How To Chunk Down Your Debt

18 November 2013


It seems like nearly everyone in my social circle has some type of debt beyond their mortgage.  It is almost an acceptable part of life.  This is extremely disturbing to me, as I have always tried to stay as out of debt as much possible, and when I do have debt, I work hard to pay it off quickly.  I feel extremely anxious when I have money owing for something other than my mortgage.  In fact, we accelerate our mortgage payments so that we can pay off our house quicker.  My grandparents were in the war, and they have instilled a near-obsession with being frugal and good with money.

This summer our air conditioner broke down, and we had no savings for which to replace it.  Therefore, the cost of the new air conditioner (nearly $3000) went on my line of credit.  I haven’t had to use the line of credit since I opened my bank account nearly four years ago, so that has made me very conscientious about paying it off.  What is my plan to pay off the debt and how will I get there?

Move debt from your credit card to a line of credit

When we first paid for the air conditioner, we did so with our credit card.  It was easy and we got points, so we figured, why not?  But with our credit card having a 20% interest rate, I knew that our debt couldn’t stay on the card.  I quickly paid off the credit card with my line of credit so that I’m not paying that enormous interest rate.  What can you do if you don’t have a line of credit?  Try calling your bank to see what you can negotiate with them; maybe you’re a good candidate for a line of credit.  If that fails, consider calling your credit card provider to ask for a reduced interest rate.

Find other ways to make money

Sometimes what you earn just doesn’t align with what you are spending, and that issue is further complicated when you have debt.  Consider finding other ways to make money.  Check out this article about how to make money on the side for options to increase your earnings.

Use the jar system

Gail Vaz-Oxlade is a Canadian money expert, and I love her website.  A lot of us on Bargainmoose refer to her regularly, since she is so good at what she does.  She advises that people create a budget using her budget calculator, then use a jar system to manage their money and pay off debt.

Reduce your costs

There are all kinds of tips on how to reduce your costs on a monthly basis.  Here at Bargainmoose, we have lots of articles to help you.  They range from tips on how to save money on groceries to tips to save money and energy.  I know I can save at least $40 per month by getting rid of my land line.  I know, I know, who has a land line anymore?  It’s really hard for me to get rid of.  I’m scared for some reason that people won’t be able to get a hold of me on my cell.  What if I forget I turned it off?  There is a new service called, and the concept is so brilliant: email them your bill, and they will advise you on how to lower your bill.   Of course they charge you a small fee to do so, but the long-term savings they provide are worth it.  They are great guys to deal with too, I have personally used them and recommend their services.

Hunker down and be frugal

As beneficial as it is to read articles and best practices around reducing debt, when it comes down to it, you really need to hunker down and be frugal in order to reduce debt.  What does that mean?  Maybe it means that this Christmas you make Christmas presents for your family instead of buying them.  Maybe it means that you stop buying Tim Horton’s coffee every morning.  Maybe it means having a make do month where you live on groceries in the house and are very conscientious about your spending.  Perhaps you cut your cable for a few months to save some cash.  I know that our cable bill is extraordinarily high, as we get premium channels such as HBO.  I just can’t give up quality shows like Girls and Newsroom!  One thing we did last month when I got a bonus cheque was to apply it directly to our debt.  Although it’s tempting to always spend money on yourself, sometimes you have to do the right thing and apply “found” money to your debt.  I used to be paid bi-weekly, which meant that I always had two extra pays each year.  I would try to save those and apply that money to debt or savings.

Tell people about it!

A key factor in your success with money will be whether you tell people about your plan.  Similar to losing weight, you need to tell people what your goals are, so they can help you and support you in your path to chunking down debt.

Get rid of some of your expenses

Do you really need two cars?  Could you take public transit instead of driving to work?  Instead of eating out once a week, could you make pizza at home?  We used to order pizza every Friday night as a celebration of the end of the week, but now we make it at home.  It’s actually fun to make homemade dough, and it’s so very easy.  Our kids think it’s a lot of fun to put their own toppings on the pizzas, so it’s a fun family activity too.  We take the $30 every week that we would have spent on pizza, and set it aside to pay off our debt.

In conclusion, chunking down your debt isn’t an easy thing to do.  With easy access to low-cost money, it’s really tempting to get another credit card or add more money onto a line of credit.   As a society, we want more stuff, and we want it now.  It’s hard to buck the trend and say no to debt.  But if you follow the tips above, you can reduce debt and plan for your future.

Bargainmoosers, do you have any other tips to reduce debt?

(banner image credit: The All-Nite Images)


  • Shawn M.
    Reduce your credit limits as you pay them down. If you have $5000 in Credit Card debt, pay it all off and rack it up to $5000 again you aren't any further ahead. You can also ask your bank to reduce your interest rate. I asked my bank to reduce my interest rate on my car loan or else I'd find a cheaper rate somewhere else. they dropped it 2%.
  • Anna W.
    I just added up all my debt last night and was a bit shocked at the total. We've been taking out a few small loans for things, and I didn't really believe how much it all added up. Scary!
  • Heather R.
    Great tips, Shawn. Agreed, Anna, debt really adds up very quickly. It's a slipperly slope!
  • Jon
    I have heard really great things about using a jar system to spend, instead of spending on credit that is really not affordable. I know too many people who need credit counseling help. Perhaps this is something they should start teaching in schools!
  • Suganthan
    Most major stores have store credit cards and they offer discount when you use the store card... have you realized it why? Those stores make more money on interest rate then the profit they make on the product itself. We don't realize that 10% discount we get by paying with the card mostly end up 28 - 36% highe; It will accumulate over time. STOP USING PLASTIC CARDS USE CASH.

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