Get out of debt - fast! (continued)

10. Mine your savings

Freeing up non-RRSP investments can work well, too. A few years ago, Anderson invested a small inheritance from her grandmother. When she was stressed out by her line of credit and car payments, she cashed in $9,000 - everything but her RRSPs - to pay off part of her $25,000 debt and still minimize the tax hit. Before making the move, she talked to her financial adviser and was careful to pinpoint the investments that had the fewest early-withdrawal penalties and back-end-load fees.

11. Ask for forgiveness See if you qualify to have your student loan reduced or even eliminated. In B.C., students who graduated after December 2004 in fields including speech pathology, physiotherapy and audiology, and who are working with children in underserviced areas, may be able to get their provincial student loan "forgiven." That's right, no repayment required. Ditto for nursing, medical, midwifery and pharmacy students who graduated as of August 2002. Visit www.bcslservice bureau.com for details. Also, check out www. canlearn.ca and your provincial or territorial student-assistance centre for information on other programs, including interest relief and debt reduction.

Talk to a pro

If you need serious financial help, talk to an accredited credit counsellor. Credit-counselling agencies work with you and your creditors to resolve your debt. Many are non-profit, which means you pay little or nothing for the service. Ask your financial institution for recommendations or visit www.creditcounsellingcanada.ca to find an agency in your area.

Credit counsellors offer a debt-repayment or management service, says Margaret H. Johnson, president of Solutions Credit Counselling in Surrey, B.C. In a repayment program, the government-licensed counselling agency contacts the creditor on your behalf and offers to pay your debt over a fixed period of time, usually five years. In return, the interest stops accruing immediately. The downside is that your credit rating takes a nose-dive for two to three years after the debt is repaid, giving you an R7 rating(R1 is perfect and R9 is bankruptcy).

For Gloria Ciccale,* a retail employee in Charlottetown, credit counselling was the way to go. "Before, I was paying almost $700 a month in minimum payments," says Ciccale, who got behind on her payments - including payments on a loan with a staggering

33 per cent interest rate - after she separated from her partner. "Now I pay $132.50 every two weeks and will be debt-free in five years. I can't tell you what a relief it is. I can sleep at night now."

* Name and location have been changed.

First published in Chatelaine.com's January 2006 issue.
© Rogers Publishing Ltd.