5 Steps That Will Help You Reduce Debt in 2017Dec 20, 2016
Do you want to reduce your debt in 2017? If the answer is yes, you are not alone. A September 2016 survey from the Canadian Payroll Association revealed that almost four in 10 Canadians feel overwhelmed by the debt they are carrying. In Ontario, the average household debt has risen again, reaching almost $21,000.
Although it’s easy to see that making plans to reduce debt should be a priority, it’s not always as easy to determine the best way to do so. Here are five steps you can take in order to control your debt, find relief from the debt burden you carry and commit to a more financially healthy 2017.
1.) Understand your debt
The first step to tackling your debt is really understanding how much you owe, how much time it will take to repay this amount and how much money you will need to pay in interest. It’s also important to understand how your debts may be affecting you. Are you constantly stressed out, worried that you won’t be able to make your payments? Is focusing on your debt making it impossible to focus on other financial priorities, such as saving for retirement or building an emergency savings fund? Gaining a full understand of your debt provides valuable insight that will allow you to move forward with your plans and set your financial priorities.
2.) Increase your financial literacy
Knowledge is power. In order to effectively deal with the debts you carry, it’s important to be aware of the various strategies, such as debt consolidation, that can be used to reduce it. You can learn quite a bit by exploring the various resources available on financial literacy websites, such as the Financial Literacy Database provided by the Financial Consumer Agency of Canada.
3.) Set SMART goals
Incorporating goals into your debt plans is a great way to work towards reducing debt, especially if they are SMART or specific, measurable, achievable, realistic, and time-framed. Creating goals that follow this framework generally leads to a more successful outcome as they are better defined and include a measurement and time-frame that allows you to track your progress and stay motivated.
4.) Increase your earnings
If you have the opportunity to do so, increasing your earnings is another potential option that can help you reduce your debt, as you can use the extra income generated to aggressively pay it down.
Increasing your income could include offering to work more hours at your current job if this option is available to you. It could also mean finding a “side hustle” opportunity, such as freelance or contract work. Studies show that many Canadians, particularly younger Canadians, now engage in this type of extra employment.
5.) Seek help
It’s important to remember that you are not alone when it comes to reducing your debt. Debt relief professionals are professionally trained to evaluate your individual needs and provide you with debt advice and information that can help you create an effective plan to reduce and control your debt.
Is reducing debt a top priority for you and your family in 2017? Join the conversation and share your financial goals for 2017 with BDO Huntsville using the hashtag #BDODebtRelief.