Your Debt Solutions Experts
BDO Hamilton

805-25 Main Street West
Hamilton, Ontario
L8P 1H1

(905)-524-1008

How to Make Debt Relief A Reality in the New Year

Do you struggle to maintain motivation when it comes to those New Year goals? Don’t let your debt relief goals be one of those forgotten promises. This year, maintain your momentum by sticking to achievable milestones for maximum results.

Why is it so challenging to pay off debt?

Aside from losing weight and getting more active, Canadians across the board resolve to get on top of their debt and save more money each year. Yet each year, personal debt balances grow instead of shrink. Rising interest rates and inflation haven’t lightened the load and affordability has become a major challenge for many Canadians. Here’s what our recent Affordability Index report revealed:

  • 34 per cent of two significant demographics told us they’re overwhelmed by
    their debt and don’t know how to cope: millennials and parents with
    children at home.
  • 65 per cent of Canadians have little to no retirement savings
  • One-in-three Canadians find it challenging to afford basic utilities while
    one-in-four find it hard to feed their families.


How to get past the debt roadblock and start making progress

If you’ve had difficulty paying down debt in the past, you might just need to take a different approach. Here’s how you can use SMART goals to your advantage and meet all your short, medium and long-term goals:

  1. Be specific. What financial decisions were you proud of in 2018? What
    behaviours do you want to change this year? Write down exactly what you want to do differently. For instance, paying off more debt might mean spending less, assessing your wants vs. needs and lowering your monthly costs. Use this budget worksheet to help you plan your goals.
  2. Make it measurable. Only you can decide, based on your budget and income, how much money you can dedicate to debt repayment each month. Start by determining your total debt load, then measure how much you’re paying off by tracking your progress and paying more than the minimum payments. One great way to pay off debt efficiently is to use the debt avalanche method. It will also keep you motivated as you see your balances disappear.
  3. Keep it achievable. Getting out of debt will take time, which is why you need to make sure you’re setting goals you can easily meet. This will help you avoid frustration as well as keep you focused. Break your debt repayment goal into smaller steps by:
    • Spending less or rethinking purchases before you buy
    • Following a budget and cutting out all unnecessary expenses
    • Adding money to an emergency fund so you won’t have to rely on debt when an unexpected expense comes along
  4. Make it realistic. You can’t do it all at once. Readjust your goals as needed so you’re keeping your finances grounded in reality. For example: If you’re struggling to add to savings in addition to your debt repayment each month, your budget might need adjustment.
  5. Keep it within a time-frame. This doesn’t always have to be a strict deadline. However, it’s good to set time-framed goals such as paying off a small credit card balance in three months or adding $500 to your emergency fund. You can always adjust your time-frame as needed, but setting a deadline is a good way to stay motivated.


How to make the most of your debt repayment

If you’re a visual person who needs reminders to get through their day, use a budgeting app to keep your money goals visible. You can also create a financial dream board or financial goal thermometer so you and your family can track your progress.

And lastly, it’s ok to ask for help when you need it. This might mean checking out your financial options using a debt options calculator, following a personal finance blogger for motivation, or speaking with a debt relief professional who can go over all your options and provide advice based on your specific needs.

How will you make your debt relief goals a reality in 2019? Share your thoughts with us on Twitter using the hashtags #LeaveDebtBehind #NewYearsResolution #DebtAdvice



Book a Free Consultation