Just do it!

• Keep track of spending – write everything down. Then be merciless and reduce the amount you are spending. Look for alternatives to fulfill the same needs at a lower cost.
• Add savings and paying down debt to the expense side of your budget. By allocating as little as $60 per month or $15 per week to these areas you will have a tidy sum to deposit in your RRSP and reduce your debt.
• Leftover money at the end of your budget isn’t a bonus. When you have leftovers the tendency is to use them for another purpose. Instead, focus any leftovers to servicing debt and adding to your savings account.
• Read all credit card statements, including the fine print. Pay close attention to see if creditors are changing the annual percentage rate (APR) to a variable rate or if they are raising rates. Pick up the phone and call credit card companies to find out if there are any changes coming.
• Pay off high interest rate debts first. The most efficient way to resolve debt is by paying down the highest interest rate balances first. Once the high interest debt is paid, tackle the next highest, and so on. Remember, to continue paying the minimum due on all other debts.
• Avoid borrowing. Borrowing against a home or your income tax refund to pay off debt may be convenient but it is also dangerous. People may lose their home or fall short of investing goals at retirement.
• Don’t be overly concerned with paying down mortgages. Mortgages tend to have lower interest rates compared to other debt. Focus on paying down other more expensive debt first.
• Re-evaluate insurance. The New Year is a great time to make sure your coverage is on target with current needs. Compare insurance prices with the existing policy to competitors. If the automobile and homeowner’s insurance policies are through different companies, look into combining for a multi-line discount.
• Get help if you’re feeling overwhelmed. During the holidays it was easy to get caught up in the spirit of the season and spend beyond your means. If this happened to you, treat this as a learning experience and resolve to do better in 2012.

Jeffrey Schwartz is the Executive Director of Consolidated Credit Counseling Services of Canada and President of the Credit Association of Greater Toronto (CAGT). Consolidated Credit is a national non-profit credit counselling organization that teaches consumers about personal finance through web-based budget and debt analysis tools, financial literacy community outreach programs and in-person or telephone counselling. CAGT is a non-profit association with a mission to provide a dynamic forum in which members can share information and expertise.

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