How to Manage Debt on Your Own

Here are five helpful, easy-to-do steps that you can take care of debt

It’s a fact: Canadians are carrying a lot of debt.

The Bank of Canada is constantly warning us to lower our debt-to-income ratio and take control of our finances. Sure, debt is a part of life and in many cases we must borrow money in order to achieve goals in our lives. Some debt is actually considered “good debt,” such as money spent on education or on real estate.

But then there’s the bad debt. Using your credit card on consumable goods, or on items that don’t hold their value, could be dangerous. If you don’t pay off your balance each month, you’ll take on interest charges that will increase the amount you owe, all while your asset is losing value.

Curbing bad spending habits and saving will give you a good foundation upon which to build your financial future, so Consolidated Credit has put together five easy steps to help you take care of debt on your own.

  • Needs vs Wants – Try using the “30 minute rule” – if you think you need to buy an item, walk away for a half-hour, then come back to it. The same goes for online shopping – open a new window, check some e-mail, or leave your desk for a half-hour. Come back and see if you actually need to make the purchase. It’s a simple test but it works.
  • Make a Budget and Stick to it – Creating a monthly budget is not restricting; it’s the opposite. You will feel liberated when you know exactly how much you are able to spend, without worrying that you might be doing financial damage. But remember – sticking to your budget is just as important as creating one in the first place.
  • Control is King – Cash is king, when it comes to making payments and staying honest about your bank account. But maybe it’s unrealistic to avoid using credit cards. Manage your credit card spending limit to a level you can pay off each month, and automate the process so the amount comes out of your account on its own. Don’t let your credit card spiral out of control.
  • Nickels and Dimes – Put in the extra effort to find grocery store discounts. Cook dinner and prepare a lunch for the next day. Put on a sweater instead of turning up the heat. Adding a little extra scrutiny to your day-to-day life will pay off in the end. Audit your spending and see where you can make cuts, then put the left-over cash toward paying down debt.
  • Build your Savings – If you’re struggling with debt, it might seem impossible to find enough cash to build a savings account. But you don’t need to start with a lot. Put a little away each month so that when an emergency or unexpected expense comes up, you won’t have to go into debt to cover it.

Debt reduction starts with you and your habits. Fixing any bad spending habits won’t happen in a day, but making an effort and following these tips will help you move toward financial freedom.

Of course, it’s easier said than done. Perhaps you’re in a place where small steps won’t work, and you need to take a giant leap or two. There is help out there. If you’d like some advice on your best course of action, give us a call at and speak to a trained credit counsellor today. You can also try our free budget analysis online and a counsellor will speak to you soon.