My financial journey #1: How I paid back a $15,000 debt in 6 months

I made a rookie mistake at the beginning of this year by taking on an RRSP loan.

In Canada, you can borrow money from the bank to contribute to your registered retirement savings plan (the equivalent of the 401-K in the U.S) if you believe the tax deduction that will result from it will be higher than the interest you will be charged on your debt.

This strategy put me in more trouble than expected and I ended up suspending my savings for almost a year to focus on repaying that loan as fast as possible.

Unexpected expenses also occurred during that time, which sunk me further into the debt cycle. In order to fix this situation, I needed to allocate about $2500 each month to my loan. Needless to say it represented a big part of my paycheck.

I, therefore, had to resort to a very strict budget plan. Today I am happy to announce that I am finally debt-free, mainly thanks to the following tips that I will share in this article. So here is a step-by-step guide for you to be able to do the same.

STEP 1: Cancel ALL non-vital expenses

This sounds easy, but it can be difficult to suppress certain habits from our consumption pattern in order to save money. This is because we have to redefine what is essential in our daily life and what is not. Here are some examples:


The first thing you should do is to drastically downsize your lifestyle. Since for most of us rent is the biggest expense, you should consider moving to a cheaper apartment or living with relatives or friends for a while.

This will help you save a tremendous amount of money.


The second most expensive account tends to be food. In order to reduce your bill, I suggest two things:

1. First, avoid restaurants at all costs! In fact we often end up paying up to 30% more than the initial meal price when we include taxes and tips.

Coffee shops should also be avoided as the price tag goes up quickly with those fancy macchiatos and chai lattes.

In general, I would advise to never buy a meal that you can easily make at home (ex: sandwiches, salads, coffee etc.) and keep the restaurant expenses for very special occasions.

I was able to save hundreds of dollars by applying this strategy.

2. Second, reduce your grocery bill by using coupons, student rebates, buying in bulk, buying no-name brands, buying only seasoned produce, and eliminating processed foods.

Meat and fish also tend to be quite expensive so if you can manage to go vegetarian 3 to 4 days per week you will see a drastic difference in your budget.


Today cell phone plans can easily go up to $80-$100/month. So by calling your mobile phone company to have your plan reduced to its minimum, you could save at least $40/month.

You could also consider getting a cheaper phone or canceling your data plan to use only Wi-Fi at home and in public spaces where it’s available.

4. CAR

If you can sell your car, lease it or limit its usage, you are assured to save hundreds of dollars on gas, parking fees, tickets, insurance, maintenance and repairs.

Try to use public transportation if you can or get around with a bike or by foot.


I love traveling, but I had to limit my expenses in this area to pay my debt. I also had to replace expensive leisure activities with cheaper ones such as pic-nick in a park, Tuesday movies and chilling at friends’.

Interestingly enough I ended up having as much fun while spending less.

STEP 2: Cut your credit cards

Credit cards help us acquire things even when we can’t afford them, and this can be problematic when you are already deep in debt.

You will never go debt-free if you keep using your credit card for daily spending. So unless you are able to repay the balance in a few days, I would advise you to call your bank and have your cards suspended or their limits reduced.

STEP 3: Delay instant gratification

Closely related to step 2, is the importance of resisting to spontaneous consumption. Avoid treating yourself if you haven’t truly earned it.

Do not shop for non-essentials even when items are on sale. As a matter of fact, do not even walk by the mall at all! Pretend it does not exist for the period of time you are trying to repay your debt.

STEP 4: Anticipate unexpected expenses

Unexpected events will most probably occur and you have to be prepared for that. For example, this year, I had to spend a lot of money on repairs for a rental property I own.

Had I correctly planned for it, I would have been debt-free sooner. In general, try to put a cost on 3 or 4 major things that could go wrong in your life and budget for them in advance to avoid using your credit card to pay for those expenses.

STEP 5: Avoid risky investments

I strongly advise against investing your money on risky assets when you are trying to pay back your debt. I actually lost a lot of money trying to beat the stock market in an attempt to pay back my loan faster.

Always stick to traditional savings accounts until all the money you owe has been paid.

STEP 6: Get an additional source of revenue

If you can manage to get a bit more money on the side in addition to your regular income, it will really help you get out of debt fast. You could get a second job or offer services online. Read this article to get some ideas.

I hope this helped and I wish you the best of luck in your own financial journey. Now that I have cleared my debt, I will focus on saving and wealth building. Stay tuned for future articles!

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