Lethbridge Debt Consultant-Darrell Pauls

Everyone wants to be debt free, but it can be difficult to actually get to that point. Today I want to give you 6 tips on how you can reduce your debt, and be closer to living debt free.

Change your mortgage payments from monthly to bi-weekly.

By changing your payments to bi-weekly you end up paying a little more each year, but you pay down your mortgage faster and reduce the number of years left on your mortgage. If you get your paycheck bi-weekly, then it is easier to make a budget that way anyway.

Make extra payments on your mortgage.

Every extra payment that you make on your mortgage goes directly to the principle, unlike your fixed payments that are split between the interest and the principle. If you are able to make extra payments especially during the first year when your payments are mostly interest, you can significantly decrease the number of months or even years you pay for your mortgage. Remember though that there is a set amount that you can pay above your regular fixed payments each month and/or year. Talk to your lending institution to find out more information.

Stop using credit cards!

Did you know that if you carry a balance of just $1000 on your 18% interest credit card and make a minimum payment of only $20 per month it will take you  150 months or 12 ½ years to pay it off? That would bring the total amount paid to nearly $2400! If you increase your payment to $100/month you reduce the number of payments to 32 months and the total paid would be $1163. It makes a big difference! Try to pay off those credit cards as fast as you can. You will save a lot of interest. Better yet, pay off your balance in full every month and skip all the interest payments! To figure out how long it will take you to pay off your credit card, try using this online credit card minimum payment calculator.

(http://www.bankrate.com/calculators/credit-cards/credit-card-minimum-payment.aspx)

Sell your unused items that are worth some money and apply the money made to your debt.

This one is pretty self-explanatory.  That quad that you never ride anymore, the books that you haven’t read in 10 years, the kids items that your children outgrew years ago. Go through your house or garage and find items that are of value and either have a garage sale or sell them online.  Apply the extra money to your credit card or line of credit. If you have enough you may even be able to wipe out one of your smaller loans.

Try to find a way to increase your income and use that money to pay down your debt.

There are many easy ways that you can earn a little extra cash. Get a paper route, deliver pizzas on the weekend, a stay at home parent could start a day home, ask for extra hours or shifts at work or if you are a hardworking and reliable employee, ask your boss if there is a possibility of a raise.

Be diligent in making your payments and paying your bills on time.

Most companies charge a penalty for making a late payment. You can avoid this extra charge just by paying on time. If you are used to making your payments late and used to having to pay the late fee, try paying on time and use the money you would normally use to pay the late fee to apply to one of your debts.  If you have difficulty remembering to pay your bills on time, set up an automatic withdrawal from your account (to for example your line of credit) so that it never goes unpaid. Just remember that you have it set up and make sure there is enough money to cover the payment in your account each month or you will have more charges to pay.

It can sometimes be difficult to be diligent in making changes to your finances, but it is well worth the hard work. If you have too much debt to handle and need debt help, we at 4 Pillars Red Deer are just a call away. We can look at your financial situation and give you the tools and direction you need to get out of debt. Whether it be debt settlement, debt consolidation or even as a last resort bankruptcy, our experts will give you sound advice and present you with the best options for you. If you need debt help, give us a call today!

1274 3 Ave S | (403) 332-7361

www.4pillars.ca