A 2019 survey conducted by Qualtrics on behalf of Credit Karma revealed that Canadians’ second-biggest fear (after death) is debt. Forty-three per cent of Canadians said that they lose sleep thinking about their finances, including debt and lack of savings. Furthermore, 26 per cent revealed they’re zeroed out at the end of the month.

It can be overwhelming to have financial struggles, especially when you’re juggling to pay balances not just from one credit card but from multiple credit cards. In times like these, it’s inviting to resort to quick solutions that can lead to more harmful consequences like taking a pay day loan or pawning a valuable and sentimental item. The good news is there are ways to combat your debt without having to make yourself vulnerable to loans with unbelievably high interest rates or giving up something that’s meaningful to you for extra cash.

Let’s look at 5 great tips below on how to face your debt issues head-on and come out on top:

1. Get organized.

Army troops don’t go to battles without a plan, and it should be the same when you’re tackling your debts. Gather all your credit card statements and make a note of the amounts you owe, plus the payment due dates, interest rates, etc. This will give you a clear picture of your liabilities so you know where you stand. Knowing your exact situation will help you draw out a workable solution.

2. Consider debt consolidation.

Consider applying for a debt consolidation loan at your bank. A debt consolidation loan is a type of personal loan that has a lower interest rate than what credit cards normally charge. This loan can pay off your credit cards or other debts, then you’ll only have one payment to take care of instead of four or five credit card payments.

3. Look into zero per cent balance transfer.

An alternative to debt consolidation is a balance transfer. It does sound like a trick move since your goal is to pay off credit card debt, therefore applying for another credit card should be out of the question. However, zero per cent balance transfer cards can be helpful in saving you money going forward. Just be sure to find a card offering an extended zero per cent introductory period, which can range from 15 to 18 months. After you find a card, transfer all of your outstanding credit card debt to that one account. You can focus on one payment with no interest.

4. Reach out to your creditors.

It’s worth a try to reach out to your creditors so together you can work with them to come up with a payment plan that suits you. This lessens the pressure for you and you can concentrate on paying off your debits according to your ability to pay. This way, you minimize the need to go for desperate recourses like pay day loans with high interest rates. Most creditors are understanding of people’s financial situation because of COVID-19.

5. Change your behaviour.
   

All of the four tips above will be useless if you don’t make an effort to change your behaviour that put you deep into these arrears in the first place. While there’s a good chance you’ll pay off your debts and you’ll come out unscathed, be more mindful of those habits that can place you in a precarious situation again. Otherwise, it will be a never-ending cycle of overspending then struggling to pay off debts.

Financial savviness is a valuable skill these days, but there are times when our debts get out of hand. When this happens, know that there are ways to manage the situation. However, going forward, you have to make an effort to avoid getting yourself in the same situation again.

Sources

Collie, Meghan. “Canadians fear debt almost as much as they fear death: survey.” Global News. https://globalnews.ca/news/6096075/canadian-personal-debt/

Niemeyer, Brooke. “7 Tips for Paying Off Credit Card Debt.” Credit.com. https://www.credit.com/debt/tips-for-paying-off-credit-card-debt/

Pyles, Sean. “How to Get Out of Credit Card Debt in 4 Steps.” NerdWallet. https://www.nerdwallet.com/article/finance/credit-card-debt

Segal, Troy. “Paying Off Debt With a Balance Transfer.” Investopedia. https://www.investopedia.com/ask/answers/111714/when-balance-transfer-good-idea-paying-debt.asp

Weliver, David. “Kick Debt’s Butt! How To Get Out Of Debt On Your Own.” Money Under 30. https://www.moneyunder30.com/get-out-of-debt-on-your-own