Dealing With Debt: Learn How to Get Out of Debt With the Assistance of The Only Government Licensed Debt Relief Counsellors
Advice From a Licensed Insolvency Trustee on
How to Pay Down Debt & Get Out of Debt
Everyone dealing with debt has to manage their debt.
For many people this is a straightforward matter of making the payments on time and staying on top of their credit card use.
For hundreds of thousands of others dealing with debt can become overwhelming and stressful.
How Do I Deal With My Debt in Manitoba?
Many Canadians tell our Insolvency Trustees that they would love to pay off their debt and get out of debt completely.
Many of these people are unsure of the best course of action, which is where we come in.
There is no “best way” to get out of debt.
Depending on the amount of debt you have, one debt relief solution might work better for you than others.
The best way to determine whether a consumer proposal, bankruptcy or another route such as a debt settlement or debt consolidation loan would match your debt situation and goals is to schedule a free consultation meeting with a government Licensed Insolvency Trustee (LIT)
How to Deal With Debt and Take Control of Your Money Problems:
Keep Track of Who You Owe and How Much You Owe
Keep a list of all of your debts including the name of the creditor, total amount of debt and the due date.
Make sure to also keep track of the minimum payment requirements.
Having all of your debts in front of you in black and white can help you be aware of the big picture and sort your debts.
For example, you could decide to pay all of your highest interest debts first, or perhaps the accounts with the lowest balance.
Don’t forget to refer to this list regularly.
Make More Than The Minimum Payment
Always ensure that you make a larger payment towards your debt than just the minimum payment.
Paying only the minimum payment on your credit card or line of credit debt will never get you out of debt.
Making out the minimum payment only goes towards interest and doesn’t go toward paying down the principal debt amount.
Paying as much extra as you can towards paying off your debt can help you pay off the debt quicker and save you thousands of dollars in interest charges.
Make a Smaller Budget Than You Think You Need
Many Canadians have difficulty controlling their spending; they often get into debt because they buy what they want and when they want it.
Learning to live with less than you want can be challenging but you will quickly get used to your new reality.
Once your debt starts reducing quickly you will find it even easier to live with less.
Once you have paid off your debt you’ll have adjusted to your new financial reality and you can put your extra money towards your wants.
The best way to learn how to live with less is to use cash instead of credit.
There have been many studies that show that people spend more when using credit rather than using cash.
Pay Off Debt With The Highest Interest Rate First
A sound strategy for getting out of debt involves making the minimum payments on your low interest debts and putting as much money as you can towards debts with the highest interest rate.
As soon as your most expensive debt has been paid off focus your efforts on the next highest interest charge debt.
This strategy will help you save on interest charges and give you a sense of accomplishment as you start getting out of debt.
Pay Off Your Smallest Debts First
Another way of dealing with debt involves paying off your smallest debts first.
This strategy should motivate you to continue paying off debt as the list of your debts and creditors gets smaller.
Consider Selling Your Second Car
Families that have a second vehicle spend as much as $1,000 a month owning and operating each of their vehicles.
If you can, consider selling your second vehicle and using the money to pay down your debt.
This can literally make a massive difference and save you thousands of dollars in just interest charges.
Use Sales to Save on Groceries
A great way to save money to use for debt repayment is to stockpile on groceries when they are on sale.
Make sure you only stockpile groceries that won’t go bad or things you can freeze.
Canned goods, dry cereals, meat and bread can be saved in the cupboard or freezer.
A family of four could save several thousand dollars on groceries each year.
Track Your Spending to Identify Areas You are Overspending
By using a spending tracking app you can identify the areas that you are spending too money on and how you could cut back to save money.
If you honestly work at listing all your spending over a period of time – say 1 or 2 months – you might be surprised at how much money you are spending, and what you are spending it on.
Get a Second Job
If you are dealing with a more serious debt problem you should consider getting a second job, or picking up extra shifts, if possible.
Apply all of the extra income you earn towards repaying your debt.
This method works well for many people and you could be out of debt in as little as a year or two by following this strategy.
Remember that working extra shifts doesn’t have to be permanent although keeping the second job for some time past when you are debt free can help you build up an emergency fund for the future.
Generate Extra Income Without Getting a Second Job
Some people can also generate extra income by capitalizing on their hobbies or renting out a room in their house.
You could use Airbnb or if you live near a university or technical school consider renting the room to a student.
Get a Debt Consolidation Loan
If you have a decent credit score you might be able to get a debt consolidation loan.
Of course this strategy can be tricky as it involves taking on more debt.
Before you consider getting a debt consolidation loan ensure that your money troubles are from a life event such as an illness, job loss or divorce rather than poor budgeting or spending habits.
Once you get your debt consolidation loan ensure that you make a budget you can stick to that will help you stay out of debt.
Speak With a Licensed Insolvency Trustee
Often people looking for a way to get out of debt need professional assistance.
The only debt relief professional in Manitoba who can provide a complete range of debt relief solutions to help people get out of debt is a Licensed Insolvency Trustee.
This means that only a Licensed Insolvency Trustee (LIT) can provide bankruptcy, consumer proposal, debt settlement and debt consolidation services.
A consumer proposal is quickly becoming the most popular way to get out of debt in Manitoba.
Only a LIT, acting as your consumer proposal administrator, can file a proposal with your creditors.
Filing for bankruptcy is usually a last resort for people although if your Trustee recommends bankruptcy as the best solution for you, you can know that it is the right choice for you.
All trustees in Manitoba must follow a code of ethics that includes telling people when they can avoid bankruptcy.
In certain cases the Trustee can inform you on how to get out of debt without the need of their services altogether!