What is Debt?
The basic definition of debt is something that is owed. In this context, it is money to pay off student loans, a mortgage, or a credit card. The borrower must repay the creditor an agreed-upon value over a certain period.
Over 73% of Canadians have some form of outstanding debt. There are various types of debt, from student loans to credit cards to purchase a home or car; collecting liabilities in your life is completely normal – and paying them off should not be a painful process. That’s why Loan Express is here to help with our quick approval loans.
What’s the Average Debt per Person in North America?
According to Maclean’s, “In the first quarter of 2022, Canadians owed $1.83 in debt for each dollar they made in a year.” This includes different types of debt, such as consumer debt products, from credit cards to personal loans, mortgages, and student debt.
The largest amount of debt in North America is experienced by Generation X, which lands in the hundreds of thousands. The smallest amount of debt experienced by a group is Gen Z, standing at only tens of thousands, as they typically are not in the market to own property, have careers, or have families.
How Does Debt Impact Your Life Negatively?
Being in debt cannot only be a huge stressor on yourself but also make qualifying for other loans or rentals difficult. If you want to buy a house, most lenders require that you have a debt-to-income ratio of less than 43%. Even if you want to rent an apartment, someone with a better credit score will always be chosen over you.
You may find it possible to qualify for a mortgage, save for your retirement, finance your child’s education, or make a fun purchase without feeling guilty. Debt affects both your wallet and your mental health.
How to get out of Debt Fast
Here are some tips from Loan Express regarding how to effectively and quickly rid yourself of the debt that’s dragging you down.
Make Your Debt & Bills Organized and Manageable
When organizing anything in your life, a virtual or hand-written list is your best friend. Compile a list of your current bills and loans, go through bank and credit card statements, and write down all fixed expenses, loans, and bills.
Then, write down your monthly income, the amount you pay towards your bills and loans, and the total balance, interest rate, deadlines, and other necessary details. Keep your credit report and last year’s tax paperwork on hand, so you don’t miss any information.
Pay more than the Minimum Payment
Once you have your budget sorted out, go through it and figure out how much you can put towards paying off your debt. Paying more than the minimum will save you money on interest and help rid you of your debt faster.
If you have a $15,000 balance on your credit card with a $450 minimum payment, while only making the minimum payment, it can take almost four years to pay off the balance – and over $5,000 in interest. If you paid $550 a month – only $100 over the minimum – it would take you less than three years to pay off your debt.
Refinance Debt with a Lower Interest rate
Refinancing to a lower interest rate can save you tons of money in interest and help you pay off debt faster. You can refinance mortgages, personal loans, student loans, and other types of debt. One way to go about this is through a debt consolidation loan. This personal loan will come with lower interest rates than your current debt.
If you have credit card debt, you should consider transferring the debt to a balance transfer card.
Use Coupon & Promotion Information
You can save a shocking amount of money by utilizing coupons found on apps, websites, or in free flyers delivered to your mailbox. You don’t necessarily have to become one of the “Extreme Couponers” you see on TV, but using coupons for items you were going to buy can keep money in your pocket to put towards paying off debt.
Cut Down on Expensive Hobbies
Here are a few ways we recommend saving some money while still enjoying a fun lifestyle:
- Thrift shopping. Whether you find that your child is growing out of their clothes quickly, or you just need some basic t-shirts or jeans and don’t want to pay the crazy costs that they retail for at upscale stores, “thrifting” is a great way to save money – and nothing to be ashamed of. It’s actually quite trendy now with the increase in popularity of vintage clothing, and you can find some great name brands for a fraction of the cost.
- Stop spending on TV you aren’t watching. Do you have every streaming service under the sun, as well as cable, and still find yourself only watching Netflix or YouTube? Save yourself some money by getting rid of some streaming service subscriptions and canceling that cable package. You’ll save hundreds, and you’ll realize you never really needed them in the first place!
- Cook at home. Although grocery prices seem to be rising daily, it is still so much cheaper to cook a meal at home than it is to go out to eat. Our tip is to make a meal plan at the beginning of each week, preferably with cheaper foods like chicken, rice, pasta, legumes, and soup, so you have meals ready to throw in the microwave when you get home from work (instead of immediately going on your phone to order in or call up friends to go out!) This doesn’t mean cutting out restaurants entirely – try to limit yourself to weekends or once a month, and the savings will add up!
- Visit the library or find local shows. With the resurgence of reading during the pandemic, people are spending tons of money on books nowadays. However, your local library is a great resource for classics and all of the newest releases. It can also be a very calming spot to bring your laptop and work or start writing a novel of your own! Similarly, your town has more to offer than you think. Try to look online or through your mail to find out about free shows and events going on near you.
- Ditch the barista and gym membership. Making coffee at home not only saves you money, but it can be a very fun process and an interesting hobby to learn from. Also, you’ll never make your order wrong. And just like an $8 coffee isn’t exactly a necessary expense, neither is that gym membership you use a couple of times a month. Go for a run outside, exercise to a calorie-burning YouTube video, go swimming in the summertime, or join a less expensive class where you can get your sweat on and meet new people! There are even free, fun exercise events, like bike groups or yoga in the park.
Budget Planning Is Key
Back to the list making – write down your non-debt monthly expenses, such as groceries, utilities, gas, cellphone, internet, rent, car, entertainment, retail, and so on. These amounts will vary, but that can be a good way of monitoring when you’re being reckless with your spending or where you should divide up your money.
Arrange each expense in importance as well – you need electricity but don’t necessarily need another pair of sneakers. If you budget to spend a bit less in each category (where you can spend less, like entertainment and retail), that’s money back in your pocket.
Earn More, Spend Less
A rule that sounds so simple but isn’t always the easiest to execute – you want to make sure your expenses are lower than your income. If they exceed your income, a great solution is to get a side hustle. In the gig economy, finding a way to increase your income in addition to your normal job is easier than ever. Try out transcribing voice recordings, or offering dog walking services, or selling some items you never use anymore. You can even stream yourself playing video games or turn your hobby into a business and earn a lot of extra cash. You can even try driving for Uber or doing grocery delivery on your days off.
Get an Instant Money Loan even with Bad Credit with Loan Express
Loan Express is here to solve your money problems, whatever the predicament. Our instant loans are here at any time you find yourself in a sticky financial situation.
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