Island Savings

Becoming Debt Free

Everyone would like to be debt-free, but getting there requires discipline. The following tips can help you on the way to becoming more financially healthy.


Tips for becoming debt free

  1. Assess your debt situation—figure out how much money you owe and who you owe it to. Determine which debts are costing you the most interest and then either pay those debts off first or consolidate your debts at a lower interest rate. That way, more of your payment goes to paying the principal amount you owe instead of interest.
  2. Determine your income and expenses—list up the money coming in and all of your expenses for one full month.
  3. Create a budget—once you can account for your income and expenses, you’re ready to create a cash flow plan that matches when you’re getting money and when you need to pay for your expenses.
  4. Track how you’re doing—monitor your expenses each week and how you did in balancing them against your budget.
  5. Curb bad habits—if you find yourself overspending each week because you are buying discretionary or impulse items or eating out too often, then it’s time to show some restraint and get back on budget.
  6. Accelerate your payments—find that you have a few extra bucks in the budget or receive an unexpected windfall? Use it to pay off any credit card balances or accelerate a mortgage payment and save yourself some interest charges.
  7. Control future debt—put some money aside each payday for larger ticket items or unexpected expenses nice and you won’t need to tap your credit card when the time comes.


A good credit report is the key to getting the best credit terms and rates. Get the most mileage from your credit by managing your debt and making sure your payments are made on time.

Tips for becoming financially healthy

  • Paying only the minimum on your credit card each month is a warning sign of spiraling debt. It will take years to pay off the balance if you pay only the minimum and it significantly increases the total cost of any purchases. You should budget to pay all of your credit card purchases every month.
  • Eating out frequently will add up fast and is one of the most common ways to sabotage any budget. Create a budget for eating out and stick to it.
  • Transportation costs account for nearly 14 per cent of personal expenditure. Public transportation or carpooling might be options? If you live close to work, why not try walking or cycling? Planning trips so you only have to go out once and make multiple stops can also help reduce transportation costs.


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