It's around this time of year where the frantic calls start rolling in - and it continues on until about March. They are from consumers who have been avoiding their credit card statements or logging onto their bank accounts, as the January financial blues set in after weeks of gleeful holiday spending. The experts have a name for it - the "holiday debt hangover."
The reaction to the post-holiday reality check is fairly universal: it starts with sticker shock and quickly moves to buyer's remorse.
So what is the plan now? Now is the time to set SMART financial goals - ones that are specific, measurable, attainable, relevant and timely. Here are some basic tips to get you started:
- Don't add any more to your debt. Put your credit cards away. Stop using your line of credit. Live on cash or debit.
- Make a budget, review it regularly and stick to it.
- Organize your debts from smallest to largest balances. Plan to eliminate one at a time, applying extra funds to the debt with the smallest balance first.
Buying only what you can afford can be a difficult lesson. Canadian borrowing levels have hit record levels, with household debt-to-income ratios recently reaching a high of 164.6%, according to Statistics Canada.
Meanwhile, the Office of the Superintendent of Bankruptcy Canada reported that for the first 10 months of last year, 60,833 people filed for bankruptcy. That is on pace to mark another drop in annual consumer bankruptcies. In 2011, 77,993 people filed for bankruptcy, down 16% from the year before.
The report suggests Canadians are still able to meet their debt repayment obligations. But that might not be the case for long. Doug Jones, a senior vice-president and trustee with BDO Canada said record high personal debt and warnings about interest rate hikes suggests a serious problem on the horizon" for those pushing their financial limits.
Often people are frightened or embarrassed to seek help. But consulting a mortgage broker comes with no charge. Brokers can help set budgets, refinance mortgages, clear up consumer proposals, and set you on the path to climb out of debt.
A good broker will understand the psychology behind which debts to pay off first... so much so that you'll soon notice a change in your savings habits. And ultimately, building a nest egg is your goal!!
We're here to help. Call today - save tomorrow!