Five Ways to Reduce Your Debt in 2015

Getting our debt under control and reduced always seems to top our list of resolutions for the New Year, especially after Christmas. So here are some ideas on how to get started:
Step 1: Divide and conquer.
The gifts may be unwrapped and the feast devoured… but the price of holiday festivities can last long into January. It’s time to face reality and determine how much you’ve really spent this season.
Find those credit card and loan statements to get an idea of the outstanding balances and the interest rates each of them are charging. This will help you get an understanding of how much you owe and will make it much easier to set a budget.
Step 2: Build debt repayment into your budget.
Entering the New Year with a detailed plan for monthly spending and debt commitments can help you adhere to the right financial path. Here are a few tips for building that budget:
• List your monthly debt commitments and the interest charged for each. Focus on repaying highest-interest debt first
• Review your total after tax income
• Keep track of what you’re spending your money on each month
• Shop with a list to help avoid impulse purchases when you’re out grocery shopping or at the mall (or better yet, avoid the mall altogether… at least for a while).
• Still coming up short every month? Revisit that budget and further reduce your costs
Step 3: Take down your biggest debts.
Once credit cards are under control, shift focus to your largest debts; the mortgage, for most Canadians. Make reducing your overall mortgage top priority by taking advantage of prepayment options, moving to accelerated payments, and comparing your mortgage rate to ensure it is among the most competitive in the market.
Step 4: Carry the best credit card.
Not all credit cards are created equal – and choosing a card with competitive features can help achieve your financial goals. For example, earning regular cash back rewards on gas and groceries can offset weekly household costs. If you are prone towards carrying a balance, avoid rewards card altogether and effectively address your debt with a low-interest credit card option.
Step 5: Ask for help.
If you’d like help managing your debt, you can always consult a financial planner or adviser. There are also credit counseling agencies, many of which are not-for-profit organizations that specialize in helping people manage their debt. A quick online search can help find a local credit counsellor near you.