If you’re looking to get rid of debt in 2023, you may think you’ve chosen the worst time to do it. After all, this year, we’re supposed to enter a recession. And how are you supposed to pay off debt with interest rates and inflation up?
Well, there is certainly a way. Not only that, but Canadians can make money as well! All it takes is consistency when it comes to your plan. So, let’s get to it.
Step #1: Go over your budget … again
You may have a budget already, but I sincerely think that you should go over that budget again. There are a few reasons. First off, it’s important to go over your budget at least once a year to see what’s changed. Perhaps you had a child. Maybe you got a new car. You might have moved. Or inflation has simply taken a hit on your finances.
Whatever the reason, right now is a great time to go over the last three months and see how your cash flow has changed. From there, see what’s going to work in your new budget and what won’t.
Step #2: Cut back!
This is certainly easier said than done, but if you are serious about getting rid of debt, you need a plan. That plan definitely involves cutting back on things you don’t need. This doesn’t mean you need to completely stop eating out, but perhaps it means changing things up.
For example. My husband and I liked to order in food from time to time. Right now, we’re trying to get a hold on our finances. So, we’ve changed from ordering in and doing pick-up instead. This alone can save us about $20 per order from delivery and service fees!
If you really need to get a handle, another option is to also go on a spending freeze. It’s no fun, but this can suddenly create a huge influx of cash when it comes to anything that’s considered unnecessary. Have you been eating out for lunch? Pack one instead. Do you pick up a coffee in the morning? Take one from home. Everything adds up, so be strict!
Step #3: Create passive income
Another way to cut back on your debt then is to create passive income. I actually don’t necessarily mean investing yet, in this case. Instead, find something you have and use it to your advantage.
This might be a passion project you can sell. It could be renting out a storage unit in your apartment or a parking space. It could even also be renting out things like toys! If you have an inflatable slide or something fun, for example, you could rent that out for hundreds each weekend!
Once you have all this going for you, the key afterwards is to remain consistent. Create a list of your debts from highest interest rate to lowest and put aside cash every single paycheque towards your debts. They’ll soon be paid off in no time.
Keep it going!
Now that you’ve got extra cash coming in, keep it going! Now, I’m talking about investing. Turn that cash into more cash and create an emergency fund, so you never have to worry about debt overtaking your life again. A great option right now that should remain stable, even during downturns, is Nutrien (TSX:NTR).
Nutrien stock provides crop nutrients around the world, which will continue to be essential, no matter what the market does. What’s more, Nutrien stock is merging the fractured industry through acquisitions and expanding through its e-commerce arm.
Finally, you can create passive income from Nutrien stock for a steal. It offers a 2.65% dividend yield and trades at just 5.38 times earnings. So, keep that passive income flowing and get your debt under control today.