Financial Consumer Agency of Canada
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Financial Consumer Agency of Canada

www.fcac-acfc.gc.ca

 

Beat That Debt


How Can I Beat That Debt?

10 tips to Beat your Debt

1. Keep track of your spending and make a budget

Find the hidden bucks

ABMs: A $20 withdrawal at an ABM not owned by your bank could cost you anywhere from $1 to $6! To save extra bucks, ask if you can withdraw extra cash (cash back) when using your debit card at a store or make sure to stop by your own bank's ABM to fill up your wallet!

Start keeping track of what you spend; this is the first step in creating a budget that will help you free up money to reduce your debt. See FCAC's Budget Worksheet to help you get started.

2. Put needs before wants

Buy what you need first. Eliminate unnecessary expenses by looking for things you can live without.

3. Reduce your banking fees

Use automated banking machines (ABMs) from your own financial institution and review your banking package. See FCAC's The Cost of Banking Guide interactive tool, which lists ABM fees and helps you choose a banking package that fits your needs at the price you are willing to pay.

4. Keep your credit card in your wallet

To avoid getting into more debt, use cash or your debit card instead of your credit card. That way, you'll be spending money you already have.

5. Pay down your highest interest rate debts first

If you carry a balance on your credit card, then this is likely the debt with the highest interest rate. Use cash or a debit card while you pay off your credit card debt to avoid accumulating more. For tips on how to reduce costs with your credit card or to help you select a card that better suits your needs, see FCAC's Credit Cards and You interactive tool.

6. Reduce small, reoccurring expenses.

Little savings every day can go a long way. Take public transportation or bring your lunch to work. Eliminating that extra $1.50 coffee each workday can mean over $400 a year in savings.

7. Avoid “Buy Now Pay Later” offers

When you are having problems making ends meet, the administrative fees tied to such offers and high interest rates if you don't pay on time will only add to your existing debt load.

8. Contact your creditors

As soon as you realize that you are having trouble making ends meet, call your creditors and explain the situation. In most cases, they will work out a modified payment plan that will make it easier for you to pay off your debt.

9. Get a consolidation loan with your financial institution

This means getting one single loan to pay off all your existing debts and having just one monthly payment to make. Once you consolidate your debts, you must stop using any credit cards or line of credit that you consolidated into the new loan. For more information on a consolidation loan, talk to your bank or financial professional.

10. Talk to trusted financial professionals

These may include your bank representative, your financial planner, or a credit counselling agency. With their help, you will be able to evaluate your current debt situation, determine your present and future needs, make a budget, and find ways to pay off your debt.

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Reasons Why You Should Make a Budget

  • Do you find that money is tight?
  • Do you wonder where your money is going?
  • Do you have problems paying off your debt?
  • You can't seem to save regularly?
  • Do you want to make your dollars stretch further?

A budget helps you see more clearly how much money you receive, and how much you spend and save. It helps you find ways to get rid of your debt, reduce costs and have more money for things that are really important to you (your financial goals).

Start budgeting with our tip sheet.

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5 Ways to Take Control of Your Finances

You CAN save a few dollars each month and those few extra dollars WILL make a difference at the end of the year.

1. KNOW YOUR SITUATION

Ignoring your debts will not make them go away. It's time to get your bank and credit card statements out and order your credit report to have an exact picture of your financial situation.

2. TAKE CONTROL

It is YOUR money, and in the end, how you spend it, is YOUR responsibility. Study your options and take charge of your personal finances by making a budget. Sure, it may seem difficult at first but the more you invest time to monitor your finances, the more you will feel empowered.

3. IDENTIFY BUDGET-BUSTERS

Seemingly insignificant purchases add up. Eliminating that extra $1.50 coffee each workday will save you over $400 at the end of the year. Remember that beating your debt is a long-term goal.

4. DO YOUR RESEARCH

The more you learn about financial products and shop around, the less likely you are to end up overpaying for them.

5. SET A PLAN

Write down your plan for beating your debt. Include your reasons, potential pitfalls, stages of progress, and how you'll deal with the temptations to overspend. Then, make your budget accordingly.

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Useful tools to help you learn how to budget and reduce your banking fees

Compare and choose the banking products that truly suit your needs, and learn how to budget

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Find the Hidden Bucks: How changing your banking package could save you big money!

Your bank can provide you with suggestions when it comes to choosing the best banking package for your needs. But doing your own research is the first step to feeling comfortable and confident about your money. Plus, when you do decide to go to your bank, you will be armed with information to get the best products for your needs.

The Solution…

  1. Change Your Banking Package

    If you are a student:
    Switch to a student banking package with no monthly fees, unlimited in-branch and self-serve transactions.

    If you are a senior:
    Most banks have banking packages that are advantageous for seniors and have no monthly fees.

    Not a student or a senior?
    Switching to a low cost bank account might be your best bet. They cost anywhere from $0 to $4 a month.

    Annual savings on fees: up to $107.40

    Banking Package Selection Tool

  2. Transfer your credit card balance

    Even if you must pay $20 in annual fees, switching to a card with a lower interest rate of 11.4% could save you more then $90 in interest charges over the year on your $1,250 balance. Shop around, examine your options.
    Annual savings on interest charges: $93
    Annual fees: $20
    ($93 - $20 = $73)

    $73 of annual savings on your credit card

    Credit Cards Selection Tool

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Request for Publications

The Financial Consumer Agency of Canada (FCAC) provides a wide range of tools with information about financial products and services. All of FCAC's publications are free of charge. To order a print version of our publications, click here. Please allow up to three weeks for delivery.



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Date Modified:
2012-11-08