FLM 2017: Advice on How to Reduce Debt Before the HolidaysNov 10, 2017
The holidays are coming, which often means spending more, but holiday shopping shouldn’t come at the expense of your efforts to reduce debt. What’s the best advice to reduce debt and make it a debt free holiday season?
Plan, Plan, Plan…
Without any sort of plan your efforts to reduce debt will be a lot harder. In the summer, many Canadians stated they were focusing on home improvements rather than saving and paying off debt. A good number of them were also relying on credit to cover those improvements. There may not have been a lot of thought toward saving for the holidays, but now they are almost upon us.
With it being Financial Literacy Month and a little over a month to go until the holidays, what steps can you take to reduce your debt load?
The best way to build an effective plan is to know what you’re working with. See how Jordann Brown made a plan and paid off $38,000 in debt in 24 months.
Take the time to do a financial analysis. This includes looking at everything with your finances including:
- What income do you have coming in?
- What are your expenses each month? (rent, mortgage, insurance, cable, phone, etc.)
- What debts do you have? (include interest rates, monthly payment, total amount, etc.)
This information will guide you in building a budget. There are lots of great resources out there to help, like the Financial Consumer Agency of Canada.
Two things to look for when building your budget:
- Are your expenses exceeding your income?
- Where are you spending money that you might be able to cut back?
If you have a budget that is running a deficit, don’t wait. Go speak with a professional, such as a credit counsellor or Licensed Insolvency Trustee. They can help you build a plan to deal with your consumer debt using professional debt relief options.
If you’ve analyzed your budget and found areas where you can cut costs, this is a great first step. That could mean cancelling your cable, kicking the daily coffee habit, or looking at consolidating debt with a loan to reduce your monthly payment. Even small sacrifices can create opportunities to save and put more toward your debt payments.
With a plan in place you’ll know what you’re working toward and what you need to do to achieve your goals. Stick with it and you’ll be on your way toward becoming debt free sooner than you might have thought possible!