Be Wise with Debt in 2019

January 3, 2019Financial Fitness

The start of a new year is the perfect time to take stock of the choices made the previous year and to consider ways to improve your financial health. A recent Manulife Bank of Canada poll, which surveyed 2,003 Canadians in all provinces between ages 20 and 69, found that 4/10 Canadians with debt, believe they’ll never be free of their debt. This stat jumps to 70% for those in a lot of debt. This is a troubling number, especially for young Canadians who are part of a generation which has traditionally been challenged by a difficult job market and underemployment.

But there are some ways to measure and improve your financial fitness in 2019. If financial health is one of your goals, it will probably mean spending less and making wise choices to lessen your debt load—which will be good for YOU.

Know where your money is going

You can gain control of your financial situation by recognizing where your money
goes. Start by writing down everything you think you spent money on last month. Next, locate your most recent bank and credit card statements to see what you actually
spent. Knowing where your money is going is the first wise thing you can do to make
good changes in 2019.

Understand your spending habits

Take a moment to think about when and why you buy. There may be a pattern that leads you to unnecessary spending. Always ask yourself if you need the item right NOW and be sure to check your budget BEFORE spending.

Take inventory of your debt & create a plan to eliminate debt

Put all outstanding balances together and make note of when your payments are due. Be sure to pay things on time to keep your credit score in good standing. It’s all about taking small consistent steps to get there.

  • Write it down – map out a realistic repayment schedule.
  • Pay down the debt with the highest interest rate first – continue making the minimum payments on all of your cards or loans, but put the largest amount of available cash on your most expensive debt.
  • Make more than the minimum payment each month – this will help you pay the debt down faster.
  • Consider consolidating all of your debt into one loan – this will make it easier to manage and then you can concentrate on paying the loan down as quickly as possible.
  • Make wise decisions – avoid buying big ticket items or taking on any additional debt.

Paul Lorentz, Executive Vice President, Retail Markets says, “We’re seeing that debt management, reducing spending and saving are, more than ever, top of mind for Canadians. Just as importantly, Canadians are also more aware of the financial choices they’re making. They are making good financial decisions to put their finances in order for the future even knowing that they may not be able to maintain their current lifestyle because of them.

Make small changes for BIG savings
  1. Take a closer look at your phone and cable bills – the right plan can save a lot of money.
  2. Turning your heat down in the winter and your air warmer in the summer will consume less energy and save on your monthly bills.
  3. Clip coupons and watch ads so you can plan your meals around food items that are on sale.
  4. Limit the number of times you eat out so that this is a treat and not a common occurrence.
Start saving

Saving doesn’t have to be difficult or time consuming. Set up automatic fund transfers from your chequing to your savings account – any amount is better than nothing. You can also set up pre-authorized transfers directly to a TFSA or RRSP.

Talk to a professional

People who work with an advisor to create a plan for being wise with money are more likely to reach their goals. Managing debt is easier with the help of a qualified advisor who will help you set realistic plans in place to reduce and eliminate your debts as efficiently as possible. If you are looking for a trustworthy Financial Representative, one of our representatives will be happy to meet with you for a FREE financial needs analysis.

Set goals for 2019

Goals help you determine what’s doable and what may have to wait. Your goals might include a home purchase, a vacation, or a career change. Write them down. Then, create a budget and a savings strategy to reach them. Prioritize and plan to reach your goals!

You can get financially fit in 2019. Just like a new diet or an exercise program, adopting long-term financial change will mean adjusting your attitude and commitment to making good and realistic habits that will serve you well in the new year.


Disclaimer: The information provided in this article is for information purposes only. It does not constitute professional advice to be relied upon. FaithLife Financial does not provide investment, tax or legal advice. Please consult with financial and legal advisors as appropriate.