10 ways to save more and pay down your debt
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
To control spending, it helps to eliminate temptation. 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.
8. Stack it
One strategy to pay off debt quickly is the stacking method. 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, do the same for the next 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 largest by making minimum payments on all your debts and putting the remainder towards the one with the lowest amount—say, a credit card. 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 limits
The TFSA limit for 2022 is $6,000. 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. RRSP room is a bit different because it’s a percentage of your earned income, and it gets reduced by a pension adjustment if you’re in a pension. Like your TFSA room, it too carries forward and is based on all your cumulative RRSP room and past contributions.
This article was originally published on Aug. 20, 2021, and it was updated on Oct. 5, 2022.
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