|By Marketwired .||
|December 30, 2013 09:01 AM EST||
TORONTO, ONTARIO -- (Marketwired) -- 12/30/13 -- Looking to kick 2014 off on a wealthier note? You're not alone - improving money management and achieving financial success top the most common new year's resolutions. However, high debt levels continue to be a lingering issue for many households - the latest numbers show Canadians now owe $1.63 for each dollar they spend.
January is an especially challenging time for financials, as consumers receive the resulting bill from holiday celebrations - but there is hope for those looking to reverse their debt-laden ways.
RateSupermarket.ca, Canada's comprehensive financial rates comparison site, shares the top five tips for reducing debt in the new year.
1. Make A Debt-Busting Budget
The first step to conquering debt is to assess just how bad the damage is - and put a plan in place to address it. Gather up all statements, take note of the additional interest accrued, and set out a timeline for repayment.
A few tips for setting a budget include:
-- 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 -- Take advantage of fantastic free budgeting tools like Mint.com
Once you have a clear picture of what is left over each month, you can start putting it towards paying off your debt.
2. Target High-Interest Debt
Letting high-interest debt linger will lead to bigger debt levels in the long run - especially if you only pay the minimum amount. Credit cards are often the highest-interest culprits, charging up to 29 per cent in some cases, so pay them off first.
3. Be Aggressive With Larger Debt
It's important to take a proactive approach to large amounts of debt - and for most Canadians, that means their mortgage. The new year is the perfect time to try a payment tactic like rapid payments or making a lump sum. Doing so will shave years off the mortgage amortization, saving potentially thousands in interest payments over time.
4. Compare the Market
Will you be renewing or refinancing in 2014 - or even just switching up your credit card? Take the opportunity to get the best rate by comparing the market.
A lower interest rate can take years off of your mortgage, while a different credit card could give you a much lower rate, give you cash back, or help you earn valuable points towards monthly expenses like gas or groceries.
5. Ask A Pro
Fine tune your debt repayment strategy with the help of a financial planner or advisor. 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.
About RateSupermarket.ca (www.ratesupermarket.ca)
Over 3 million Canadians have found their best rate for personal finance products on RateSupermarket.ca. Launched in 2008, RateSupermarket.ca is Canada's most comprehensive rate comparison site, offering visitors transparent access to the best mortgage rates as well as credit cards, bank accounts, insurance quotes and GIC rates.