Avoiding Canada Bankruptcy: Best Ways to Pay Off Debt

Posted by: Sandy Lyons on 12/06/2011

Debt can be a source of financial and emotional stress. High interest credit cards and lines of credit can eat up at your monthly budget, and the amount of money spent on interest can add up to thousands. Many Canada bankruptcy cases can actually be traced to too much debt.

If you are carrying significant amounts of Alberta debt, especially high interest credit cards, it is in your financial best interest to pay it off as soon as possible. In many cases, this may mean putting more money towards paying off debt rather than saving it for emergencies or a rainy day.

While it’s important to have savings for emergencies, paying your debt off quickly can free up more money for savings in the long run. If you opt to paying off your debt rather than boosting your savings account, these tips will help you pay off debt quickly and easily:

Make a financial plan

It will be difficult to pay off your debt as quickly as possible without a plan. Figure out how much you owe, interest rates, and minimum payments, then decide if you’re going to tackle large interest accounts first, or pay off the ones with the lowest balances.

Pay more than the minimum amount

Minimum amounts are designed to drag out the amount of time it will take you to pay off the balance. In order to pay down your debt, you will need to pay more than the minimum, preferably as much as possible.

Call your creditors

You may be able to lower the interest rate on your accounts by calling your creditors and attempting to negotiate a lower rate. This is especially true for customers whose accounts are current, in good standing, and have a history of paying on time. Keep in mind that not all creditors will do this, but it’s worth a try.

Put extra income towards debt

We all come across “windfalls” every now and again, whether it’s a gift, rebate check in the mail for a purchase, or tax return. Putting all (or at least the majority) of these unexpected sources of income towards your debt reduction will help you quickly pay off your debt.

Consider a second job

If you’re really serious about paying off your debt and doing it as fast as possible, consider getting a part-time job temporarily and putting that extra income towards paying off your bills. Even a seasonal job will make a big difference in paying off debt.

Stay focused

It’s tempting to keep paying the minimum amounts and spend income on other things, but staying focused and committed to paying down your Alberta debt will help you reach your financial goals as quickly as possible.

Paying off your debt can save you thousands of dollars in interest and provide you with peace of mind. These tips will help you to pay off your debt and then you can focus your attention towards building up your savings account using the same disciplined practices.  You’ll have your nest egg in no time.