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Ignoring debt doesn’t make it magically vanish. Interest builds, minimum payments become overwhelming, and the stress can seep into every corner of your life. The upside? Facing debt is the fastest (and only!) way out. Not only will you save yourself money on interest, but you’ll reclaim your peace of mind — not to mention your credit score.

A little focus now can have a big payoff. So how do you tackle it? You could get a little helping hand from a financial advisor, a money coach, or task an expert to get you a plan – like this consumer proposal in Ontario. Here’s what to expect in a 10-step debt plan.

Step 1: Get Real About Your Debt

First things first, bring every debt skeleton out of the closet. Grab a notepad (or a spreadsheet, if you’re feeling fancy), and write down:

  • The creditor’s name
  • The total balance owed
  • The minimum monthly payment
  • The interest rate

This exercise can feel daunting, but transparency is essential. Seeing the full picture gives you control, not powerlessness.

Why this step matters: You can’t conquer what you don’t acknowledge. Listing out each debt helps you spot which ones are draining your wallet fastest and where to focus your energy first.

Step 2: Check Your Spending (Without Judgment)

Take a hard, honest look at your monthly expenses. Where does your money go? Are there sneaky subscriptions or impulsive meal deliveries that add up over time?

Why this step matters: A detailed view of your spending habits helps you find extra cash to redirect toward debt payments. Knowledge is the start of financial wisdom — not an excuse for self-blame.

Step 3: Build a Bare-Bones Budget

Now for the fun part (no, really). Create a simplified budget, prioritizing essentials like housing, food, and transportation. Any extra funds? Those go straight to your debt.

Tips for your budget:

  • Focus on needs, not wants (at least for now)
  • Automate savings for bills and debt payments to avoid temptation

Why this step matters: Budgeting isn’t about deprivation; it’s about directing your money according to what matters most. Every dollar you rescue from mindless spending can become debt-busting ammunition.

Step 4: Face the Music With Minimum Payments

Make sure you are, at a minimum, paying at least the minimum on all your debts. This keeps your accounts in good standing and protects your credit score from nosediving.

Why this step matters: Skipping payments often leads to late fees, penalty interest rates, and a credit score so low you’ll need a flashlight to find it.

Step 5: Pick a Strategy, Avalanche or Snowball

It’s time to get strategic. Choose one of these popular payoff methods:

  • Debt Avalanche: Pay off the highest-interest debts first, while making minimum payments on the rest. This saves the most money over time.
  • Debt Snowball: Tackle the smallest debts first. Each paid-off debt gives you a psychological boost, building momentum.

Pick the approach that motivates you most. If seeing quick wins sparks your inner competitor, start small. If you’re all about reducing interest, focus on the highest rates.

Why this step matters: Strategies bring order to chaos. They make the process manageable and even a little satisfying.

Step 6: Negotiate Like a Pro

Believe it or not, creditors sometimes settle for less than you owe or may lower your interest rate if you ask (nicely, and sometimes persistently).

Try:

  • Calling to request reduced interest rates
  • Asking about hardship programs
  • Negotiating a lump-sum payoff for less than the balance

Why this step matters: A 10-minute phone call could save you hundreds, maybe thousands, of dollars. The worst they can say is no. The best? A much lighter financial load.

Step 7: Consider Consolidating Your Debts

Rolling your debts into a single monthly payment (usually via a personal loan or balance transfer) can simplify your life and sometimes secure a lower interest rate.

Look for:

  • Balance transfer credit cards with an introductory 0% APR
  • Low-interest personal loans from reputable lenders
  • Just make sure not to rack up more debt on your now-empty cards!

Why this step matters: Debt consolidation streamlines your payments, making it harder to miss one and easier to get ahead.

Step 8: Increase Your Income (Yes, Really)

You can only cut back so much, but your earning power is (theoretically) limitless. Think temporary side hustles, freelancing, or selling items you no longer need.

Ideas include:

  • Freelancing on platforms like Upwork or Fiverr
  • Selling clothing, electronics, or furniture online
  • Tutoring or dog walking in your neighborhood

Why this step matters: Even a small boost to your income can make a big impact on your debt repayment timeline. Every dollar counts.

Step 9: Protect Your Progress

Now that you’ve reined in your spending and have a plan, set up safety nets. Start an emergency fund — even $500 is a good start — to avoid slipping back into debt at the first sign of trouble.

Tips:

  • Use a separate account to avoid dipping into your emergency stash
  • Automate small, regular deposits so you build savings painlessly

Why this step matters: Emergency funds safeguard your progress. Nothing derails a good debt plan like an unexpected dental bill or car repair.

Step 10: Celebrate Your Wins and Stay Accountable

Debt repayment isn’t always linear, and setbacks are part of the process. Celebrate each milestone, whether it’s paying off a credit card or making six months of on-time payments.

Find an accountability buddy or share your goals with friends. Even better, treat yourself (responsibly) whenever you reach a significant milestone. Think a fancy coffee, not a five-star vacation.

Why this step matters: Positive reinforcement works. Every celebration boosts your motivation to stick with your plan, no matter what life throws at you.

Beating debt doesn’t require a degree in finance or a lottery win. It’s a series of small, determined steps that add up over time. Remember, the goal isn’t to live with restriction forever but to regain financial freedom and peace of mind.