Don't cash in your RRSP. When people get over-indebted they begin to look at their RRSP as a source of debt-repayment cash. The problem is that when the RRSP is cashed it goes right into your taxable income. Tax will then be due on the entire lot, which may increase your marginal tax rate and your ongoing tax-deferred gains will stop.

Snip the credit cards. It is too easy to put lunch, dinner and “I want it now” purchases on your credit cards. Many people easily max three or more credit cards and pay up to 28% per annum interest (about 18% is the norm). Stick with one card that offers you the lowest interest rate, and cut up the rest. When offered a higher credit level, decline.

Don't borrow if you're cash hungry. Some go out and borrow money at a ridiculous 28% or higher. They may believe they are consolidating their card payments, but will pay a much higher interest rate per annum––which could amount to $2,000 per year or more, depending on your overall debt (assuming $20,000 at an extra 10% per annum interest rate over the 18% on the average credit card). Young adults are often tempted to use this strategy. Another problem results. Any future lender–say when you want to buy a home–will look at the lending institution and the percent you are paying (when they pull your Equifax or Transunion report). This will bode badly against your overall credit rating, even if you are making your payments on time. Why? Because high interest loans, once taken out, indicate you have been hungry for cash–so hungry, you'll pay outlandish interest rates to get a more leniently underwritten loan.

Don't stop paying your insurance premiums. When debt climbs and the payments get out of hand (can't all be paid month by month) your credit rating may drop. And you may begin to let important things slide such as your life and/or disability insurance. With financial stress, you can become ill and need time off. Thus, make sure you have adequate income replacement coverage–additional personal disability coverage–if your employer only covers for the short term (up to 90 days).