The holidays are over and now the credit card bills are coming in on top of those utility bills you may have delayed or that missed rent or mortgage payment just to get through the season. Instead of feeling overwhelmed, dive right into that pile of debt and start tackling the problems. Make 2013 the year you finally resolve to get a handle on your finances.

First things first – stop spending!  Stay away from all those sales and put away the credit cards. Only use cash or debit cards so you get into the habit of spending only the money you have right now. When paying your credit cards, pay more than the minimum amount due. It will take years to pay off the balance if you’re only paying minimums.  If you can’t put those credit cards away just yet, then try to stop juggling them – this can get you into even more hot water.
Here a few more suggestions:

  1. Create a budget. You can find sample budgets online.
  2. Become aware of your spending habits. Save all receipts from all purchases to see where your money goes.
  3. Set some goals. Start with short-term goals that are reasonable and attainable like paying off one of your credit cards, and then add medium- term, then long-term goals. You will feel better about yourself and more in control of your finances if you start to achieve even small financial goals.
  4. Look at ways to cut your monthly spending. Do you really need that $4 latte every day? That’s $80 a month, based on 20 work days, and $960 a year.
  5. Can you cut some of your household expenses? Look at what you pay for cable, telephone, etc.

Try not to be too drastic with your cuts. You don’t want to feel deprived. You want a plan that you can realistically stick with.

If you’ve made these changes and are still overwhelmed, or if you just don’t know where to start, it may be time to speak to someone at your local credit counseling agency about financial management. Or if your finances are completely out of control — you can’t pay bills, there is no money left for groceries, or the collection agencies are starting to call, then you may want to consider getting a Fresh Start. Whether it’s a consumer proposal or bankruptcy, starting with a clean slate can help you live a more fulfilling and healthier life without the constant worry over the burden of debt.

By Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)