Newcomer Debt Levels are Rising. Here’s How You Can Reduce Yours

Research shows that newcomers in Canada are taking on more debt in Canada, with borrowing rates in 2025 growing over 6% year-over-year. The reasons behind the growing debt are likely complex – rising costs of living and higher unemployment to name a few.  

But when it comes to reducing debt as a newcomer, the challenge is not learning abstract financial principles. It is learning how to manage debt payments in an unfamiliar system. The goal is not perfection. It is control.

Quick Tips To Reduce Your Debt This Month – At Least a Little 

We brainstormed our best quick tips you could implement today to reduce your debt, at least a little bit this month.  

Credit cards & payments 

• Stop using your credit card for daily spending until the balance is paid down. 
• Remove your credit card from Apple Pay / Google Pay. 
• Make one extra payment this month, even if it’s just a few dollars. 
• Call your credit card provider and ask for a temporary interest rate reduction. 
• Pay using cash or debit only.  
• Cut up your credit card.  
• Turn off “tap” on your card to slow down impulse spending. 
• Switch to an envelope system this month. 
• Freeze your credit card (literally or digitally) if impulse spending is a problem. 
• Set a “no new debt” rule for the rest of the month. 

Subscriptions & recurring costs 

Subscriptions feel temporary and small. A streaming service here, a fitness app there, plus small monthly costs for cloud storage, premium job boards, and food delivery memberships. But the reality is that, together, they reduce the amount of money you have to put to your debt each month.  

• Cancel two subscriptions today, and don’t switch them back on until you’re debt free. 
• Downgrade streaming plans to the cheapest tier. 
• Cancel food delivery memberships and delete the apps. 
• Share streaming services with roommates or family. 
• Review bank statements for forgotten monthly charges. 
• Cancel cloud storage you no longer need. 
• Switch gym memberships to pay-as-you-go options. 
• Move money to a no-fee chequing account if eligible. 
• Set a calendar reminder to review subscriptions every 3 months. 
• Find free versions of the apps you need – like free-to-air tv instead of Netflix. 

Food & daily spending 

Food is where most advice becomes unrealistic. Newcomers are busy, tired, and often working irregular hours so “just meal prep every day” is not realistic for some of us — especially not in the short-term without broader lifestyle changes to free up time and energy. These tips balance meal prepping to save costs with reducing costs on food from outside the house:

• Stop buying drinks when eating out; order water. 
• Bring lunch from home two days a week. 
• Buy store-brand groceries instead of name brands. 
• Challenge yourself to use the food you have (instead of throwing it away). 
• Avoid grocery shopping when tired or hungry. 
• Use frozen meals instead of takeout on busy days. 
• Limit take-out delivery to once per month. 
• Cook one large meal and eat leftovers for several days. 
• Pay for food with debit, not credit. 
• Choose more affordable options when buying take-out.  

A quick note: cooking meals at home does tend to be more affordable than buying takeout or eating out frequently. It can be a helpful goal to move to a lifestyle where you more regularly prepare food at home — but since this article focuses on short-term quick-wins, we haven’t focused on that here.

Transportation & car costs 

For many newcomers who choose to buy a car, the problem is over-financing one. Cars, even used cars, in Canada can be expensive.  

Paying cash for a reliable used car can really help newcomers manage their budgets. But if you’re unable to afford a car in cash, then it’s helpful to pay a large downpayment and keep the loan term as short as you can. You can even delay purchasing a vehicle, and rely on short-term rentals when needed instead. 

If you already have a car loan, here’s what you can do to reduce the amount you owe this month:  

• Make one extra payment toward your car loan. 
• Refinance your car loan if interest is high. 
• Use public transit a few days a week. 
• Carpool with coworkers when you can. 
• Cancel unneeded premium auto insurance add-ons. 
• Shop around for cheaper car insurance. 
• Drive less aggressively to reduce fuel costs. 
• Combine errands to reduce gas spending. 
• Consider selling your car if your monthly payments are too high. 
• Cancel extended warranties or other optional protections you rolled into the loan.  

Income & quick wins 

• Sell items you can live without (electronics, furniture, clothing). 
• Put money you would have spent on something else towards your debt (skip a takeout coffee, pay $5 off your credit card balance). 
• Take one short-term side gig and earmark earnings (less taxes) for debt. 
• Ask for a bill payment extension if cash flow is tight. 
• Switch to a cheaper mobile phone plan. 
• Switch to a cheaper internet plan, or cancel yours for some time if possible. 
• Delay any purchases above $50 for at least 30 days. 
• Track every dollar spent for one month. 
• Choose one debt to focus on and commit to reducing it this month. 
• Unsubscribe from marketing emails and sale alerts.  

Earlier Debt Tips We Stand By 

We previously covered some tips for newcomers looking to manage debt in Canada that we think are worth repeating here too. These won’t help you reduce debt in the short-term, but they are good habits that may help you avoid money stress over time. 

• Have long-term goals. You do not need a detailed plan, but it can help to know what you are working toward. This could be buying a home, feeling less stress, or being able to stop working earlier. A clear goal makes it easier to skip spending that adds debt but does not really improve your life. 

• Do not judge affordability by the monthly payment. A low monthly payment can hide a high total cost. This is common with cars, phones, and Buy Now, Pay Later financing plans. Before using credit, ask how much you will pay in total, including interest, not just what comes out each month. 

• Use simple systems to control spending. Relying on willpower is hard, especially when money is tight. Automating savings, paying yourself first, and using a basic rule like 50% for needs, 30% for wants, and 20% for savings can make money easier to manage. 

• Build an emergency fund slowly. An emergency fund helps you avoid using credit cards when something goes wrong. While a good long-term goal for many people is to have three to six months of expenses saved in an emergency fund, having a smaller amount set aside can make a big difference. 

These habits will not eliminate debt right away, but they make it easier to stay in control—especially during your first years in Canada, when costs are high and mistakes are easy to make. 

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