Debt reducing strategies for the holidays

Helpful tips to avoid wracking up debt this holiday season, and plan for the next one

The gemstone earrings are beautiful. And who wouldn’t want the latest tablet PC? It’s always great to give gifts. But paying for them come January? Well, that can be another – and very stressful – matter entirely. Canadians are racking up more credit debt than ever before so it’s easy to understand that you can get in over your head, especially at this time of year, and derail your long-term financial well-being. Instead, why not give yourself the gift that keeps on giving – financial stability – by using these strategies to control debt and make better use of your money.

Wrap up your cards – A high credit card limit or line of credit can lure you into buying more than you can afford. If you spend more than you can pay off each month, you’ll pay interest on the balance, often at very high rates of 20 per cent or more. So those earrings or that tablet PC will end up costing you a lot more and you’ll likely be paying for them for a long time.

Keep your credit cards in your pocket unless you intend to pay off the balance each month. If that’s the case, try to use a credit card that offers reward points.

Get into the spirit of the season – but not too much. Those earrings are super expensive but you really want to buy them. Resist! Don’t feel compelled to buy expensive gifts. Remember, it really is the thought that counts.

A better alternative: Each month, put a small amount into a savings account dedicated to Christmas presents and buy those earrings for cash next year.

And speaking of cash, purchase gifts out of your cash flow. If your cash flow is tight, look for cost-effective ways of restructuring your debt to free up more dollars on a regular basis.

And speaking of more dollars, think beyond the season, look to your future – and establish a realistic strategy for saving toward your important life goals. Here’s a start:

Reduce ‘bad debt’ (such as credit cards) and consider debt consolidation and/or a monthly debt reduction plan.

Launch an emergency reserve perhaps in a Tax-Free Savings Account (TFSA).

Protect your income and family with life, critical illness, and disability insurance.

Fund your children’s education with Registered Education Savings Plans (RESPs).

Add funds to your retirement by investing in a Registered Retirement Savings Plan (RRSP). Pay off some of your debt or add to your savings with the tax refunds that result.

Debt control and financial health are worthy goals. Your professional advisor can give you the gift of good advice to help you reach them – in every season.

J. Kevin Dobbelsteyn is a certified financial planner with Investors Group Financial Services Inc.. His column appears every Wednesday.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Federal justice minister consults with British Columbians on assisted-death law

During a coast-to-coast tour this week, federal Justice Minister David Lametti has… Continue reading

One last blast of winter tonight for the Valley before temperatures on the rise

A snowfall warning is in effect Friday including east Vancouver Island.

YANA celebrating its 30th annual Big Love Benefit Feb. 28

“The extra touches that the committee has added this year are going to knock some socks off.”

Comox’s Cooke wins Boating BC scholarship

Highland grad is currently studying in VIU’s marine mechanical tech program

Comox hit with record-breaking snowfall amid winter storm

Comox area saw 10 centimetres more snow than previous 70-year-old record

VIDEO: Cold snap brings ideal conditions for Okanagan icewine

Take an inside look at how icewine is made

Blue Monday is a myth but seasonal affective disorder and the winter blues are real

Canadian Mental Health Association says weather can affect mood

PHOTOS: Eastern Newfoundland reeling, search underway for missing man after blizzard

More than 70 centimetres of new snow fell overnight, creating whiteout conditions

Prince Harry, Meghan to give up ‘royal highness’ titles

‘Harry, Meghan and Archie will always be much loved members of my family,’ says Queen Elizabeth II

Ice chunk from truck crushes vehicle windshield on Vancouver Island

None injured, but Nanaimo RCMP say there can be fines for accumulations of ice and snow

B.C. society calls out conservation officer after dropping off bear cub covered in ice

Ice can be seen in video matted into emaciated bear cub’s fur

Calls for dialogue as Coastal GasLink pipeline polarizes some in northern B.C.

Coastal GasLink is building the 670-kilometre pipeline from British Columbia’s northeast to Kitimat on the coast

Wind and snow spark power outages across Vancouver Island

Winter storm warning in effect for east and west regions while wind warning to hit south and north

BC Ferries hybrid ships arrive in Victoria on Saturday

The battery-operated vessels will take over smaller routes

Most Read