Get out of Debt


Couponing 101: Tips to Get out of Debt Faster

One day about 9 months ago I woke up and realized that if I didn’t get my spending under control I would be in major debt that I wouldn’t be able to pay back. It was at that point that I decided to do make a plan to pay off my consumer debt in less than 2 years. My plan was this:
  1. Stop using credit cards for any purchases (very, very important!)
  2. Make a budget (and stick to it)
  3. List all my debt details
    1. Amount owing
    2. Interest rate
    3. Minimum payment
  4. Make a debt repayment plan (and stick to it)
  5. Develop ideas to reduce spending and increase income to pay down debt faster

Stop Using Credit Cards


The first thing I did was stop using my credit cards. No more of the buy now pay later mentality. If I couldn’t afford to buy it, I didn’t. This is the most important step, and for some it is the hardest. I knew that if I didn’t stop spending I wouldn’t be able to pay off what I already owed. 

I knew the temptation would be there to use my cards if they were in my possession. So I froze them. Literally. I took a Rubbermaid container, filled it 1/2 way with water and dropped the cards in. I popped it in my freezer and there they will stay. I didn't want to cut them up, but instead make it very very hard to use them! 

Make a Budget


Next I started using Mint.com to help with my budgeting. Mint.com is a good resource to track your spending and to allocate it to budgets. I created a 0 balance budget, meaning every dime I bring in I budget to be spent. Any extra inflows go on debt. I have been using Mint for a while now and I have to say I really like it; it makes budgeting easy, allows me to track what I spend most on and shows me my spending trends over time.

My budget has a number of categories including: Housing, Auto, Food/Groceries, Mandatory Bills (utilities etc), Debt Repayment, Charitable Spending, Entertainment, and Childcare. Each category has sub categories. For example under Auto I have a budget for auto payment, insurance, gas and maintenance. The nice thing about Mint.com is you can personalize your budget to fit your needs. I made sure to include an emergency fund in my budget so that I would not have to use my credit card if an unexpected expense popped up.





List all My Debt Details

Now that I had my budget in place I knew how much funds I had available monthly for debt repayment. Now all I had to do was figure out what I owed, to whom, and how much it was costing me to carry this debt (interest). I decided to make an Excel spreadsheet to track my debt and the progress I was making paying it off. I listed each card’s name, balance and interest rate. I then prioritized which order I wanted to pay my cards off. This part is up to you. You can pay off the highest interest first, or the highest balance or the lowest balance etc… Ultimately you will pay the least amount of interest if you pay your highest rate card first, but the decision is up to you. After working with the numbers for a while I decided to pay off my lowest balance card first.




Make a Debt Repayment Plan


My budget was made; I knew what I owed and what order I wanted to pay it off in. Now all I had to do was decide what method I wanted to use to pay everything off. After a lot of research I found the best way to pay off debt is to snowball your payments. This means you pay the minimum payment on all your debt but one, this debt is the one you put all your extra money on, and the one that you put the most money on each month. In my case I was able to pay that card off in 2 months. Here comes the snowball part. I took the payment I was making on the card I paid off and applied it to the next debt I wanted to pay off, on top of the minimum payment I was already making. Once that debt is paid off I will roll that payment into the next debt and so on. Using this method I will be out of debt in just under 18 months.




Decrease Spending, Increase Income

In order for me to pay off debt quickly I had to not only rely on my debt repayment plan but also develop other strategies to reduce spending and increase income.

The best idea I had to reduce spending is to use coupons as frequently as possible. For more on how to save using coupons, see my article here. Some other ideas I had to cut spending were:
  • Eliminate extras on cable/phone bills such as paid channels that aren’t frequently used on your cable bill or call waiting on your phone
  • Change you cell phone plan(s) to the minimum you require  
    • Don’t eliminate something you use frequently like texting or data, you don’t want to be hit with extra charges each month
  • Only shop sales, and never pay full price
  • Shop at clearance and/or second hand stores wherever possible
  • Go to the library for books instead of buying them

In addition to cutting spending as much as possible, I also wanted to increase my income in any way possible. This has proven to be quite a challenge, but one that I am thoroughly enjoying. Some of my ideas were:
  • Use points cards to earn bonus points that can be redeemed for gas cards, free groceries, gift cards etc…I currently use the More Rewards program offered by Save-on-Foods. I also collect Shopper’s Optimum points from Shopper’s Drug Mart. Other rewards programs include Air Miles, Aeroplan, HBC points and Sears Club points
  • Use the internet to earn extra money
    • Sell unwanted items on sites such as Craigslist and Ebay
    • Use online programs such as Swagbucks and Royal Draw 
      • Redeem points earned for gift cards, or PayPal cash cards
    • Blogging (through ad revenue)
    • Completing surveys
  • Have a garage sale for unwanted items that aren’t suitable for online sales 
I knew getting out of debt took work. I didn’t know exactly how much work was involved until I really started doing it though. It has taken a lot of dedication and will power to stay on track, but now that I am seeing results I know it is all worth it! Everyone’s journey is different but ultimately our destinations are the same, get out of debt so we can get our money working for us instead of for someone else!


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