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Useful Ways Digital Tools Can Help To Reduce Your Debt

Pick up a smartphone these days and you have the option of leaving your credit cards at home. Mobile wallets are being embraced across the country by all ages — especially by millennials, but also by boomers, who are acknowledging their convenience in larger numbers every day. Over half of Canadians have admitted they’re still cautious about their financial information being available online, but it can be hard to deny the ease of not having to carry cash. If you have increased your use of mobile payment apps, or even tap-enabled credit cards, it’s important to have a strategy for monitoring your finances and keeping an eye on your debt. Digital tools and apps can even help you reduce your debt. Here are three useful ways to do just that:

  1. Use a spend tracking and budgeting app to keep your monthly budget accessible.

There are a variety of apps like Mint, that have high-levels of security and connect to your bank information to track spending in real-time. Built-in budgeting features can let you take your budget with you everywhere and receive notifications if you are overspending. Having access to your budget and spending can help you quickly assess on the spot if that purchase you are about to make fits into your plan for the month. By monitoring your spending, you’ll be better informed about your financial situation allowing you to make adjustments as needed. Over time, you may find that you’ve even cut back on your spending, providing you with a good opportunity to make extra payments towards your debt.

  1. Make a debt planning app part of your debt plans

Understanding the impact debt has on your finances can easily get lost in a digital world. Try adding a debt planning app to your phone to help you visualize the long-term impact of a digital purchase. These apps can show you how much interest you’ll pay over the course of repayment and how long it will take to repay the balance. Some apps even include debt reduction plans like the debt snowball or debt avalanche, which are tried and true ways to reduce your debt.

  1. Digital banking apps can help you streamline payments.

Digital banking has made it easier than ever to keep up-to-date with your bill payments. If you have recurring monthly bills, think about setting up preauthorized payments to withdrawn directly from your bank account. These payments can also be tracked by a financial app like Mint, ensuring you keep up-to-date with bill and debt payments. Making your payments on time will also help your credit score and credit rating. At the end of the month if you’ve come in under budget you can easily make extra debt payments or add to your savings.

At first thought, you might think the benefits of financial apps and a mobile wallet are strictly limited to convenience, but these newer technologies offer so much more. You can track your spending, monitor your budget and even improve your financial literacy as you use the different features in these apps. Perhaps even better, digital apps and tools can help you find ways to reduce your debt. Given the record level of debt that many Canadian families carry, that’s a huge benefit.

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