As Canada's population ages, the country is facing a looming financial crisis that doesn't garner…
The Christmas season is a time of joy, family, and celebration. It’s natural to want everything to be perfect. Maybe finding the right cut tree to decorate or shopping for gifts for loved ones that will make their eyes light up is the best part of the season for you. Others might look forward to having out-of-town friends and family over or making their yearly donations to their favourite charities. Regardless of what makes the season unique to you, it can cause even the most financially-disciplined person rack up a sizeable holiday debt.
The Reality of After Christmas Debt
It’s easy to get carried away and go over your budget. Many people don’t maintain a budget, or they seem to disregard it almost entirely when the holidays come around. This can lead to runaway spending to depths that aren’t evident until after the new year. This is when the credit card bills start arriving with their large balances that loom in a worrisome fashion.
Christmas Debt Statistics
Lest you think you’re alone in overspending for the holidays, an online survey by CIBC revealed that over half of Canadians believed they would wind up spending more than their budget allowed for Christmas in 2017. That same survey also indicated that the amount respondents were planning to spend on gifts and decor was an increase of eight percent over the amount that people paid in 2016, according to a similar survey commissioned by CIBC. Though this year’s numbers haven’t been released yet, it’s likely that Canadians will be spending more for Christmas in 2018 than they did the previous year.
Reining In Holiday Debt
There’s a reason why insolvency filings increase around the last week of January. This is when many Canadians see their credit card bill’s balances that reflect their holiday spending. Even if you are one of the two-thirds of Canadians who didn’t save very much for the Christmas holidays — and you charged up your credit cards to make the season merry — there are things you can do to deal with after Christmas debt successfully.
Gather up your bills
Knowing how much you owe helps you face the reality of your situation, but it can also be a good motivator. Seeing your total credit card debt shrink over time as you whittle it away is affirming, and it shows that you’re on the right track.
Lock the credit cards up
If your credit cards are easily accessible, you could have a tough time resisting sales or other opportunities to use them. Cut them up, give them to a trusted person to hold for you or freeze them in a block of ice. If it makes you feel more secure, keep one that is to be used for emergencies only.
Focus on one card
Some experts recommend paying down the credit card with the highest interest rate. This strategy saves you money over the long run and makes the most sense when it comes to saving money. For many people, a better approach is to pay off the credit card with the lowest balance. Doing so shores up your sense of accomplishment and motivates you to stick out your plan to address your after Christmas debt.
Enlist a professional
Chipping away at your holiday debt can seem like a slow and arduous process. If you find it difficult to get started or you’re merely overwhelmed because you don’t seem to be making progress, let a professional look over your finances. With an eye toward debt relief, a professional can offer a solid plan that mirrors your goals and keeps you moving forward.
While it might be too late to plan for this holiday season, make sure you create a budget in 2019 that takes your Christmas spending into account. Saving just $50 a month will net you $600 to spend on the holidays later that year!