New Year Resolutions…

The Good and The Bad

If one of your resolutions this year is to get a hold of your finances – or even if it’s not – we have some ideas of how to help with your debt. First of all, there is a difference between consumer debt – “bad” – and non-consumer debt – “good.”  Non-consumer debt is a debt like a mortgage, where your bank account may look terribly in the red, but you are actually paying into an investment that, especially in Vancouver, should accrue monetary value over time. Consumer debt is just pure, unadulterated debt, usually with high interest rates. This debt is usually obtained on credit cards, but it can also include other types of debts – payday loans, overdrafts, etc. – which are used to fuel consumption, not investment.

How do you get rid of your consumer debt? I am sure by now, everyone has received their credit card statements from Christmas. Not feeling very merry now? Take a deep breath: you can pay off your credit cards this year if you commit to making an active effort. The first thing is to draw up a budget, which you can do using my Best Budget. Secondly, you need to see how much debt you have on each credit card, how much interest you are paying, and what your minimum payments are. Using your budget, do you have money you can dedicate to paying more than your minimum payment? Even $20 or $50 a month or biweekly can add up in your favour. If you’ve received an end-of-year bonus, Christmas bonus, or money as a Christmas/New Year gift, a smart way to use this extra cash would be to pay down and/or off your debts. Why? Because in the long run, you will be paying less interest, leaving more of your “take home” money in your pocket – money you can save!

Looking for a major debt solution to give yourself – and 2013 – a new start? We can help you utilize the equity in your home to pay off your debts. There are other ways you can pay off your debts in a smart and timely way. Talk to your financial planner today, or we can refer you to a highly qualified financial planner who can help you get your debts under control. Financial freedom has to be one of the best resolutions you can set for yourself. Make 2013 the Best ever!