1. Know What You Owe
It’s amazing how many people have no idea exactly how much they owe and to whom. Gather all bills, face reality and breathe. Did you know the exact date each month the payments was due? Did you know what interest rate you were being charged if the balance was not paid in full? Educate yourself. Ignoring debts will not make them vanish.
2. A Goal without a Plan Is a Wish
Prepare a monthly (or even weekly) spending plan. List all income sources then deduct essential expenses for that time frame. The key word is “essential”. The left over balance can be used to pay down the debt as fast as you can. The faster you pay the more money you save! Systematically pay as much as you can. Vacation pay, a bonus even a tax refund can be put to good use. This is "Why a Budget is Necessary" (blog).
3. Stash the Card
You will never put a dent in the debt if you continue to use the card. It may seem impossible to live without the credit card safety net but remember the card is extra debt not extra income! Stop the bleed. If you don’t have it, you can’t spend it. Saying no to purchases may seem stifling but it is necessary. You must learn to live within your means.
4. Don’t Be Fooled
Credit card companies do not want you to pay off the debt. They make money on the interest you incur. They want to see you happy and getting everything in life but at a profit. In fact, they would prefer you get a second card to pay off the first card. Why? They know that you will likely pay off one but keep both and continue to use both. Learn to say “no” and be in control.
5. Think Outside the Box
Depending on how much debt you have incurred and your financial situation, you may never pay off the debt if you make sporadic payments. Consider transferring balances from a high interest card to a low interest card to save money and pay down faster. Consider liquidating assets such as your TFSA to free up cash to pay off balances. Consider consolidating debts into one lump sum by filing a consumer proposal. Most importantly, if you find yourself chasing your tail and getting nowhere, it’s important to seek professional advice from licensed professionals. Legal options are available to assist you and relieve your stress.