The moment that you’ve recovered from the champagne hangover and the other consequences of your New Year’s Eve celebration, you’re going to write down your resolutions for the next twelve months. Before you start coming up with goals like getting a new gym membership or learning a new language, you should put one resolution at the top of the list: pay back your debt.
The Debt Problem
Maybe you have credit cards that are completely maxed out sitting in your wallet. Maybe you have outstanding student loans that have been following you since graduation. Or maybe you took out a payday loan and watched with disbelief as the interest rate drove the repayment costs higher and higher. You’re not the only one with this problem.
According to an Ipsos survey, approximately 48% of citizens are $200 or less away from reaching financial insolvency — this means they are unable to pay off their debts. Knowing this, it makes sense why improving personal finances is one of the most popular New Year’s resolutions, only lagging behind goals like dieting or getting fit.
How Do You Deal with Your Debt?
See a Professional
If you’re deep in debt, you should see a licensed insolvency trustee for a consultation. They will discuss the best options to get out of debt with you so that you can figure out how to quickly reach a level of financial stability.
It’s easy to go overboard with your spending when you’re not keeping track of your money. You should make a household budget to get a better idea of your financial needs and your bad spending habits. You can go old school and make the budget on graph paper using a pencil and a calculator. Or you can download an app like You Need A Budget or CountAbout.
Make Smart Savings
There’s always something that you can do to cut down your costs. For instance, you can make simple energy-efficient home improvements like washing your clothes in cold water or sealing windows with caulking. These will shrink your bills and give you more savings to put toward your debt.
Practice Mindful Spending
You have to do more than refresh your monthly budget — you have to refresh your perspective on money. If you’re racking up debt because of impulse buys, you have to ask yourself why you feel compelled to buy things that you don’t need. Practicing mindful spending will help you develop a healthier relationship with money and make it much easier to reach the end of your resolution.
Think of your resolution like a mountain. When you’re at the base, you’ll be intimidated by the distance that you’ll have to cover — you may not even see the peak. But, as you climb up the rocky surface, you’ll get closer and closer to your goal. It’s a test of endurance, so keep at it.
That debt may feel like Everest, but that doesn’t mean you can’t conquer it. Every cost you cut and every saving that you make will take you one step closer to the top.
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