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Ask Savvy: In Need of Savings Tricks to Pay Off Debt

Dear Savvy,

I read the Savvy posts almost every day because I am in tons of debt and seriously need help. I'm the type of person that needs actual tricks to save. I have zero willpower when it comes to money. I keep seeing the Bank of America adds for Keep the Change and I feel that could really work for me. I was just wondering if you knew of any Canadian institutions offering similar programs. I've tried searching on the Internet but with no success. Any more tricks you could offer?

See my answer when you

.

Canadian banking is not my forte, but I can definitely try and help you with a savings and debt pay-off plan. The easiest way to save, hands down, is to utilize an automatic savings plan. Bellaressa was on track with her suggestion to set up an ING account; you can quickly and easily create an online account with ING Canada and set it up so there's money automatically withdrawn from your checking account to your ING savings account.

Here's what I recommend for a relatively painless way to save and pay off debt: Open two accounts that are both connected to your checking account, one for savings and one for money that will only be used to pay off your debt. Set up your accounts so that a percentage of your paycheck is allocated to each of these accounts every time you get paid. Even though you have some debt to pay back, it's important that you build up some savings in case of an emergency so that you don't fall deeper into debt.

Before you can determine how much to deposit into those accounts each month, figure out how much you'll need for your fixed expenses like rent and bills, what you'll need to cover food costs, and if possible set aside some for having a little fun, too. Once you've determined a rough budget, commit to only living off that amount each month. Take away the temptation to spend by not even giving yourself the option — that's the beauty of automatic savings.

Goals always push me to do better with my money. Check out our calculators to come up with some savings and debt repayment goals! Whenever you feel the urge to spend, revisit your goals to help yourself stay on track.

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idanceinmycar idanceinmycar 6 years
I set up an ING Electronic Orange savings account and, if it's available to you, I'd recommend it highly.
katherynn katherynn 8 years
I agree with and second what Hithat'smybike said. It is JUST as IMPORTANT to save as it is it pay off debt. The two bank accounts is a really good idea. If you can set it up to be automatic, you wont even notice it, and cant mess up! BUT the only way to make something a habbit is to do it, so if you can manually do it, that's just a good!
cgnelson cgnelson 8 years
i tried a couple of things while getting out of debt - i would bring my lunch to work and put the estimated savings (20-30 a week) towards the debt. another thing i did wasn't to get out of debt, but to save for something i wanted (though it could work for that too) was to not spend any change but save it all in an old coffee can. when it was full, take it to the bank and apply towards debt payment.
meetmeherelater meetmeherelater 8 years
these are all great ideas. the ing account seems interesting! and i really want to get a scotiabank account now.
zcoral zcoral 8 years
Here's a budget tip: When I am in a store and want to purchase something, I think of its cost in terms of work hours. So if a shirt costs $40 and I make $10 an hour, I would have to work 4 hours to pay for it (actually more because of taxes). This has really been working for me lately, give it a try!
skigurl skigurl 8 years
i use the Scotiabank bank the rest program in Canada and it's SWEEEEEEEEEEEEEEEEEET!! round up as high as they will let you, and it will go into a money master account...the interest is only like 2.25% now, so once you have a bit in there, you can transfer it elsewhere. i also do online banking so if i see that my normal account has extra cash in it and my various payments won't be coming out before my next pay, i just transfer a bit of cash over to the money master account.
Spectra Spectra 8 years
I wish I could help more, but I don't have much debt except student loans and a mortgage. What we do is use our credit card to automatically pay our bills and buy gas and stuff each month and we pay the balance off each month. If you have a credit card with a large interest rate and you want to pay it off, you may want to transfer the balance to a low-interest card. Pay off as much of the balance as you can while the interest is still low. As other posters said, you're much better off allocating most of your money toward paying off high interest debt (credit cards, car payments), saving some in a high-interest savings account (most online banks offer higher interest rates than traditional banks), and budgeting the rest for your monthly needs.
rgerscharm rgerscharm 8 years
Budget your money, and get out of debt asap. The interest will add up! Consider starting a portfolio and start investing your money. In today's world just putting money into a savings account isn't enough. Especially with the value of the US dollar declining!!
Cassandra57 Cassandra57 8 years
I'll second bellaressa's suggestion. I have a little ING account that I use to save for larger upcoming expenses. It's easy to make deposits online, but takes a few days to transfer back to my regular checking account, so it saves me from impulse spending. Every payday (twice per month) I pre-schedule online payments for my credit cards. I try to pay at least the monthly minimum each time (but remember, this is twice per month). By pre-scheduling it, I don't get second thoughts and say "I'll skip it just this one time, I want to buy some new shoes." Oh, and I try not to use them! The point is to pay those balances down, not keep churning at the same level. By doing so, you save a lot in interest and fees. Pay down the higher-rate cards faster, and try to close accounts with additional fees, like yearly "membership" charges. I try not to write paper checks, because I *hate* trying to keep track of them while they "float". I use my debit card as much as possible, because the transactions show up right away. Also, it's easier to track than cash when I'm trying to figure out where my money went. Try to find an interest-paying checking account. ING's "Electric Orange" is an example. Credit unions generally have lower fees than regular banks. If you qualify for one, you might look into it. A penny saved is, well, a penny saved!
hithatsmybike hithatsmybike 8 years
I think allocating money for both debt repayment AND savings each month is essential. I'm carrying around a bit of a heavy debt after some necessary (ok, and some frivolous) purchases, but that doesn't stop me from putting an equal amount in savings every paycheque. Leaving yourself without a bit of savings just sets you up to undo all the hard work reducing your debt in the case of an emergency. What if something unexpected comes up that requires you to spend some money, like a funeral you have to travel to or a car repair? It's nice to be able to dig out stored-away funds instead of whipping out your credit card and watch your balance climb back up again. My dad always encouraged me to keep at least 3-months earnings in a savings account at all times. It's painful to abide by this when I'm already a starving student, but I've found his advice has helped me IMMENSELY to get me through times like a late paycheque or a sudden emergency. I hate suffering the discipline it takes to hold my credit card statement next to the balance in my savings account and refuse a transfer of funds, but my savings has bailed me out of hard times too often for me to justify screwing it up.
cmd0610 cmd0610 8 years
I think HSBC Canada should have a high interest savings account. I don't know if HSBC operates all over Canada- but with Internet banking it might work- plus then if you can't get to the ATM to pull out money- just by doing online transfer- you wouldn't have the opportunity to pull out money for unnecessary purchase. Good luck!
sallyass36 sallyass36 8 years
Though I'm not a customer of this bank in particular, Scotiabank has a "Bank the Rest" program. www.banktherest.com (Or .ca) Good luck!
Renees3 Renees3 8 years
Good tips, I REALLY need this too. I hate living paycheck to paycheck. I really need to start saving, but need to set up a budget first, guess I gotta figure out how to do that!
luv_bug1211 luv_bug1211 8 years
Thanks for the tips for us Canadian readers! Always a little frustrating that most of these things arent available in Canada.
rabidmoon rabidmoon 8 years
One tip I will offer...be very aware of what you are saving versus what your debt is actually costing you in interest or fees. In many, many situations its far better to just put ALL available funds into eliminating or reducing your debts, instead of saving it. Start with the debt with the most brutal terms and interest rates, and focus on getting it out of the way..chances are doing THAT is a better "saving" in the long term, than fiddling with putting money away at (usually feeble) interest rates.
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