For all those people residing in Canada who want to live a life free of hassles and stress by getting debt-free, we got your back.
In this post, we have discussed easy yet effective tips that can help you to get rid of the debt that is the biggest cause of stress in your life. Have a look at these handy tips.
Bring your Savings to Use
If you have saved your money for emergency times, use them now to get rid of the loan. If they are not enough to pay the whole amount of your loan, pay as much as it is possible. It will help relieve some burden from your shoulders.
Use your Spending Wisely
It may seem to be straight out of a textbook tip but it actually works. The best approach is to make a budget and follow it rigorously. Allocate each expense you bear a portion of the budget and leave some for the repayment of the loan. You will only get debt-free if you are following this budget properly otherwise it will be of no use to you.
Another advice, making a budget, is to be realistic. Consider all the important expenses and future spending well making it. Know the difference between needs and wants and make a budget accordingly. Prioritise the items you need, allocate a portion for repayment of the loan, and leave the rest for your desires.
A Comprehensive Plan to “Get Out of Debt”
Another handy tip is to make a get out of debt plan. It may seem a simple tip on paper but it actually works, as it will motivate you psychology to repay the debts and serve you as a reminder as well. When making this plan, take a paper and enlist all debts you have to pay. Make sure you are writing them in the correct order, starting with the biggest debt and finishing with the small one.
Start paying loans one by one either from the start or the bottom. One by one all your loans will be paid and all the stress will be eliminated.
Debt Consolidation Loan
This one can specifically come in handy if you have more loans to repay. Contact a financial company in Canada and apply for a debt consolidation loan. Make sure it has a lower interest rate; for this, you may have to spend a little time evaluating various consolidation loan options offered by different financial institutes in Canada.
By getting a debt consolidation loan, all your loans will be combined into one. Thus, instead of making a list of multiple loans with different interest rates, you will have to focus on one loan and get rid of it.
Debt Ladder Method
Another tip for managing and eliminating debts efficiently, in case you have a multiple number of loans to pay off is, to follow the debt ladder method. In this matter, a list of debts that you have to repay is made with respect to the interest rates. The debt with the highest rate is written on the top followed by the one with a lesser rate and so on. Starting from the top, repay loans one by one.
The biggest benefit of following this method is that it can help you to save money on interest. Since the loan with the highest interest rate will be eliminated first, you will be secured from spending accumulating the huge amount of payable money in lieu of interest every month.
Give your Credit Cards some Rest
Credit cards offer great convenience and ease. However, the pros it offers can turn into cons if they are not used tactfully, particularly if you are already drowned in debts. Using your credit is similar to having another loan on yourself. If you are not paying the credited amount on time, interest will accumulate, which, in later stages, can prove to be difficult to get rid of. Thus, it is recommended to use cash or debit card instead and give your credit cards some rest.
Go for Smaller Amounts
If you feel you cannot pay a huge sum of money at once, go for smaller amounts. However, make sure you are paying them at regular intervals. This will help to ease off the burden of loans a little.
Sell Your Assets
This tip must be followed in only dire circumstances when none of the above is working for you. If you have a valuable asset without which you can survive easily, sell it and clear the debts with the amount.
There you go! These are some of the effective tips you can follow to become loan free. Remember the fact, paying loans before the deadline is important otherwise, it will result in poor credit score, which will lead to problems in the long run.