How can you get holiday debt under control?
Holiday debt getting you down? Many Canadians overspend during the holiday season, and January can be a harsh return to realty. The good news is holiday debt doesn’t have to control your finances and dictate your life! Here are some tips to help you manage your debts effectively as we move through January.
First, examine your debts carefully
Before you start paying off your holiday debt, you need to know what you’re working with! It might sting a bit, but it’s important to face your debts head on. Take a good look at your bank account and your statements. Make a list of how much you owe, when your payment due dates are, and what interest rates you have. This will help you organize your finances and form a repayment plan. It’s also very important to double check your debts to make sure there are no errors. Mistakes do happen, and double charges or unfamiliar expenses might occasionally pop up on your account. Since you don’t want to pay more than you have to, you want to catch these errors early. Don’t put yourself through unnecessary financial stress!
Always pay at least the minimum amount
Some people think the best way to handle holiday debt is to only focus on high-interest debts at first. This is a good idea in theory, because higher rates will result in more money spent the longer your debts exist. However, it’s better to spread out your money so you can always make the minimum payment amounts on all your debts. This way, you won’t face any late fees, which can be hefty. Staying on top of your payments ensures you won’t be forced to pay any extra fines, and it means you will be making progress on all of your debts. If you are able, you can also make higher payments on high-interest debts. Just make sure you cover all your payments first.
Re-evaluate your budget moving forward
You might have to make some adjustments to your budget while you are paying off your debts. If possible, making tweaks to your daily spending habits can help you pay off holiday debt faster. Try to really focus on your needs, and limit the amount you spend on less important items. For example, you cannot cut out groceries, but perhaps you can reduce the amount you spend on dining out. It can also help to use cash when you shop, because this only gives you a certain amount of money you can spend. You should also avoid any tempting sales if you don’t need whatever the product or service is. This might take some self-restraint, but it will help you save enough money to pay off your holiday debts as soon as possible.
Think ahead for next year
We know it’s only January, but it might be helpful to start making a plan to avoid falling into debt next holiday season. If you know approximately how much you spent last year, you can plan ahead to keep yourself from overspending. You can start saving now to ensure you have enough money to cover your holiday expenses next year. Alternatively, you can start thinking of ways to reduce the amount you spend.
Get in touch with a mortgage broker
If your holiday debt is really wearing you down, it’s time to get in touch with a mortgage broker. If you are a homeowner, you may be able to use your property to your advantage. You might want to consider a mortgage refinance, or debt consolidation. A refinance will adjust your mortgage terms to suit your needs, whether that involves a new product, prepayments, or a different amortization schedule. Alternatively, your broker may suggest debt consolidation. This combines all your debts into one monthly sum, often with a lower interest rate. This product helps you keep track of what you owe, and gives you the chance to enjoy a lower rate.
Holiday debt can be painful, but with a good strategy you can pull ahead. Use this time to regain your financial independence and control your money once again! We're here for you every step of the way.
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