Agency: Credit Counselling Service of Sault Ste. Marie & District

Topic: Reduce Your Personal Debt

Phone: 254-1424

Date: 1/02/01

A New Year’s Resolution to Reduce Your Personal Debt

January means a fresh start and a perfect time to make a balanced budget part of your New Year’s resolutions. Thousands of Canadians carry large debt loads and worry about paying off what they owe. Whether you are having trouble managing a long-term loan or facing a new stack of bills from the recent holiday season, a few small steps now can help you look forward to a brighter financial future. • Keep track of your bank balance by recording all of your Interac purchases, and save your credit card transaction slips. With all the transactions made during the holiday season you need to be aware of your spending and to be vigilant of errors or fraud. Guard your PIN number and check the accuracy of your bills and statements.

• By using a budget blueprint, you can regain a sense of control over your finances and sleep at night knowing you are working to reduce your debt. First, itemize all of your necessary living expenses such as housing and food costs. Don’t forget those irregular expenses such as car repairs, christmas gifts and optional expenses like entertainment and vacation. Once you have set a plan, stick to it.

• Eliminate any unnecessary spending. This often includes eating out, impulse purchases, or expensive entertainment. If you reexamine your lifestyle and make some short-term adjustments it can make a big difference in freeing up funds and speeding up your debt repayment plan.

• Look for ways you can save money. Clip coupons, buy generic products, wait for sales, and consider buying good quality second hand items if possible. These measures can bring you enormous savings throughout the year.

• If you can’t meet all of your bills, don’t ignore them. This may have an effect on your credit record and add to your stress. Once you know what you can realistically pay, contact your creditors and tell them you are having difficulty. Most creditors will appreciate your honesty and good faith and may be willing to work out a reasonable payment schedule to help you catch up. Once you have your immediate credit problems at bay, you need to follow your spending plan to methodically chip away at your debt during the year.

• If you are juggling several hefty debts, focus on paying down the highest interest bearing debt first. Once you pay that off, you can move onto the next highest, etc. Use any savings, tax rebates, or cash windfalls to pay down your debt. Do not just make the minimum payment on your credit card. Decide how much you can afford and pay extra every month. This will save you a considerable amount of interest in the long run.

• If your expenses and payments surpass your income and payments are falling behind, a call to your local not-for-profit credit counselling agency can be the most important step you take. A professional counsellor will work with you to change your financial situation based on your needs. This can range from a few budget counselling sessions to get you on your way, to establishing a financial management plan, where the counsellor negotiates a debt management program with your creditors on your behalf. Under such programs, creditors may agree to waive interest payments and reduce your payments to a level you can afford to pay.

Make 2001 the year you maintain a balanced budget. It’s one resolution that you can’t afford to break.


"Helping you manage your debt" is a series of articles provided by member agencies of the Ontario Association of Credit Counselling Services. All member agencies provide a range of no or low cost services to help people solve their financial problems and improve their consumer and money management skills. For more, please contact Greg Elsby, Executive Director, Credit Counselling Service of Sault Ste. Marie and District, 298 Queen Street East, Suite 2, Sault Ste. Mare, ON, P6A 1Y7