For many Canadians, debt is a normal part of managing major expenses. A mortgage, car loan, student loan or line of credit can all play a role in a broader financial plan.
But high-interest credit card balances and other unsecured debt can become harder to manage when payments start becoming all-consuming.
At the same time, Canadians are experiencing record levels of debt. In Q2 of 2026, Canadian consumer debt hit a record $2.64 trillion.
The good news? You don’t necessarily need to overhaul your entire financial life to start making progress.
A few immediate changes can help you get a better understanding of what you owe, reduce the cost of borrowing and create more room in your budget.
Here are three places to start.
1. Get a clear picture of what you owe
The first step to managing debt is knowing exactly where you stand.
Make a list of your outstanding debts, including:
- Credit cards
- Personal lines of credit
- Personal loans
Car loans and any other borrowing.
Record the balance, interest rate, minimum payment and payment due date for each.
It can also be useful to check your credit report. In Canada, Equifax and TransUnion are the two main credit bureaus.
Your credit report contains information about your credit accounts, balances and payment history. Checking your own credit report does not affect your credit score.
Once everything is in front of you, look at which debts are cost the most in interest.
From there, you can asses where it makes the most sense to make additional or higher payments. Diwndling down the biggest financial leak can help reduce the amount of money you’re paying over time.
Payment history is also a very important factor in your credit score. If you’re struggling to make a payment, contact your lender to find a solution instead of letting it go upaid.
2. Create breathing room in your budget
Paying down debt is especially difficult if you continue adding to it.
Take a look at your recent spending and identify expenses that could be reduced or redirected toward debt repayment.
That could mean:
- Cancelling an unused or unnecessary subscription
- Eating out less and making coffee/drinks at home
- Finding affordable grocery services
Thrifting and buying second hand whenever possible
Finding enjoyable, free community events and activities to participate in
Selling items and belongings that don’t serve you anymore
The goal isn’t necessarily to eliminate everything you enjoy or like. It’s to create a sustainable gap between what you’re bringing in and what you’re spending.
Even a relatively small amount of additional money directed toward a high-interest balance each month can help reduce the amount you pay in interest over time.
3. Consider debt consolidation
Debt consolidation can help lower your overall payments, depending on the circumstances.
Canadians can consolidate certain debts through:
- A consolidation loan
- Personal line of credit
- Home equity loan
- Balance transfer
Consolidating can simplify multiple payments into one and, in some situations, reduce interest.
But consolidation isn’t automatically the right choice.
Before moving debt, compare the interest rate, fees, repayment period and total cost. A lower monthly payment may sound attractive.
However, if it comes with a significantly longer repayment period, you could end up paying more interest.
Start with one change
Eliminating debt isn’t usually an immediate experience.
Start by understanding exactly what you owe. Then look for one realistic way to free up money in your monthly budget and opportunities to reduce the cost of borrowing.
Most importantly, don’t wait until a manageable debt problem becomes a financial crisis before asking for help. The sooner you understand your options, the more choices you have.
A stronger debt-management strategy isn’t just about paying down what you owe. It’s about creating more financial flexibility for the future.
We highly recommend speaking with a qualified financial professional to find the ideal approach to your debt.
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