Get a free, no obligation personal loan quote with rates as low as 6.99%
Get Started You can apply with no effect to your credit score

Sure, you could apply for a debt consolidation, reduction or settlement program, but many often overlook the benefits of reducing debt on their own. While working directly with a debt expert does have its many advantages (their experience is invaluable), sometimes it’s smart to take care of your debt management yourself. You’ll even save on debt counselling fees, but it’s going to take some proactive and responsible actions. So let’s get started:

1. See where you stand

If you want to reduce or get out of debt without any help, you first have to see where you stand. You have to evaluate your financial position, and most importantly, figure out how much debt you have. In order to do this, you first have to collect all your financial documents and identify who you owe to, and how much you owe. Getting a copy of your credit file is a good way to start, you can get a copy from either TransUnion or Equifax.

Next, figure out how much you owe to each account, and take note of the interest rates and your monthly payment amounts. This list should include your mortgage, car loans, payday loans, your credit cards – all debt that you have.

2. Analyze your budget

Now that you know what you owe, the next step is to determine how much you can pay. Calculate your monthly, after-tax, income and take away all of your fixed costs from that amount (including your rent, mortgage, utility payments, groceries, insurance and so on). The remainder is the amount that could go towards paying off your debt. If the remainder just doesn’t cut it, you will have to look for ways to reduce your fixed expenses. The goal is to reduce your debt, and it may come with some sacrifices but in the end you will bounce back stronger and without debt.

3. Strategy

Once you have determined that you can meet all of the minimum monthly payment amounts for all of the different debt accounts that you have, you should use any cash left over to pay off the debt from your debt account with the highest interest rate. The faster you pay off the high interest rate accounts, the easier it will be to get out of debt. Once you clear off your most expensive debt account, move on to the next highest and work like that. It will take time, but this is the best way to work toward financial recovery. As you pay off your more expensive debt accounts, your debt payments will become cheaper and cheaper over time until you are debt free.

4. Negotiate

Whether you can or can’t meet your debt payment requirements you should still include negotiations as part of your strategy. It’s a good idea to contact your creditors and negotiate better terms. Extending the term of your loan or reducing the interest rate can go a long way. These changes will make it easier for you to meet your payment requirements while avoiding hefty missing payment fees and shots against your credit score.

Finally, if you have home equity, obtaining a home equity loan to pay off your high interest debt is always a good idea. These loans come with low interest rates (because they are secured against your home) and long terms, and that’s one of the best ways to manage and reduce your debt.

Caitlin Wood, BA avatar on Loans Canada
Caitlin Wood, BA

Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

More From This Author

Special Offers

More From Our Experts

https://loanscanada.ca/wp-content/uploads/2023/09/GlobeMailTopCompanies2023-1.png
Loans Canada places No. 228 on The Globe and Mail’s fifth-annual ranking of Canada’s Top Growing Companies.

By Caitlin Wood, BA
Published on September 29, 2023

Loans Canada is excited to announce it has made it onto the Globe and Mail’s Top Growing Companies list for the second year in a row.

https://loanscanada.ca/wp-content/uploads/2023/09/Finder-Awards.png
Finder Awards Finalists: Personal Loans Customer Satisfaction Awards 2023

By Priyanka Correia, BComm

Loans Canada is happy to announce it received the finalist award in the Best Personal Loan Search Platform category.

https://loanscanada.ca/wp-content/uploads/2016/12/caution-1.jpg
Beware of Fraudulent Lenders Impersonating Loans Canada

By Caitlin Wood, BA

A note to our clients about fraudulent lending practices and illegal upfront fees.

https://loanscanada.ca/wp-content/uploads/2022/10/How-To-Pay-Your-Taxes-With-A-Credit-Card-Through.png
How To Pay Your Income Taxes With A Credit Card

By Lisa Rennie

If you’d like to pay your taxes using a credit card, you’ll need to use a third-party service provider like Plastiq or PaySimply.

https://loanscanada.ca/wp-content/uploads/2021/08/Climate-Action-Incentive-CAI-1.png
What Is The Canada Carbon Rebate (CCR)?

By Bryan Daly

The Climate Action Incentive Payment (CAIP), or Carbon Tax Rebate, is quarterly benefit paid to eligible Canadians in

https://loanscanada.ca/wp-content/uploads/2021/03/Canada-Workers-Benefit-CWB.png
Can You Claim The Canada Workers Benefit (CWB) In 2024?

By Bryan Daly

The Canada Workers Benefit is a refundable tax credit for individuals earning a low taxable income of $3,000 - $24,112.

https://loanscanada.ca/wp-content/uploads/2020/12/Student-Tax-Credits-and-Deductions.png
Student Tax Credits In Canada

By Chrissy Kapralos

Similar to how there are specific tax credits and deductions for businesses, seniors, and parents, there are student tax credits in Canada.

https://loanscanada.ca/wp-content/uploads/2021/04/Pay-Less-Taxes-Canada.png
How To Pay Fewer Taxes In Canada

By Bryan Daly

People are always trying to figure out how to save money on taxes in Canada. We present the best ways to legally pay less tax in Canada.

Recognized As One Of Canada's Top Growing Companies

Loans Canada, the country's original loan comparison platform, is proud to be recognized as one of Canada's fastest growing companies by The Globe and Mail!

Read More

Why choose Loans Canada?

Apply Once &
Get Multiple Offers
Save Time
And Money
Get Your Free
Credit Score
Free
Service
Expert Tips
And Advice
Exclusive
Offers

Build Credit For Just $10/Month

With KOHO's prepaid card you can build a better credit score for just $10/month.

Koho Prepaid Credit Card