http://www.moneyville.ca/blog/post/878800--6-steps-to-a-debt-free-life
October 21, 2010
TD Canada Trust released a report on Wednesday saying that Canadian household debt has almost tripled since 1980, and there are fears that debt levels could continue to increase as the Bank of Canada keepsinterest rates low.
The formula isn't complicated: All you need to do is cut spending and use start paying down what you owe. Here are the six steps I used to repay my $60,000 student loan in two years. It wasn't easy and it required a lot of sacrifices, but I'm now debt free.
1. Identify where you are spending your money - create a detailed list of what you've been spending your money on over the past three months.
2. Categorize each item in the previous step into one of the three categories: things you need, things you want and onetime expenses. Onetime expenses are non-reoccurring items that happen once, like when your car breaks down and you need to get it repaired, or the purchase of a new laptop.
3. Create a budget based on only the things you need - it's time to cut out the things you want and reduce your onetime expenses. Remember, you're trying to pay off debt, which means you need to reduce your spending.
4. Stick to your budget and don't waver. Now is the time to be diligent, focus on your goal of paying off debt and make some short term sacrifices for long term satisfaction.
5. Re-allocate the money you are now saving to pay off your debt.
6. Repeat steps one through five every month and see if you can continue to reduce your spending by moving items from the things you need list to things you want.
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