Start with an honest inventory
Before choosing a strategy, list every obligation on one page: creditor, current balance, annual interest rate, minimum payment and due date. Include store cards, lines of credit, buy-now-pay-later plans, family loans and accounts already placed with a collection agency. Partial lists produce plans that fail in month three.
Then pull your credit report from both Equifax Canada and TransUnion Canada. Consumers are entitled to a free copy, and the file will surface accounts you have forgotten — which is the most common reason a repayment budget quietly breaks.
2
Credit bureaus to check (Equifax, TransUnion)
90 days
Spending history to audit before budgeting
20%+
Of net income is a strong repayment target
Run a 90-day budget audit
Export three months of bank and card transactions and sort every line into four buckets: fixed essentials (housing, insurance, utilities, transit), variable essentials (groceries, fuel, prescriptions), debt minimums, and discretionary spending. Three months smooths out irregular costs such as car repairs and annual renewals.
Your repayment capacity is net income minus fixed essentials, variable essentials and a small buffer. Whatever remains is what you can commit — not what you hope to commit. Overstating capacity is the single most common cause of a broken arrangement.
Build the buffer first
Set aside a starter emergency fund of $500 to $1,000 before accelerating repayment. It is what prevents the next unexpected expense from going back onto a credit card and undoing months of progress.
Avalanche vs. snowball: choosing a repayment order
Both methods pay every minimum on time and direct all surplus to a single target account. They differ only in which account gets the surplus.
The avalanche method
Target the highest interest rate first. Mathematically optimal: it minimizes total interest paid and shortens the overall timeline. Best when your highest-rate balance is large — a 29.99% retail card or a payday loan will consume any plan that ignores it.
The snowball method
Target the smallest balance first. It costs somewhat more in interest, but closing an account early produces a visible win and frees a minimum payment that rolls into the next target. Best when motivation, not arithmetic, is the binding constraint.
A practical hybrid: clear one or two small balances for momentum, then switch to strict avalanche order for the remainder.
Monthly budget planner preview
Enter your figures below to see what remains for debt repayment each month and how that allocation splits between minimums and accelerated payments.
- Available after essentials
- $1,800
- Accelerated payment capacity
- $1,350
- Share of income to debt
- 43%
Estimates only, for planning purposes. Figures do not account for interest accrual or irregular expenses.
Protect the plan
- Automate every minimum payment on its due date. A single missed payment can trigger a penalty rate and a derogatory mark on your credit file.
- Put the accelerated payment on its own automatic transfer the day after payday, so it is gone before discretionary spending begins.
- Review the plan quarterly. Rate changes, income changes and closed accounts all shift the optimal order.
- If an account is already in collection, contact the agency and fold the arrangement into the same monthly figure rather than treating it as separate.
Working with FDR Asset Group
If FDR holds one of your accounts, we can document a payment arrangement in writing that matches the capacity number your budget produced. Bring the figure to the conversation — it makes the arrangement faster to approve and far more likely to hold.