Ep. 6 Debt Free In 4 (or 5) Easy Steps

Living Richer

Dec 27 2020 • 18 mins

On average Canadians are indebted at 177 per cent of their disposable income—meaning that for every dollar of household after tax income, Canadians owe $1.77. This is just off its all-time high. By comparison, in 1990 that number was just 86 cents. In today's episode, we take you through 5 steps to follow, to finally regain control of your debt and start to steer yourself in the right direction.

Mark starts by looking at debt in general. He compares good debt to bad debt and discussed why it’s never a good idea to have bad debt.

If you follow the first four steps to get out of debt and stay that way, you can avoid the fifth step, which could have the most negative impact on your financial situation.

  1. Making debt repayment a priority in your monthly budget. Tips on how to find extra money in your budget. Apps to help find the best prices on necessities.
  2. Comparing two methods for paying down debt. The Snowball Method vs. the Avalanche Method. Which method can work the fastest. Which method will save more in interest. Which method has the highest likelihood of success.
  3. Don’t create more debt. This one is really important and one where a lot of people trip up.
  4. How to deal with your existing credit cards. Studies show that people spend 15% more when paying with credit, which is why getting rid of your cards could be a solution for you.
  5. Instead of declaring bankruptcy, why a Consumer Proposal might be a better solution.

Links

Dave Ramsey – Snowball method

Debt service ratio calculator