Paying Down Debts and Rebuilding Your Finances

There is no shame in accumulating debt — whether it’s from credit cards, student loans, or because of unexpected expenses. It’s no small feat to build and maintain a healthy budget, and sometimes life gets in the way. Paying down debt is the first and most important step to securing your financial future, and there are several routes to take.

In Canada, there are several personal loan options for Canadians struggling with managing their finances — whether it’s through online payday loans in Manitoba or debt management programs in Toronto. No matter what your current situation may be, paying down debts is the first step to finding a solid financial footing.

We’re breaking down the simplest ways to pay off outstanding debts so that you can rebuild your budget.

Budgeting with Apps

If you’re struggling to get a hold of your finances on your own, there are several resources you can turn to for help. In recent years, budget apps have been a popular choice for young homeowners, corporate professionals, and even post-secondary students.

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Most of the commonly-used debt management apps offer similar services, but each with its own unique resources. Once you have control over your debt and spending, you have the freedom to continue using the app or to manage your money independently.

The Snowball or Avalanche Method

When you’ve accumulated multiple debts, it can be challenging to know where to begin.

The snowball method is designed to teach you to prioritize your payments. Paying down the smallest loans first, disregarding their interest rates, builds momentum — it’s a motivational tool to show you how it’s possible to become debt-free.

On the other hand, there is the option to use the avalanche method — which deals with more extensive, high-interest payments. You can focus on the low-interest debts without the added stress.

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Consolidate Credit Cards

While it’s tempting to open a new credit card for a store rewards program or the latest travel perks, having too much credit is harmful to your financial health. Instead, keep one card with a healthy credit limit that will be for emergencies or for occasional purchases that you can instantly pay off.

Switching to a debit card and using cash will put your spending into perspective. When you’re able to see what you’re buying, and you’re not waiting for a credit statement, you’ll know if you’re overspending and how to spot those warning signs.

Start a Side Business

Have you ever considered if any of your talents can be turned into a small side business? Perhaps you’re talented with coding or web design, or you have an artistic side that could translate to home decor. On the other hand, if you’re unable to generate income through additional work, the answer could still be found inside your home. Whether it’s through selling clothes or turning one of your rooms into a short-term rental, it might be time to get creative if you need extra cash to pay down your debts.

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