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Helpful tips on reducing debt

iCASH offers ideas on how to help pay back what you owe and get your finances in order
Sort and settle your personal finances.

Debt. It’s a word we don’t like to hear, but many of us tend to disregard, ignore, or pledge to deal with, often at a later date.


Sometimes we get into debt because of an overriding desire to attain goals immediately, before we are financially ready to repay it quickly and fully.

Perhaps a job situation has taken a downturn, or illness has prevented you from working.

Or maybe the rising cost of living has outpaced your wages, leaving you with less to pay for your expenses and leaving you reliant on outside assistance, such as loans, to make up the shortfall.

Whatever the reason, if you are in that uncomfortable position, how do you go about making things right and either reducing or paying off your debt?

One of Canada’s leading online lenders, iCASH, has some helpful ideas and advice on ways to reduce debt.

First off, get a clear picture of how much you owe, and to whom. That will lay the groundwork to guide your debt repayment plan.

Then, assess your debt to income ratio. That means calculating what your monthly debt payment is compared to your monthly income. That will allow you to determine how much to set aside to repay your debts.

That step leads directly into making, and adhering to, a monthly budget to organize how you spend, save, and set aside money to pay what you owe.

Be honest with yourself when doing this. Identify what you spend on, what is vital and important to you, and what you can do without to get you back on a more even financial keel.

With that in place, make it a goal to pay more than the minimum required each month to the creditors you owe. It doesn’t have to be a lot, but whatever you can spare, the additional payment above the minimum stated on your bills will reduce your debt faster and decrease the amount of interest you pay on outstanding balances.

Once you decide on a repayment plan, you can either focus more on a creditor with the highest interest to tackle how much you pay monthly - the debt avalanche - or go after the creditor with the lowest amount owed - debt snowball.

Both approaches have different benefits. Debt avalanche lowers how much interest you pay overall, while the debt snowball can provide you with a sense of accomplishment that you’ve eliminated one of your creditors, and you can now move on to another.

Whichever method you choose, it’s vital to keep to your budget and not be tempted to amass any more debt once you’ve reduced or paid off a creditor.

If circumstances require you to increase spending, consider working more, negotiating a pay increase, selling personal items that are no longer needed, or starting a side business.

If you happen to come into some additional money unexpectedly, consider it a one-time gift and do your best to direct it to your debt.

Financial institutions can also help. You can ask them to re-negotiate your debt, maybe reducing your interest terms or payment schedule.

They might even suggest a consolidation loan which will lump together all of your debts into one amount, usually at a better interest rate, and leave you with an easier-to-manage single month payment.

Short-term loan providers can also help in a pinch. Just be sure to determine if the interest you are being charged makes financial sense.

For more information about what iCASH can do to help sort and settle your personal finances, visit their website at