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3 Steps You Can Take Now to Get Out of Credit Card Debt

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December is here, and the shopping malls are all abuzz with people looking for gifts to give their loved ones. The holiday season also means a lot of Canadians will be accumulating more credit card debt to finance their gift-buying excursions. Household debt in this country is already at a record high of $1.65 for every dollar earned, so it’s time to start looking at measures to get out of debt rather than getting deeper into it. Here are a few things you can do to avoid taking on more debt over the holidays, and pay off the debts you already have in a shorter time frame.

Look for a consolidation loan

If you’re carrying multiple credit cards and making multiple payments each month, this can be simplified with a consolidation loan. You can also save money on interest by combining all your debts into one payment. Speak to your bank and see what they can do for you. They should have a line of credit or loan available which can take care of you. A consolidation loan can be a smart move that will help you pay off your debts faster by saving you a lot of money on interest.

Create a holiday budget

Write a list of everyone you need to buy presents for, and then determine how much you can afford to spend on all your gift-buying expenses this year. That figure should include not only gifts, but also wrapping paper, tape, cards, decorations, food, drink, travel expenses, and any other packaging materials you might need. Divide the number of people on your list by your budget limit and you’ll have an average of how much you can spend on each person. If you spend too much on one person, you’ll have to spend less on someone else to make up for it. Remember to keep the receipt for your records!

Set realistic goals

There is a lot of information available for people looking for debt advice online, but one the most important things that you should know about is how to set realistic financial goals for yourself. The problem with New Year’s resolutions is that people often make them too broad, or too lofty to achieve, and so they fail at sticking to them.

You need to have both short and long-term goals in mind. A realistic short term goal might be something like, “I will use only cash to pay for all of my gifts this year,” or “I will spend no more than $200 on gifts this year.” A longer term goal could be something like, “By the end of 2016 I will reduce my debt load by 30 per cent,” or, “I will contribute 10 per cent of every paycheque to a TFSA.” Write them down and remind yourself of your short and long-term financial goals every day.     

Credit card debt is a growing concern for many in Canada, and the holidays are prime time for people to increase their debt. Implementing smart lifestyle changes, which could include a debt consolidation loan, can help prevent you from falling into the holiday debt trap.

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