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How to Kiss Your Consumer Debt Goodbye

Are you ready to break up with your consumer debt for good, but don’t know how? You might just need the right kind of motivation.

Personal debt is often a one-sided relationship

Three-quarters of Canadians are carrying personal debt, which can make debt feel normal. However, for those with a lot of debt, more than a third feel stressed, anxious and worried about it. How well are you coping with your debt load? Ask yourself these questions:

Am I staying on top of all my bills?

Am I left with no money by payday?

Are essentials becoming less affordable?

Are my credit card balances nearly maxed?

Am I repaying debt or simply covering the minimum payments?

Like a bad relationship, your debt doesn’t really offer you anything in return. Sure, you can use it to purchase large ticket items you wouldn’t be able to afford otherwise. But, the long-term effects of carrying that debt can keep you paying off those initial items for years to come. Wouldn’t you rather keep your money flowing toward your current goals?

How to break the consumer debt cycle for good

The best place to start when starting any financial journey is to set some goals. Define exactly what you want to accomplish, whether you want to save more money, spend less or reduce debt. Or, it can be a combination of all three. You just need to set out how you’ll do it. Here’s how you create a SMART goal:

  • Be Specific. How much debt do you have? Use this debt calculator to tally up your balances. How much money would you like to save each month? Write down the specifics of what you’re looking to achieve.
  • Make it Measurable. In order to measure your progress, you need a few tools. First, set up a budget to track all your monthly expenses. That way, you’ll know exactly how much money you can dedicate to savings and debt repayment each month. Use this worksheet or a budgeting app.
  • Is it Achievable? Don’t set such lofty goals that you’ll fall off the wagon. Make sure your goals are within your reach. You can always revise them as you go.
  • Be Realistic. You likely won’t be able to pay back $20,000 in one year, but you can break it down into smaller steps such as $1000 over 3 months. Having a debt relief strategy will help you keep your feet on the ground.
  • Set a Time frame. Any good plan has a time frame. How much debt can you realistically pay back before summer starts? How much debt can you pay over a year? Your time frame doesn’t need to be set in stone, but you can use it as a guide to track your progress.

Having trouble sticking to those “new year, new you” resolutions? Staying motivated  can be tough but SMART goals can help you stay focused. Use this SMART goal calculator from the Financial Consumer Agency of Canada (FCAC) to start setting consumer debt goals today. And, if you’re looking for more motivation, check out one of many great personal finance blogs like Give me back my five bucks from Krystal Yee.

Ready to kiss your consumer debt goodbye? Join the conversation and find other Canadians on the same journey. Find us on Twitter #LeaveDebtBehind #RelationshipWithMoney #Budgeting

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