If you’re trying to pay off your debt, you’re not alone. It seems a lot of Canadians are trying to get themselves out of the red, according to a new poll by CIBC. Nearly half of those who hold debt made at least one extra payment to bring down their balances in the last 12 months. CIBC believes that the new focus on debt payment means Canadians are finally getting the message about the dangers of high debt loads. The poll reveals the ways in which people are trying to pay it off: 62 percent are making payments to credit card balances; 46 percent are making payments to reduce line of credit balances; 22 percent are working to pay off their mortgages.
My husband and I fall into the last category. We’ve been trying to pay off our mortgage so we can be debt-free within the next five years. Cutting consumption and curbing lazy spending habits (goodbye taxis and takeout) has definitely helped — we now have more money left at the end of the year which we use to pay down our mortgage and build our emergency fund.
However, rising costs aren’t helping. In fact, I have to admire Canadians who are able to save money and pay off debt at a time when everything from food to heating and gas costs is costing more. And with interest rates set to rise at some point in the future, debt is also going to get a lot more expensive to carry.
CIBC shared a few good tips for those of you who are trying to pay off your debt. Here are a few:
1. Make lump sum payments and focus on paying off higher interest debt first (i.e. your credit cards)
2. Cut your interest costs by transferring your debt to a lower interest debt product.
3. Set your debt payments higher than what is required — that will reduce your overall interest costs on long-term debt and will help you pay it off faster.
What strategies are you using to get rid of your debt faster?