Are You Wondering How to Get Out of Debt? How You Drive Might Matter
by Julie Jaggernath
When you’re looking for how to get out of debt, look at how you drive. If you’re someone who races from one red light to the next, you might be spending 37 per cent more on fuel than if you accelerated more slowly and drove at a more even speed. BCAA reports that if you drive like this, you only save one minute for every half hour on the road. Who knew that aggressive driving can be so costly!
To put this into real numbers, if you spend $300 each month on fuel, a savings of 37 percent is $111. That’s massive! An extra $111 per month could help you pay off credit cards or other bills and debts. Plus, you’d save on wear and tear on your vehicle, which would save you additional money on maintenance and repairs. A more impactful way to frame this is if you give up aggressive driving (regularly accelerating hard from a standstill), you could buy a new car with the savings every 10 years ($111 saved per month compounded annually at 7% grows to over $19,000 in 10 years, plus you’d have added savings from less wear and tear on your vehicle).
If you need help looking at your budget and deciding how best to use the money you save to pay off your debts, contact us to make an appointment with one of our Credit Counsellors. They are experts at helping Canadians manage their money and debt better.
How to Pay Off Debt the Best Way
There really is no one right way for how to pay off debt, so to find the best way, start by tracking your spending. A personal expense tracker might be the best way to start. It’s a simple paper and pencil method that will let you see what your spending habits are as well as how much you’re spending.
Expense Tracking with an Excel Spreadsheet
If you’re tech-savvy, an app or expense tracker in Excel might work better for you. Rather than create your own spreadsheet, to help make it easier, we’ve started one for you. Download it and save your details to your own computer. That way you can control who sees your personal information.
Decrease Your Spending on Monthly Expenses
Once you’ve tracked your monthly expenses for a few weeks, you’ll get an idea what your habits are and where you can make some changes. While it might be tempting to make some drastic changes, start by cutting an expense by no more than 50 per cent. See how it goes, and if you’re okay spending less on that item or in that category, cut your spending by a further 50 per cent. Wait it out again for a few weeks before you decide if you can live with spending even less on that expense or not. After several steps to reduce your spending, then decide if slashing that expense from your budget entirely makes sense.
If you’d like help identifying areas in your budget that could be reduced, you can try out our free, interactive Excel Budget Calculator Spreadsheet (designed for Canadians) or you can make an appointment to go over your budget with one of our Credit Counsellors. They are highly trained budgeting experts who can even help you make a budget too if you feel you might need some help.
Get Out of Debt Quickly by Driving More Efficiently
The one expense you might want to see if you can reduce right away to help you get out of debt quickly is fuel. If you drive, BCAA has some great money-saving eco driving tips that will help you reduce how much you spend on gas, as well as on vehicle maintenance and repairs. Giving up your car might not be an option, but finding the most economical way to operate it will still get you from A to B.
Options to Get Out of Debt When You Have Extra Money in Your Budget
The best way to get out of debt depends entirely on you and your overall financial situation. Once you’ve tracked your expenses and know if you have money in your budget that can be spent more effectively, then certain options are available to you. These include consolidation loans, debt management programs, and DIY repayment plans. We’d be happy to explain them to you in more detail during a free, confidential appointment.
Alternative Options to Get Out of Debt
If your budget is so tight that you can’t free up any money to pay off debt, then you need to look at alternative solutions. Sometimes it’s best to communicate with your creditors because how can you pay off credit card debt when you have no money? Maybe you need a sample letter to creditors when you’re unable to pay or a sample if you need to write a debt forgiveness letter. You might have options to increase your income or decrease your expenses, but none are a quick fix. This might also be the time when you ask how does bankruptcy work and is it the right debt relief option for you?
How to Get Out of Debt – Get Help to Find the Best Way
For help exploring your options about how to get out of debt, contact one of our friendly, professional Credit Counsellors. They will be happy to look at your whole financial situation with you, answer your questions and provide you with information, guidance and solutions. Our appointments are free and confidential. If you are concerned about your credit rating, they can show you how to improve your credit score in Canada. Contact us now by phone, anonymous online chat, or by email. There are so many ways to get help with your debts; don’t struggle and worry alone. We are happy to help.