January is a great time to examine your finances and set new targets for the year but making progress on your goals can be challenging if you have to deal with a holiday debt hangover. In 2019, the average Canadian was projected to spend approximately $1,600 on the holidays, up about 2% over 20181, and increasingly they’re charging it on plastic. Now that the holidays are over and the credit card bills are arriving, here are three steps to help you to take control of your debts and start the New Year off on the right foot.
#1: Own what you owe
Fixing any problem begins with understanding it. People can be so afraid of their debt that they refuse to open their bills. But late or ignored debt payments only make matters worse and can have a long-term impact on your credit rating if left unchecked. Take the first step and gain clarity by assessing the damage to know exactly how much you owe and to whom. Then set up a schedule for paying back the debt. Try to repay significantly more than the prescribed minimum so that you chip away at the principal.
#2: Put your spending into hibernation
Now is the time to give your cards and yourself a rest – don’t add to the debt. Reduce your entertainment costs, avoid eating out and trim any extras on your internet, telephone and/or cable bill. Use a debit card or cash to pay for necessities like food. And take steps to avoid spending temptations. That may mean going for a walk outside instead of through the mall or keeping your credit card at home. A lot of our life is now online, so you may also want to take a digital hiatus to control any shopping from your couch.
#3: Focus on goals, not resolutions
Resolutions tend to be all or nothing affairs. They usually fail because we often don’t map the necessary steps to achieve the goal we’re striving for. To successfully achieve your goals, you have to have a clear intent, a concrete plan and a willingness to take action. Start by building a budget and a timeline for each goal. For debt, set a reasonable deadline for paying it off. Remember that over time, putting aside even small amounts in regular increments can grow to substantial savings. Just think – if you can save $50 a month for a year, you’ll have $600 to spend during the next holiday season.
You owe it to yourself
Being prepared and having a plan to bring your aspirations to fruition is one of the best ways to make a positive and meaningful change in your life. For help fine-tuning your 2020 wealth plan to get results and move closer to realizing your goals, contact one of our Investment Advisors today.
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