Every Canadian has debt of one form or another. Whether it’s a Milton auto loan, mortgage, personal loan, student loan or something else. Debt is a part of life and not usually an issue. However, if you’re having trouble paying everything off or want to buy a car, house or other big ticket item, you may be required to pay off debt faster.
Our Milton auto loans team has put together a quick outline of how you can work your finances so you can pay off debt faster. Whatever your reasons, whatever your situation, this is how to do it.
Create a Budget
This is always the first step in any financial process, including how to pay off debt faster. A budget tells you where you are, where your money is going and what you have left at the end of the month.
From here you can do anything, which is why we recommend it so often.
List all your income in one column in a spreadsheet. List all outgoings in another column and list your debts in a third. List debts in order of interest rate with the highest at the top.
Include all outgoings so you end up with an accurate figure at the end. This is how much you have to work with.
Prioritize your Debts
In that debt column, you should have a list of everything you owe with the highest interest rate at the top. Prioritize paying off the most expensive debt.
Unless you could completely clear a slightly cheaper debt with one hit, prioritize that expensive payment to reduce the interest burden you’re carrying.
Work your way down the list so you’re always paying the expensive debt first. That way, more of the money you’re paying will settle the debt and not pay interest.
Cut Some Expenses
If you don’t have sufficient funds to cover outgoings or you want to pay more off faster, make some savings.
Your budget should show you where your money is going so you should be able to identify areas you could make cuts. Even temporarily while you get on track or pay off what needs paying off.
Consider eating out less, buying less, cutting subscriptions, not saving for a vacation this year, shopping around for groceries or gas, pausing the country club membership or whatever you regard as a viable cut to make.
It doesn’t have to be forever and will definitely help you in the long run.
Don’t Forget to Save
Even though we’re prioritizing paying debt, you should always have an emergency fund.
If you don’t already have savings, allocate an amount per month to put into an emergency savings fund. Set up an automatic payment for the day after you get paid.
It doesn’t have to be for much, but saving something is a good habit to get into.
If anything does go wrong, it will save you have to use a credit card or get into debt again to manage the situation.
We won’t pretend that paying off debt is easy because it isn’t. It’s a long, gradual process that can take months or years. The one good thing about it is that you make steady, measurable progress.
Focus on that and you’ll get through it!
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!