How to Realistically Reduce Debt and Curb Spending in 2017Dec 21, 2016
Do you have a goal to reduce debt this coming year? Getting control of your debt isn’t always an easy task, especially when you’re dealing with factors such as Yellowknife’s high price of housing and rising food costs. Debt repayment and saving typically top the list of financial resolutions, but many people fall short because of competing financial obligations. This December, make sure whatever financial goals you’re creating for the year ahead are realistic and achievable — goals you can stick to all year long.
How to reduce debt by making small changes
When setting goals, it is important to keep them realistic and attainable as well as setting a time-frame for which to complete them. Getting out of debt usually can’t be accomplished in 12 months, but you can make significant changes to your finances that will help you reduce debt efficiently all year long. Small changes like swapping our coffee shop drinks for home brewed, and opting out of buying lunch can add up. Use United Way’s Small Change app to track the positive effect your reduced spending has on your savings. You can also practice intentional spending by saving your discretionary dollars for what makes you happiest. Read more about intentional spending and saving here.
Create long, medium and short-term goals
Changing small habits can have a big impact on your finances over time. Here are some larger goals you can set for yourself that may increase your debt reduction and saving potential.
- Create a budget to track all your current expenses and financial obligations. Do you have room in your budget for extra debt payments? Which areas of spending can be trimmed to make room? Using a budgeting app or worksheet for easy reference will remind you how much you have to spend each day/week/month.
- Start a savings account by opening a TFSA or setting up automated savings with your bank. Even a small amount put aside for savings each month can help you with debt control. You can also automate your bill payments to avoid paying late fees.
- Reduce your interest fees. Call your creditors and try to negotiate a reduced interest rate. You can also combine credit card balances in order to pay less in interest charges each month.
- Earn more money. Can you find any seasonal or temporary work that may help you increase your debt payments without taking away from your budget? Millennials are especially embracing the idea of working a few jobs to pay the bills.
- Speak with a debt professional about your debt options. A Licensed Insolvency Trustee can answer your debt questions and recommend a repayment plan that suits your needs.
- Increase your financial literacy by visiting the Financial Consumer Agency of Canada (FCAC) website. You can also follow financial bloggers like Jessica Moorhouse or columnists like Rob Carrick to learn more about your finances. On social media, you can follow @FCACan, @abclifeliteracy and @MoneySkillsCA.
How will you reduce debt this year? Use the Financial Goal Calculator provided by the FCAC to get started or share your story on Twitter with the hashtags #LetsTalkDebt #BDOdebtrelief