How to Get Out of Debt Fast: Strategies for Quick Relief

Do you have debt that keeps you up at night? Do you wish you could wake up tomorrow and see your credit card balance cleared? While there is no magic button you can push to get rid of your debt overnight, there are several strategies to help get those numbers down fast. Not only will you gain peace of mind, but getting rid of your debt will allow you to start saving for the future, so you are less likely to be in debt again. Keep reading to learn how to crush your debt fast in five steps.

1. Assess Your Debt Situation

List Out Your Debts

Before you can tackle anything, it is time to face the music. Grab your paper, pen, tablet, laptop, or anything to help you jot things down. Let’s do this! Write down all your debts, including balances, interest rates, and minimum payments. It is easy to lose track of debt if you do not audit your finances often, so taking the time to write it all down will pay off in the future.

Prioritize Your Debts

Once you have listed all your debts, choose a repayment strategy that works best for you. The two most common methods are the avalanche and snowball methods. The avalanche method focuses on paying off the highest-interest debt first, which can save you money on interest in the long run. On the other hand, the snowball method involves paying off the smallest debts first to build momentum and motivation.

Calculate Your Debt-to-Income Ratio (DTI)

Understanding your debt-to-income ratio (DTI) is a must. This ratio compares how much money you make versus how much you are spending on debt. Use an online calculator to figure out your DTI. If your DTI is less than 36%, your debt is in a healthy range compared to your income. 36% to 49% is an acceptable range, but it also means you are getting close to a high debt-to-income ratio. This is when it could start hurting your credit and make it harder to borrow money or get a mortgage.

See Where You Can Cut Back on Spending

Creating a budget is a key step in getting out of debt fast. Review your spending habits and find areas where you can cut back. This might include dining out less, cancelling unnecessary subscriptions, or reducing spending on entertainment. Every dollar saved can be put towards paying down your debt faster.

2. Try Out Strategies to Get Out of Debt Fast

Automate Your Payments

Setting up automatic payments for your debts can help ensure you never miss a payment. This can save you from late fees and keep you on track with your repayment plan. Many banks and financial institutions offer this service, making it a convenient option.

Use Unexpected Funds Wisely

Whenever you get unexpected funds, like a tax refund, bonus at work, or gift, consider putting it towards your debt. These extra funds can make a big dent in your balances and speed up your journey to getting out of debt.

Consolidate Your Debts

Debt consolidation involves combining multiple debts into a single loan with a lower interest rate. This can simplify your payments and reduce the amount of interest you pay over time. However, make sure to understand the terms and conditions before opting for consolidation to ensure it benefits your financial situation. While it sounds convenient, they are not for everyone and can be hard to qualify for if your credit has already been damaged.

3. Understand Your Options

Working with a debt expert can help you understand all your options. They can guide you through consumer proposals, debt consolidation, and other strategies to relieve the pressure of debt.

4. Seek Assistance for Debt Relief

Consult a Debt Expert

A debt expert can provide personalized advice and help you create a plan to get out of debt. They can offer insights into your financial situation and recommend the best strategies for your specific needs. At Farber, we offer free consultations if you would like to review your debt-relief options together and help make a plan to start lowering your debt.

Debt Counselling Services

Debt counselling services can provide support and guidance as you work to pay off your debt. They can help you create a budget, negotiate with creditors, and develop a plan to become debt-free.

5. How Farber Can Help You Get Out of Debt Fast

At Farber, we specialize in working with Canadians just like you to find realistic solutions that turn your debt stress into debt relief. Our experts do this by:

• Take the time to understand your unique financial circumstances and the challenges you re facing.
• Exploring all available options with you, making sure you are informed and confident about the choices you make.
• Helping you develop a tailored plan that fits your needs and empowers you to take control of your finances.

While we offer counselling, one of the powerful tools we also offer is a consumer proposal. Not everyone has heard of it, but a consumer proposal is an excellent debt-relief solution offered by the government that can reduce or eliminate your debt. Before you know it, you will wake up feeling lighter because your financial situation has drastically improved and you are well on your way to being getting out of debt. The sooner you address your financial pressures, the more debt-relief options will be available to you.