There’s no sugar coating it, things have been rough. Many of us continue to find ourselves in a difficult financial situation. It’s easy to feel overwhelmed when so many things may seem out of our control, so it’s important to start focusing on what you have control of – such as your spending and be more aware of your money.
If you’re in debt and looking for a way out, you’re not alone – getting out of debt has been the #1 goal for Canadians 9 years in a row. To help you get there, we’ve put together the key steps to getting debt free below. Remember it’s about progress not perfection, so even if you can’t do them all, starting on just one is already a step forward:
- 💸 Stop using your credit card
As credit cards make it too easy for you to overspend and accumulate debt, put your card on ice and consider it an emergency backup. If you already have credit card debt, make only the minimum payment on it and switch to using a prepaid card or your debit card. Doing this will help you budget because you can only spend the money you have (don’t use overdraft if you have it). You’ll also learn how much money you can afford to spend.
- 🔍 Know your debt
Your goal is to be debt free, so list out all of your current debts. By knowing all about them (amount, interest rate, and payments), you can decide on how to best tackle them (using the Avalanche or Snowball method). Remember the reasons why you want to get out of debt and use it to motivate you to move forward.
- ✅ Create your money plan
If you don’t have a budget already, starting one is easier than you think. Try the simple to follow 50/30/20 plan to spend no more than 80% of your income. Want to push harder to speed up your progress? Try the 50/50 financial buffer plan. We recommend weekly budgeting for best control because the more you chunk something down to easier tasks, the more successful you’ll be. Stop increasing your debt, then start putting more money towards paying off debt and you can adjust as you go.
- 📊 Track your spending daily
One of the secrets of creating a habit, is taking just 2 minutes a day to focus on it. Schedule this into your calendar so you won’t forget. Every day review the reasons you want to get out of debt, review your spending from the day before, and make the appropriate adjustments for this new day. Don’t worry if you get off track, simply learn from it and move on. We promise if you do this simple 2 minute daily exercise, 1 year from now you won’t believe how far you’ve come.
It’s all about making progress, not perfection. The more you pay attention to your money, the more mindful you will be around how you manage it, and the better your results.
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–The Mogo Team