18 Ways to Get Out of Debt

Many Canadians find themselves dealing with debt and trying to make ends meet, while others get by and might be a couple hundred dollars from financial disaster if an emergency or unexpected expense came up.

The average credit card debt for Canadians was about $4,240. About 70% of Canadians pay their entire credit card balance each month, and about 41% of Canadians have an average credit card limit that’s around $10,000 or more, with a 33% volume increase (since 2012) in the use of credit cards as a payment method by Canadians. With the average Canadian carrying 1.4 credit cards, it might come as a surprise that personal attire makes up about 64% of credit card spending in retail categories in Canada. While almost 40% of Canadians tend to use their credit cards for things like accounting, convenience, or to build their credit rating, about 31% or near one third of Canadians struggle with daily finances or paying their bills. Over 80% of Canadians plan to prioritize paying off their debt.

There are a number of options if not yet ready to move that could assist you with better managing your personal finances, starting with paying off your debt.

Consolidate Debt with a Personal Loan

This is the most common approach to getting debt under control, especially if there are multiple high interest rate credit cards that are owed. A personal loan can consolidate debt into one payment, often at a lower interest rate, making it easier to manage. Keep in mind that getting a loan with bad credit can be a challenge, so managing your credit rating is of the utmost importance.

RELATED: How You Can Deal with Credit Card Debt

Pay the Largest Debts First

Since the largest debts are also likely to have the most interest owed, you usually want to take care of these first. However, in some situations you may find that a comparable debt that maybe isn’t the largest owed but has a higher interest rate might be costing you more. Figure out which debt costs the most and pay it down as fast as you can to start wiping out your debt. But you should also look at paying the debt with the highest interest rates first and compare what the right move is.

Pay More Than The Minimum

If you’re only making the minimum payment on where you owe, you may have a long road ahead before paying off your debt. The more you pay, the faster your debt disappears, and since credit cards have high interest you want to pay them as quickly as possible.

Balance Transfer

Often a debt consolidation loan is the answer, but in some cases doing a balance transfer to a 0% APR credit card can be the right move. These types of credit cards have a promotional period from nine to 21 months where they let you avoid interest, so if you can pay it off within that period you’re golden. Note that some often have a transfer fee (typically from 3%–5%) and possibly an annual fee, so you have to do some math to see if the benefits outweigh any fees.

More: How to Eliminate Credit Card Debt with Personal Loans

Stop Creating Debt

When you are trying to pay down debt, it should go without saying the last thing you might need is more of it. As you try to get out of debt, try not to use your credit cards. It should be noted that you do want to use them within every few months so they have activity. Just make it for smaller amounts and pay it off immediately. You don’t want your credit card account closed for being inactive because it can affect your credit utilization ratio and possibly credit score. Consider putting a small recurring charge on the card, but don’t forget to pay it. There’s no time like the present to take control of your debt and develop some money management skills while developing some financial literacy to keep your finances under control.

Ask for Lower APR

Sometimes all you have to do is ask, and if your credit card rates have higher interest sometimes all it takes is to pick up the phone and ask for an interest rate reduction. Worst case scenario is they deny your request, but it’s worth a try.

Cashing Out

Consider any sources you might be able to withdraw from to help get out of debt. This could be a retirement account, 401(k) or even a life insurance policy. Doing so may have it’s benefits, but also may come with various risks as well, like penalties or additional tax consequences. When choosing this option you would want to carefully examine all outcome scenarios.

Frugal Finances

If you can commit to a ‘spend free’ year where you only buy the essentials, you might be able to save more than you think and pay down your debt even sooner. This would mean no more eating out, clothes shopping, or anything that might be categorized as a luxury. Sticking with essential purchases could have a real impact on what you can put towards your debt.

More: How to Get Out of Debt Faster

Consolidate Transport

If you’re a two car family, you might save a substantial amount by switching to one. The amount spent on gas, insurance and maintenance adds up and could be a few thousand dollars in one year. Selling the car could be a source of thousands more to put towards your debt. Should you sell your vehicle and replace it later, be sure to buy used so you save more.

Make More

Another way to get out of debt is so simple, you probably already thought of it. Make more money and you have more to pay your debt. There are all kinds of tasks, gigs, and even part time opportunities that could get you closer to your goals of being debt free. Sometimes looking for another employer can also be the path to increasing your salary if you have experience in demand and know you could do better.

Creditors and Counselling

If your accounts are past due and you find yourself getting deeper in debt each month, debt settlement may be a solution for some. But this is not something to jump into. Creditors typically only accept settlement offers with accounts in default or at risk of defaulting. Credit counselling is when a credit counseling agency negotiates with creditors on your behalf to get lower interest rates and handle your debt payments. This can have serious strings attached and debt management plans like these can last four to six years, and should be considered with caution before committing to such a plan.

Reshop Your Expenses

You might be able to lower your expenses by reshopping for auto, home and life insurance. Doing so might lower monthly payments and provide you with more money available to pay down debt.


Figure out what non essentials you have that might be downgraded. It could be a cable tv package or streaming service with a subscription. You might even consider cancelling some, like the gym or something similar that is more of a want than an essential need. Cut the cord and give up your landline if you don’t really need it to save another $25 or so a month. It adds up.

Brown Bag

Bringing lunch to work is certain to help you save a considerable amount each week. It’s up to you how much or how often, but the more you choose to brown bag your lunch, the more you’ll money probably save.


If you don’t already use a grocery store awards program to save, consider joining. While it might not be huge, you need groceries and it adds up. Depending on your budget at the store, it could result in saving an extra 10-20 dollars every couple months.

Track Your Spending

If you know where the money is going, you can find ways to cut back. Proper money management involves tracking both the incoming and the outgoing. From bills and such right down to every dollar spent on gas, coffee and entertainment. Tracking is the cornerstone to budgeting and getting yourself out of debt.

Create a Budget

There it is again, the “B” word. No doubt you’ve come across it before. But if you haven’t already created a budget and are serious about getting out of debt then it is high time you get started. With a budget you can plan how much you might save, or put towards your debt. Making changes in your spending habits can help you pay it down faster, and developing a frugal lifestyle to cut your expenses might be part of that plan.

Use a Budgeting App

Your budget is only as good as your commitment to stick to it. With a budgeting app, especially a mobile version, you can track your spending and stick with your budget much better.

Balanced Debt Methods

One method that has proven to be popular for getting out of debt is the Debt Snowball method. This is where you make the minimum payment on all your debts except for the smallest one, which you’ll pay as much as you can toward. Some have said this gives them a feeling of accomplishment to get something paid off, but in some ways it comes at a cost. We mentioned earlier that you might try paying down your debt with the largest amount owed or costing you the most in interest. While the Debt Snowball method might appeal to some, it may also cost you more in interest if you are taking care of the smallest debts first. We would recommend dealing with the highest interest rates or largest balances first.

Another option for paying off your debt is the avalanche method, which doesn’t give you ‘quick wins’ like the snowball method, but because the focus is paying off your higher interest debt first, you are likely to save more money in the long run.

MORE: Strategies and Methods to Pay Off Debt

Getting on Track

It’s also advised that you put some money aside monthly for an emergency fund as well. You might be tempted to use 100% of the funds available to pay down your debt, but having an emergency fund available can help prevent you from using your credit card or a short term loan if any kind of unexpected expenses come up.

Your own personal priorities might influence how you tackle debt as well. If owning a home in the near future is part of the plan, you might want to be putting money away for that down payment too. If having children is something you want soon, you’ll have to decide on what you might do for maternity leave and for how long, and whether you need to set money aside for when the time comes. Or if going back to school is important to you, that’s another expense you would need to plan for. Depending how deep in debt you are and what your future plans are, you want to look at the big picture as you try to get out of debt.

The key to getting out of debt is figuring out what you owe, where your money goes, being aggressive about paying it off, but realistic at the same time.


Making sense of finance one day at a time.