how much you owe, to whom, and the rate of interest you're paying on each debt. Your debt with the highest interest rate is most likely from your credit cards so it’s best to pay them off first.
2. Record and slash your expenditures.
For one month, keep track of where your money is going. Use an electronic spreadsheet or write it down in a notebook. Each day, save receipts for anything you buy, even the small stuff. At the end of each day, record and categorize your expenses—lunch, gas, gifts, miscellaneous, and so on. By the end of the month, examine each category and determine where you can cut costs. Add up the total amount of money you would have saved and this should be the minimum amount you’re able to put towards paying down your debt.
3. Lower your interest rates.
People think interest rates are set in stone, but credit card companies want to keep you as a customer because they know it’s a competitive marketplace. Call the toll-free number on the back of each card, and ask the customer service representative if there's anything that can be done to lower your current rate. If you have a good history of paying at least the minimum on your cards every month, your rate could be lowered on the spot.
4. Take big steps.
Be prepared to do everything within your power to better your financial situation. Although bringing your lunch from home instead of buying it every day will certainly help your finances, it may take a lot more than frugality on your part. Depending on how large your debt is, you may have to consider taking more drastic measures. This may mean getting a second job, ceasing all credit card usage, or even liquidating essential items such as your car or home.
5. Seek out professional help.
If your financial situation is truly dire, talk to a credit counsellor who will set you up on a repayment program to resolve all of your outstanding debt. As many agencies are non-profit, service costs are minimal or sometimes nothing at all. To locate an accredited credit counselling agency in your area, visit creditcounsellingcanada.ca.