For many Canadians, 2022 has been a difficult year due to rising living expenses such as gas, groceries, and home heating. We want you to make 2023 the year you turn your debts and credit around, and these steps will help you achieve it.
It can be difficult to carry debt when you are drowning in it. Having it drags on your finances and makes achieving your goals more difficult. It can be challenging to become debt-free when you have monthly debt payments, especially if they are high interest.
Here are four steps you can take to become debt-free in 2023:
1. Make a commitment to become debt-free
Take a moment to consider why you want to pay off your debts and what it will mean for you when you are debt-free. Keep those reasons in mind. It might even be a good idea to write them down.
2. Figure out what you owe
In order to pay off your debt, you must first determine how much you owe. Write down the amount of each debt that you have, the interest rate, and the amount of your monthly payment. This list may include credit cards, loans, mortgages, and other outstanding debts.
3. Make sure you have enough room in your budget to repay your debts
As soon as you understand what you owe and how much your debt costs, figure out how much you spend on other things. If you haven’t tracked your spending before, a budgeting app can help you do so. Compare what you earn against what you spend on rent, bills, groceries, etc.
4. Make a plan
To finish, determine which strategy might be most effective for you, and set yourself realistic goals. Here are some of the common approaches you can take:
If you consolidate your debt, you increase your chances of borrowing more in the future. By having more available credit, you will be able to get deeper into debt instead of getting out of it. It will still take a lot of self-discipline to remain on top of your repayment goals.
Bottom line. As interest rates rise in 2023, carrying debt will become even more expensive. You should be realistic about what you can accomplish.