Credit Canada

January 3, 2007

It is undeniable that many people make their number one New Year's resolution to become better money managers.  This can take many forms from saving more money, planning retirement or simply reducing debt.  Without a doubt, reducing debt is a goal for a good number of Canadians and will top the list of New Year's resolutions. 

Consider this, debt loads have never been higher in Canada and savings rates are at an all time low.   Canadians are certainly struggling against a sea of debt.  Although interest rates remain low, many Canadians are trapped in high interest debt mainly being credit cards which can range anywhere from under 10 percent interest to over 28 percent.  Unfortunately it becomes a vicious cycle of making minimum or just over minimum payments and then turning around and finding themselves using that credit card again.

Warning signs of debt may be obvious to the observer but for those trapped in a cycle of never-ending debt, they are hard to identify. They can be as simple as using one credit card to pay another, using credit for every day expenses, obtaining cash advances to receiving overdue notices and collection agency calls.

And what about the toll it takes on an individual's psyche and health?  The stress of debt can be phenomenal and can result in many collateral health problems.  Sleepless nights, arguments with spouses, irritability, depression and a sense of hopelessness can all result from high debt loads.

It is not all doom and gloom, though.  People can and do follow through on their resolution to liquidate debt. All it takes is a little bit of planning and a lot of discipline!  First, start by writing down everything you owe to everyone.  Put it on paper. Sit with your spouse or partner so there is a "buy in" and agreement on getting rid of the debt. 

Second, list all forms of after tax income. From here create a monthly budget to determine how much of your money is going toward your monthly expenses. The money left over can be used to liquidate debt.

If you do not have enough money left over to pay debts as they come due, review your budget. Is there anywhere you can cut back?  Do you need to take your car to work?  Is transit cheaper?  How about brown bagging that lunch?  Can you make coffee at work rather than buying it?  Think about creative and reasonable ways to make your budget work.  Don't know where your money is being spent?  Use a budget tracker to keep track of your spending for one month. Review it and cut back where necessary.

Ideally you want to be able to pay more than the minimum on your credit cards to be able to get rid of debt in a realistic time period.  If you only pay the minimum toward your credit cards, it will take you many years to become debt free.

Still struggling?  Credit Canada is standing by!  We are here to help you review your finances and look at ways to become debt free.  Call 1-800-267-2272 to speak with a counsellor immediately or set up an appointment. Visit us on our website at www.creditcanada.com and try our online assessment.   We can help you achieve your New Year's Resolution to become fiscally fit!

Credit Canada - the operating name of Credit Counselling Service of Toronto - is a non-profit, charitable organization that provides credit counselling and education programs to financially troubled individuals. The agency has been serving the community for 40 years and is an accredited member of the Ontario Association of Credit Counselling Services and a member of Credit Counselling Canada.

Contact:

Laurie Campbell
Executive Director
Credit Canada
416 228 2526
lcampbell@creditcanada.com