Well happy New Year all!

2013 was a rough year financially for my family. Between unexpected emergency vet bills and the flood, we took on consumer debt for the first time in years.  

My focus in 2014 – get rid of that debt and build savings back up.

We were in a good position heading into 2013 – plenty of savings, no consumer debt – but a few unexpected, relatively large, expenditures set us back and it’s time to pull our socks up and tighten our belts!

[blockquote author=”” link=”” style=”” target=”_blank”] It always seems impossible until it’s done. — Nelson Mandela [/blockquote]

Money troubles add unwanted stress to any relationship so working together and communication is the best way to get through it unscathed. 

We are the lucky ones though, we have sufficient income to get the debts paid off provided we spend smartly and not frivolously.  For some it’s not quite as easy.  

I recently read an article in the Financial Post about Money Hurdles, and getting out of debt in 2014 and that made me think, of course, to my situation and the fact that writing down and communicating your goals is the absolute best way to actually achieve them.

In the FP article there was a great checklist for those wanting to get out of debt:

  • Stop using credit, NOW!  I hear the excuse all the time – “we want to earn points” – well the interest will add up to a lot more than the points will if you continue to carry a balance each month
  • A little trick to help with your credit card addiction – take your cards out of your wallet and leave them at home.  If you don’t have them, you can’t use them!
  • Budget, budget, BUDGET!  Not just what you are going to spend, but where you can cut back to create the cash flow to pay down debt
  • Pay down debt as soon as you get paid, don’t wait until the end of the pay period because there’s a risk that if it’s in your preverbal “pocket” you’ll spend it
  • Like I said above, write your goals down, figure out how much you want to pay each month towards your debt and then what your end goal for total savings will be towards the end of the debt repayments.  This way you’re more likely NOT to get into the same situation again
  • For those who are short on cash flow to pay down debt, think of out of the box ways to increase your cash flow. Take a second shift, work overtime, do odd jobs, freehand, sell items in your house.  The less interest you are charged, the faster you get the debt paid off so throw as much money at it as possible
  • Attack the debt with the highest interest rate first – credit cards, personal loans, lines of credit and then mortgage debt
  • Consolidate your debts into a low-interest loan.  If you own a home and have some equity, consolidating your debt into your mortgage can yield the cheapest interest rates and create the most cash flow each month.  If you don’t own a home, talk to your bank about a personal loan in order to decrease the interest rate you are paying and, again, create more cash flow to pay the debts faster
  • The most important tip – DON’T GET YOURSELF INTO THE SAME SITUATION AGAIN!  There is usually such euphoria and relief once you’ve paid the debt off that people relax too much. Kind of like going on a diet – once they’ve lost weight, they think they can go back to the old habits and the weight won’t creep back on.  Sadly, not true in either case
If consolidating your debt through the equity in your home is the answer for you, do not hesitate to contact me to understand how this works.  It’s a no obligation conversation that could save you thousands in interest!