Several Canadians fail to pay their monthly credit card statement in full as paying off debt isn’t effortless, and the fact that it is so easily accumulated makes it hard. How can one successfully pay back multiple creditors on time, every month, while having enough money to spend and save? It seems impossible. However, aside from cutting expenses and budgeting your money, these three ways could help you prioritize your spending and set you free from debt.
Pay Off Small Debt Fast
Known as the “snowball method”, making big payments on your smallest debts while paying the minimum on larger debts will clear out what you owe quickly. Once you’ve paid off one small debt, move to the next smallest and eventually all you’ll have left to is your larger debts. This method makes budgeting and financial planning easy, as it allows you to focus on paying back one debt at a time instead of juggling multiple. Make sure you keep making minimum payments on your other debts – don’t forget that your interest rates will continue to accumulate.
Consolidate Your Debt
If you have a lot of debt from various lenders, consolidating it might be a good option if you’re having difficulty keeping track of what you owe. It’s hard to juggle different debts. However, applying for a personal loan, a line of credit or a balance transfer card means you only have to pay back one lender instead of multiple. This option is great for saving money, as consolidating your debt means that you’re only required to deal with one interest rate.
Set Paying Off High Interest Debt As A Priority
Interest is the amount of money that you pay for borrowing money, and it can be a huge set-back when you’re trying to pay back your creditors. If you have a lot of debt with high interest, making minimum payments can be a lengthy pay-back process, and not to mention, discouraging. If you prioritize your high interest debt, called the “avalanche method”, you’ll clear your larger debts first, which minimizes the amount of accumulated interest that you’re required to pay. If this is the route you to choose to take, ensure that you’re making minimum payments on your smaller debts too.
Debt could be easy to gain and hard to lose. If you’re worried about the amount of debt that you have, it’s crucial to understand the options available to you. Whether you choose to pay back small debts first, consolidate what you owe or prioritize paying off high-interest debt, put these strategies into play and we guarantee you’ll be debt free sooner than later. Lastly, debts can also affect your credit to a certain extent, therefore, if you are looking to re-establish good credit while paying off or after getting rid of your debts, call Canada Auto Experts at 1-855-550-5565 to talk to a credit specialist today.