(TORONTO, ON) – If the start of 2013 brought the same old resolutions to pay off debt and get your finances in order, you’re likely experiencing a little New Years debt déjà vu. Once again you have made the same promise as last year, and maybe even the year before – to make debt repayment a priority.
You are not alone. In fact, a recent CIBC poll indicated that Canadians have identified paying down personal debt as their top financial priority for the third year in a row. At the same time, Statistics Canada has indicated that average household debt-to-income ratio in Canada has hit an all time high of 164.6 per cent.
“As far as New Year’s resolutions go, we do a great job in making debt repayment a priority. We just don’t do a very good job of following through on these resolutions,” says Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada, Inc., “Its one thing to recognize that you need to manage your debt, it’s another to turn this awareness into action and create a solid plan to get your financial house in order.”
If the New Year brought the same old debt dÃ©jÃ vu, Consolidated Credit offers these tips to start paying off debt before it spirals out of control:
- Stop spending – Put your credit cards away and don’t make your problems worse by adding more debt.
- Assess the damage – You can’t create a plan to pay off debt if you don’t know how much you owe. Gather your bills and receipts from the past twelve months to determine how much you owe and where your spending got out of control.
- Budget – It’s impossible to tackle debt without a budget. A budget gives you a financial snapshot of where you stand today so that you can plan for expenses, debt repayment and savings in the month ahead.
- Increase your monthly payments – If you are only making the minimum payments on your debts it will take years to pay them off. Allocate any extra money available in your budget to your debts. The same goes for bonuses, tax refunds and gifts of money.
- Ask for a lower interest rate – If you have a good history with your creditors, ask them to lower your interest rate. The worst case scenario is they say no.
- Consolidated debt – Consider rolling all of your credit card debts into a single debt with a lower interest rate. Not only will you save money through the lower interest rate, you will only have one debt payment to worry about each month.
If you’ve experienced difficulties keeping your financial priorities on track, don’t wait another year to try again. The Budgeting Made Easy guide can help you build a healthy financial future and avoid the New Year debt dÃ©jÃ vu in 2014.