More Resources
Table of Contents
Debt can feel like a weight that follows you everywhere. The credit card balance grows with interest. The student loans that stretch into the future. The car loan or personal loan that eats into your monthly expenses. You want a way out.
With the right repayment strategy, you can save money, pay off debt faster, and move closer to financial goals that matter.
In this guide, you’ll learn simple, proven strategies for handling outstanding debt, choosing the best way to pay it down, and building a path toward debt-free living.
Paying down debt starts with clarity and ends with a plan. These steps give you a roadmap you can follow.
List every type of debt you have: credit card balances, student loans, car loans, personal loans, and even mortgage payments. Add up the total amount. This shows you the size of your outstanding debt and helps you design a repayment plan. Look at your credit report to see missed payments.
Choose a repayment strategy that fits your needs:
Combine multiple debts into one monthly payment, often with a lower interest rate. Options include a debt consolidation loan, balance transfer credit cards, or using home equity.
Consolidation helps you save money and reduce the risk of missing payments. But you need discipline; new debt on top of consolidation can leave you worse off.
Track income, monthly expenses, and debt payments. Cut overspending and redirect extra money to pay down debt.
Build a savings account for an emergency fund so you don’t rely on credit cards when unexpected costs appear. A clear financial plan helps you manage money and stay on track.
Call your lenders and ask for a lower interest rate or new repayment terms. Some will agree if you’ve stayed in good standing. Others may offer a structured debt management plan. Don’t be afraid to explain your financial situation. A single phone call can lower monthly payments and speed up your debt repayment plan.
If your debt feels unmanageable, explore other options. Non-profit credit counselling agencies can help you build a repayment strategy. They may negotiate with creditors and set up a plan that fits your financial goals.
For more serious cases, consumer proposals or bankruptcy may be last-resort options. These affect your credit score but can also give you a chance to reset your financial future.
Bringing in extra money accelerates your debt repayment. Look at gig work, freelancing, or starting a small business. Every dollar above your minimum monthly payment chips away at your total amount owed. Even a short-term hustle can move you closer to debt-free living.
When you want to pay off debt, knowing where to start is the hardest part. Should you clear the smallest balance first? Or focus on the highest interest rate? The answer depends on your financial situation or long-term financial goals.
High-interest debt, like credit card debt or payday loans grows the fastest. Every month, the balance climbs if you only make minimum payments. The avalanche repayment strategy saves money over time and reduces your total amount owed faster. If your credit score is in good standing, you might also lower interest rates through a balance transfer or debt consolidation loan.
For some people, the weight of a large loan, like student loans, car loans, or personal loans, causes the most financial stress. In this case, focusing on the total balance can bring peace of mind.
Paying extra money toward a large debt may not be the cheapest option, but it gives you a clear sense of progress. The debt snowball method also works here.
Your financial future also depends on your emotional health. A credit card balance that feels overwhelming or a loan that threatens your monthly expenses can weigh heavily on you.
Sometimes, paying down the debt that causes the most financial stress is the best financial decision you can make. Having an emergency fund or small savings account helps reduce the need for new debt during life events.
Not completely. Keep a small emergency fund in a savings account to cover unexpected expenses. This prevents you from relying on credit cards or new debt when life happens.
Check in every few months. Look at your credit report, monthly payments, and progress toward debt-free goals. Adjust your plan if your financial situation or interest rates change.
Yes. Consistent debt payments improve your credit score and show lenders you’re in good standing. A better score can help you qualify for lower interest rates on future personal loans, car loans, or mortgages.
Paying off debt takes time. Credit card balances, student loans, and personal loans don’t disappear overnight. While you follow your debt repayment plan, there may be moments when you need extra money to cover monthly expenses or avoid missing payments.
With My Canada Payday, you can apply online in minutes, get fast approval, and receive money by Interac e-Transfer 24/7, with no credit check delays. Get quick access to the funds you need to stay in good standing.