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10 Ways to Pay off Debt by Saving Money

Hi, Welcome to another series on how to get out of debt, pay off debt and debt consolidation. In today’s post, I will be sharing with you 10 ways to pay off debt by Saving Money.

Saving Money can be a big task for many of us because of the daily expenses. It can be rent bills or stuffs just coming in.

But in this post, you will learn how to save money and as well as how to pay off debt by saving money maybe every month or twice in a week. It all depends on your scheduling.

Did you want to know how to Pay off debt by Saving Money?

Read on

10 Ways to Pay off Debt by Saving Money

1.Set a Goal

If you are damn serious about saving money to pay off your debts, then you need a goal. A realistic goal anyway, not an assumption goal.

There are a lot of people have seen that proposed more than they can achieve and they end up failing on both ends, not able to save money and not able to achieve close to what they proposed. It simply means you need to set a goal but let it be realistic.

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2. Track your Expenses

There is a need for you to be able to track all your expenses, the money that will be coming in and as well going out. You need to track it.

Tracking our expense helps us to be more accountable of our spendings in a day. What to reduce and what to increase. There are apps that you can use to track your expenses. Get one or better still, a jotter is not bad

3. Be Frugal

At this time, you need to be frugal, there are things you need and things you don’t want it. So, get the things you need and cut down on the things you don’t want. This is going to help you to be able to pay off debts.

4.Kill two birds with one stone

For those with low to moderate incomes, paying off debt—including the mortgage—is the best tax-planning you can do. That’s because you don’t pay taxes on the capital gains on your home and there’s no tax on the return you get for getting out of debt.

5.  Automate it!

Set up an automatic transfer of funds to savings to a savings account (or TFSA or RRSP) so that a set amount—say 10% of your gross monthly income that comes off your paycheque automatically. This way, it’s not a question of finding the willpower to save every month. So save first for the goals that you have and then spend what’s left over.

6. Pay less tax

Slash your taxes by making sure you use TFSAs and RRSPs properly. Hint: Generally speaking, if you make less than $50,000 annually, TFSAs work best. If you make more than $50,000, then saving in an RRSP works best.

7. Don’t tempt yourself

Eliminate temptation to control spending. Forget roaming through malls and bookstores where impulse buys are common. Instead, hit the gym or join a book club to stay busy and engaged.

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8. Stack it

One strategy to pay off debt quickly is the stacking method. It asks you to list all of your debts in descending order from highest interest rate first on down. This strategy requires you to make minimum payments on all of your debts while directing the remainder of your funds towards the loan with the highest interest rate. Once that one is paid off, you’d do the same to the next highest interest rate debt on your list.

9. Let it snowball

A second method to pay down debt is the debt snowball strategy. This is where you focus on paying your debts from the smallest amount to the highest by making minimum payments on all your debts and putting the remainder towards the one with the lowest amount—such as a credit card, say. Paying off a small debt can lead to a feeling of accomplishment, which is an important motivational factor for those who may feel overwhelmed by their debts.

10. Know your TFSA

The limit for 2017 is $5,500. Try to max it out if you can. And remember, your room is cumulative, meaning the unused amount you can add to your TFSA has rolled over.

 

Oyejobi Adeola is a blogger and an affiliate marketer. He is studying Mechanical Engineering as a profession but blogging became what he loved most in terms of sharing good posts like the one you just finished reading. He is focused on Personal finance tips, money saving tips, how to make extra money ideas, lifestyle, and more.

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