“This is the last time I’m starting a new year saddled with credit card debt,” says Tiffany, a 48-year-old computer analyst. “I’ve said this every January for the past five years. This year, I’ve got to keep this promise to myself. I don’t want to spend another 12 months catching up, only to fall behind all over again. I can’t take this stress anymore.”
Tiffany’s resolve for a healthier financial future isn’t uncommon in the weeks following the holiday season. According to Manulife Bank of Canada’s 2020 Debt Survey, 46% of Canadians say that debt negatively impacts their mental health every day.1 Given that 85% of shoppers plan to use their credit card to purchase holiday gifts2, it’s not surprising that many people start their new year with a debt hangover. The good news is that you don’t need to end the year in debt. Here are some strategies that could help put you in the driver’s seat of your financial life, post-holidays and beyond.
Put your credit cards away
Start by taking your credit cards out of your wallet. Don’t put them back until you’ve paid off your balances.
Don’t shop the post-holiday sales
Now is a good time to stay out of retail stores, no matter how alluring the bargains may be. Instead, apply what you’d purchase to your credit card debt and distract yourself with something to do that doesn’t cost anything.
Create a plan to pay off your debt
If you have more than one credit card, pay off the card with the lowest balance first. You can do this by increasing your monthly payment while paying the minimum on your other card(s). Once the first card is paid off, apply that payment to your next lowest balance card, and so on until every balance is zero. This is short-term pain for long-term gain because once you’ve paid off your cards, you can put that money into savings.
Set up a monthly or weekly budget
Reaching financial goals begins with small steps, the most important of which is knowing what it costs to live and setting up a plan to live within your budget. Doing all you can to stick to it while, ideally, putting away what you can for an emergency fund isn’t easy, but the payoff can be a lot less worry in your daily life.
Start saving for the next holiday season
If you know what you spent on the previous holiday, start a savings account and contribute to it regularly so that you’re not facing the same situation next year.
Find an ally
The good news is that you don’t have to do this on your own. CONTACT OUR OFFICE we will be happy to be your ally as you reset your financial life for a new year. We can offer empowering strategies and tools to get you started and help keep you on the path to a healthier – and happier – financial future.
Sources:
1. 2020. Manulife Bank. “2020 Fall Debt Survey”.
2. 2020. Retail Insider. “Holiday Spending in Canada Expected to be Down 30%: Study”.
Copyright © 2021 AdvisorNet Communications Inc. All rights reserved. This article is provided for informational purposes only and is based on the perspectives and opinions of the owners and writers only. The information provided is not intended to provide specific financial advice. It is strongly recommended that the reader seek qualified professional advice before making any financial decisions based on anything discussed in this article. This article is not to be copied or republished in any format for any reason without the written permission of the AdvisorNet Communications. The publisher does not guarantee the accuracy of the information and is not liable in any way for any error or omission.