How to Get out of Debt in 2019

How to Get out of Debt in 2019

Whether you built up debt on your credit cards holiday shopping or have carried debt for a while, getting out of debt is the perfect resolution for 2019. According to a recent CIBC report close to half of Canadians feel they are not taking the proper steps to manage their finances in the approaching year. In fact, 48% of those surveyed were not planning to reduce spending or eliminate debt. However, nothing makes more sense than to review your spending habits and plan for a stable financial future by becoming debt free in 2019. Here are some easy tips to help you start the new year off on the right financial foot.

Make a Budget

You can’t possibly manage your new year debt without having a budget plan in place. Review your monthly financial obligations as well as your monthly spending on other items, such as groceries and clothing, in order to see how much you are spending each month.

Then add up your monthly income and deduct your spending from your income. If you are lucky you will still have money left at the end of each month, or at least break even. If you break even or are left with bills unpaid, then you need to start cutting spending for non-essentials.

Reduce Spending

Assessing how much you spend each month will provide valuable insight to help you identify areas where you can reduce spending. The first place to look is how much you are spending on non-essentials such as entertainment, dinners out and unnecessary items from clothes to electronics. You can hopefully find several areas to reduce your spending to help improve cash flow.

Stop or Limit Credit Usage

This is a very important part of managing your debt. Take your credit cards out of your wallet, so you aren’t tempted to use them. Instead, use debit, or better yet cash. Using cash is the best way to keep track of everyday spending such as morning coffees.

Spend Points

Check your loyalty points balances and see how much you have accumulated for rewards programs. Look at the best way you can spend them to provide a little bit of extra cash. Points can either be used for special occasions, travel, or applied to practical uses such as discounts on groceries.

Apply Extra Cash to Debt

Once you assess your spending try to put at least $100 per month aside to add to your debt repayment. This will help you get out of the habit of simply paying the minimum amount, and instead start putting a real dent in your debt.

Automatic Payments

Once you establish how much more you can put towards paying your new year debt, you can set up some automatic payments for your credit cards. This works for you in two ways: It forces you to put aside the money to cover the payments and it helps you avoid making late payments, which can affect your credit score.


With automatic payments set up, you can then start looking at building up some savings. By having some money squirrelled away you will be better prepared when a major purchase is required. You can also avoid having to resort to using credit for unexpected expenses.

Speak to your bank to learn more about high-interest savings accounts. Having money set aside will provide an emergency fund to cover you in unforeseen situations such as job loss or illness. You should always have enough money to cover three to six months of your expenses just in case.

Consolidate and Switch

If you are paying off several different lenders from credit cards to lines of credit, consolidating your loans is an excellent option. You can apply for a lower interest loan, pay off all your debt and then just have one lower monthly payment to manage each month. Switching to a lower interest loan also cuts down on your balance as you will be accruing less interest. This can save far more money than you might think.

Maintain a Good Credit Score

In the struggle to decrease your debt, it is easy to overlook the importance of maintaining a good credit score. You can request your credit score from the credit bureaus to look at what creditors will see should they check on you. Make sure that there are no discrepancies and if there are you have a right to speak to the credit bureaus and send them proof that things such as outstanding debts are paid, or that you have been paying on time if they show you as always making late payments.

A bad credit rating means you will get charged higher interest rates as lenders will view you as a higher risk. They will want to collect as much from you as possible in case should you default on the loan.

To build and keep a good credit score, use a new credit product such as a low-interest credit card to help build a better score by using the card monthly and then paying off the balance on the due date each month.

Never Credit Hunt

Avoid credit hunting as this can negatively affect your credit score. The credit bureaus look for “hard” inquiries, which are formal applications for loans or credit cards. The more often you do this, the more desperate you appear to be to acquire more credit. This type of inquiry can stay on your credit report for up to two years. That’s why when consolidating it’s always best to deal with a bank or debt management company who can arrange things without the need for you to make too many hard inquiries.

To learn more about how to get out of debt call Kevin Thatcher & Associates today at 1-866-719-8547 or contact us here.

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