Often times New Year's resolutions are so focused on losing weight or quitting a bad habit, that people forget it's also a great time to reassess their finances. This year, make it a resolution to create a plan to tackle household debt. Here are four simple steps to get you started:
1. Cut down mortgage costs.
By making your mortgage payments more frequently, you'll save a substantial amount of money in the long run. Instead of making a payment each month, change to a weekly pay mortgage, or even opt for the accelerated-weekly payment.
2. Pay your bills on time
Out of sight, out of mind is not the way to go. It's important not to let your bills pile up, even though they can seem daunting. Instead of having your bills delivered by mail, set up a system with your bank so that the payments will come straight out of your account. This will help save you from hefty late penalties.
3. Get those scissors out
That's right. Take them out and cut up all your credit cards. If you want to get rid of debt, it's essential to stop racking up interest payments on your credit cards and to stop spending money you don't have. Try sticking to cash-only instead and obtain all your receipts to hold yourself accountable for everything you purchase.
4. Create an emergency fund
Just like you have to pay your bills each month, you should also pay yourself. What does this mean? It means putting money away for an emergency fund. Unexpected situations happen all the time -- your car breaks down, your pet get sick, and your house needs repairs. Having an emergency fund will prevent you from paying for these situations with your credit card, which will only make your debt worse.
5. Seek help and advice
Know when to seek help if you need it. Money Mentors and Credit Counselling Society are great, Alberta-based, not-for-profit organizations that host free financial workshops each month. To contact them, go to www.moneymentors.ca and www.nomoredebts.org.