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How do I… pay off debt?

Take control of your debt with a debt management plan

You came to the right place if you're looking for help to manage debt

From growing credit card bills to student loan payments and car payments, mounting debt can be challenging to tackle. The good news is you don’t have to do it alone.

Every year, millions of Canadians get help managing their debt to take control of their finances. A debt management plan can help you pay off your debt in as little as three to five years and give you the freedom to live without the pressure of debt.

Don't let debt get you down. From debt consolidation to credit counselling, here are some helpful ways to get your debt under control.

Building a debt management plan

The best way to pay off debt is to make a short and long term plan. Sit down and take an honest look at your current monthly income and expenses. Then set your long term goal, and build a realistic plan to help you acheive your goal. 

Consider consolidating high-interest credit cards into one loan with a lower interest rate or setting up automatic payments. If you have student loans, ask your lender about setting up an income-driven repayment plan that fits into your budget.

Gulf & Fraser can help you develop and stick to a plan that works best for your financial goals. We'll sit down with you to review your current situation, create a budget that fits into your lifestyle and find smarter ways to pay off debt.

Prioritize debt payments

It may be tempting to push debt payment aside and focus on investing or saving. However, it's important to prioritize debt repayment so that you can get out of debt as quickly as possible.

High-interest debts can add up quickly—and ignoring them only damages your credit score and increases the amount of debt you owe.

It is typically recommended that you start by paying off the debt with the highest interest rate first, then work your way through other creditors in order of interest rate. There can be exceptions to this rule depending on the nature of your debt - reach out to an advisor for support in prioritizing debt payments.

Continue making minimum payments on all accounts (unless you’re trying to consolidate or transfer balances). Missing payments can damage your credit score and cost you extra money in late fees and penalties.

Consolidating debt

Debt consolidation can be a great way to manage multiple debts. By combining multiple debts into one manageable loan, you may benefit from a lower interest rate. Consolidation can include credit cards, loans and other debts that you may be struggling to stay on top of.

Consolidation involves taking out a new loan to pay off all your other debts, then repaying that one loan. Make sure you can afford the payments on this new loan and that you have room in your budget for your other monthly expenses. As well, look for a loan with flexible payment terms and no prepayment penalty so you can pay it off as quickly as possible.

Here are five ways you can pay off debt faster:

  1. Make a list of all your debts and prioritize them by interest rate         
  2. Ask creditors if they can lower your interest rates or consolidate multiple payments into one loan
  3. Set up automatic payments with your financial institution so you never miss a payment due date
  4. Consider transferring your high-interest credit card balances to a low-interest card
  5. Make extra payments whenever you can to reduce the total amount of interest you pay on debt

Organizing debt

If your lender isn't able to provide you with a debt consolidation plan, there are a few ways you can take action on your own. First, you could transfer the balance of one or more high-interest credit card(s) into a new card with a lower rate and lower annual fee.

Another option is to apply for a personal loan. Personal loans usually offer competitive interest rates and fixed repayment terms. This can make it easier to stay on top of payments without worrying about interest rate hikes or payment increases.

The Credit Counselling Society of BC offers debt help, financial education and free workshops and webinars to help you get out of debt fast.

Tackle debt head on

Ignoring your debt won't make it go away. The best way to tackle debt is to face it head on.

This may mean making changes to your budget and lifestyle—at least in the short term. Consider how you can reduce your expenses or increase your income so that you can make more significant payments toward debt. Small changes like cancelling a streaming subscription or eating out one less time a week can make a big difference in the long run.

As well, always practice good financial habits like setting and sticking to a budget. The easiest way to start is by speaking to a trusted advisor for advice and guidance.

Remember, debt doesn't just go away on its own. But, with a little effort and help, you can take control of your debt and be on your way to a better, brighter financial future.

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