Get an Early Start on Your New Year’s Resolutions

If you are like most Canadians, there is a good chance you will spend close to $1,600 to celebrate the holiday season, and purchase a least one gift you know you can’t afford.  While these gifts may bring joy to your loved ones, without a solid plan to pay off the debt you can risk financial hardship in the New Year.

Instead of waiting until January 1st to make budget planning your priority, why not get an early start on your New Year’s resolutions today.

Stop using credit.  Put your credit cards away and stick to a cash-only plan.  Using cash instead of credit can help you stay within budget and resist the temptation to pile on even more debt.

Determine how much you owe: Add up all of the charges you’ve made on each credit card during the holidays.  Add these values to the current balance on each credit card to determine how much you owe.

Determine your monthly payment: Use a credit card calculator to determine your new minimum monthly payments, and how long it will take you to pay off the balances on each credit card.

Pay more than the monthly minimum: If there is room in your budget to pay more than the minimum payments, direct that extra cash flow towards your highest interest credit card bill.  Any amount paid over the minimum will go directly toward the balance owed and will help pay down the debt faster.

Set priorities for the New Year: Making a list of priorities and goals can help you avoid making further impulse purchases, while staying focused on paying down your debts and saving money.

Plan for 2013 holiday spending:  Now that you have addressed how to pay down your debt, make a plan for your 2013 holiday spending.  By adding holiday savings as a line item on your monthly budget today, you can avoid ringing up debt again next year.