Money & Career

6 ways to reduce your debt

Author: Canadian Living

Money & Career

6 ways to reduce your debt

Raise your hand if your credit card debt is piling up faster than you can knock it down, or if you're not making much of a dent in a gargantuan mortgage that feels like it will outlive you. Or maybe you have teenagers whose texting addiction is exploding your mobile phone plan, threatening to put you in the poorhouse.

The good news is that you and your family can find little ways to get out of debt faster. Where on earth will you find extra money, you might ask. It could be lying around the house, in a matter of speaking. Here are some ways to find it.

1. Work the phone
Sometimes you can reduce your expenses and debt by just making a phone call. A family I know has a 13-year-old daughter who is an avid texter. So proficient are her flying fingers that one month, she rang up a $1,500 bill. No, there is not an extra zero at the end of that number. The family called the mobile phone company to work out a payment plan. The company actually reduced some of the bill, and switched the family’s plan to one that better suited their combined cell phone and text usage. Now the teen texting queen knows how many texts she can send to stay within her plan’s free limit.

Bottom line: If you don’t ask, you won't know. It can be worth spending the telephone time to find out if you qualify for a better deal than what you’re getting now, on everything from interest rates to better plans.

2. Take care of your own renovation waste
While there’s a lot in a renovation you can't do yourself, like precision-cutting a countertop or rewiring the kitchen, you can save money by handling the waste disposal yourself. "Contractors put it into one bin and it can be an expensive part of the renovation," says Dale Jackson, a television producer who resides in Halton Hills, Ont. "I separate it and take it to the transfer station with my neighbour’s trailer for a fraction of the cost."

Considering many of us take out a line of credit or even borrow against our home's equity to remodel, it can make financial sense to undertake this aspect of DIY even if we leave the rest to the pros. "I spent about $200 getting rid of waste on my own and knocked about $2,000 off the cost of a $35,000 renovation," Jackson says.

Your reno waste might also find a second life by being reused at places like Habitat for Humanity resale store, where proceeds go to charity.

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3. Sell the junk in the basement
The fine print on a recent credit card statement advised me that on my $300 bill, paying the minimum $10 each month would take two years and seven months to pay off – almost the same amount of time it takes to complete law school! That's a long term of debt for a relatively small amount, so I decided to pay it off by selling what I didn't need around the house, setting $300 as my goal.

In my basement, I found a boombox, skis and two Ikea tables, all collecting a respectable layer of dust. A few Craigslist sales later, I drummed up $280 to pay off that statement before the due date, needing only $20 out of my bank account. I also learned that Ikea furniture has a surprisingly high resale value on Craigslist.

4. Stop outsourcing tasks your kids can do
"I'm not at the stage yet where I have kids old enough to babysit younger siblings, but I suspect when the time comes, I won’t pay them to do it," says Hamilton-based Julie Cole, mother of six and owner of Mabel's Labels. In the meantime, she gets her kids to help with everything from snow removal to garden maintenance. "We get our kids to do things around the house to save money, particularly because we do not believe that we should pay kids for helping," she says. "When someone starts paying me to make dinner, I'll start paying someone to clear the table," she adds.

Teens can learn how to paint your house (a skill they can parlay into a part-time job to reduce loans in college), and younger kids can wash low exterior windows and sliding glass doors if you give them the correct tools and instruction. Money saved is more money for your mortgage, or to put in a family-vacation-funds jar.

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5. Do a better job of composting and recycling
Find out how much you're spending on garbage disposal a year, then see if there's a way you can reduce it, suggests Jackson. "More and more municipalities are imposing user fees on garbage. We always hear about house recycling and composting efforts from an environmental perspective but rarely hear about it from a cost-saving perspective," he adds. It's an easy place to save money so you're not in debt over trash, of all things.

"My municipality doesn't provide trash pickup in my area (so we don't pay for it). It contracts out free weekly recycling pickup to a for-profit company. We need to take our own landfill trash to the dump at a cost of $2 per bag but once we recycle and compost we only fill one bag every six weeks," he says. His yearly garbage outlay: $16.

Driving to the dump isn't feasible for everyone, but in many places you are charged for extra garbage bags, or a larger garbage bin so those are easy expenses to cut back by stepping up composting and recycling efforts, or simply reducing the packaging that comes in to your home.

6. Move date-night and socializing into your living room
Forking over your credit card for dinner and movies once a week could easily result in a $400 monthly bill, and that's not including babysitting fees. "My husband and I save money at our house by staying home," says Cole. "People are always talking about the importance of 'date night', but if we go on a date night, we have to hire two babysitters."

"Does this mean we don't spend time together? Absolutely not. Once the kids are in bed we can have a lovely dinner together, share a bottle of wine, have friends drop over," she says. "Sometimes you have to think outside the square. Just because we don't go out doesn't mean we don’t have time to socialize – and in an affordable way," she adds.

Parents who want to get out of the house can team up with another couple and let them go out one night, and switch the next, Cole says.

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6 ways to reduce your debt

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