Money & Career

Make your bank account great: Overcome your holiday debt with these 3 easy steps

Author: Canadian Living

Money & Career

Make your bank account great: Overcome your holiday debt with these 3 easy steps

You're a giving person by nature, but this holiday you may have given a bit too much, as evidenced by the staggeringly large balances on your credit card statements.

It's no fun being in debt. "There is nothing more stressful than owing money and having a debt load hanging over you," says Canadian Living Life Editor, Donna Paris. "You can’t get away from it, it's always at the back of your mind. Debt can really get you down in the dumps – it can keep you up at night, and affect your emotional and mental health, too."

Rather than let debt get you down, it's best to face it and make a plan. "The best thing you can do about debt is to come up with a plan to tackle it. Once you do that, you'll feel like a weight has been lifted and you can start to move forward," says Paris.

Here are three ways to tackle your holiday debt.

1. Make a plan
Download this free budget template to help you calculate your holiday debt and create a repayment schedule. There are two tables on the template:
• One table will help you calculate your debt by adding up your credit card balances, bank account overdraft, and money you might owe to friends and family.
• The second table helps you create a schedule to pay off your debt. Remember to pay off the debt with the highest interest rate first.

Update your template monthly or weekly as you pay down your debt. Recording your payments and seeing your progress will prove to be one of your biggest motivators.

2. Cut back on your expenses — but don't make extreme budget cuts
Look at your expenses and find out where you can reasonably cut your spending. But just like an extreme diet, if your budget is too restrictive, it could backfire and drive you to binge spending. Once you've cut your spending, put the money you're saving towards your debt.

3. Cash is king
Put away your credit cards and debit cards and start using cash. Decide on an amount of money you can afford to spend each week on food, transportation, gifts, entertainment, hobbies and sundry items. Take out that amount of cash at the beginning of each week and make sure to make it last all week.

Save your receipts so you can track where your money is going. You may find more expenses you can cut for things you won't miss, like your daily latte.

If you watch your nickels and dimes, consistently look for ways to save, and track your spending and debt repayment, you'll be out of debt in no time.

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Make your bank account great: Overcome your holiday debt with these 3 easy steps

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