New year’s resolutions

Is Getting Out of Debt One of Your New Year’s Resolutions?

Guest post by John Adamson CPA, CMA, a Licensed Insolvency Trustee in Ontario. John has over 25 years of experience helping individuals, small businesses, their owners and even lenders, find solutions to their debt problems.

Are you sick and tired of receiving calls from creditors threatening to take legal action against you? Are they saying they can garnish your income if you don’t pay them back? And are you worried that, if they do, you have no idea how you’ll be able to put food on the table?

If so, it’s likely that debt repayment is on your list of New Year’s resolutions.

But how do you make this resolution last more than a few weeks before you give up?

Here are 7 tips to help you make debt repayment a reality in 2022.

1. Acknowledge that debt repayment is a long-term commitment.

Unless you come into a windfall of money through the lotto, you probably won’t be able to pay off your debt in an instant. Instead, you’ll need to chip away at it over a period of time. That said, the effort is worth it. The rewards you reap from debt repayment will benefit every area of your life.

2. Reevaluate your mindset around money.

We live in a society that gears us toward consumption. Every single ad you see on television or in stores makes you believe that by buying x item, you will find contentment and satisfaction. The truth is, it never does, and we end up wanting only more.

Stuff and things do not bring us authentic happiness. Yes, we need food and shelter to live well. But do we really need the latest model smartphone? How about designer clothing? Is a purchase a must just because it’s on sale? Ask yourself before you buy whether you need the item or if it’s an impulse purchase you can do without.

3. Start thinking long-term about your financial life.

Many of us live moment to moment. We can’t give up an opportunity to buy or do something that costs money. We instead put it on credit when we really can’t afford it.

Take a moment to visualize what life would be like without mounting debt. You would eliminate a great source of stress that pervades every area of your life, including your interpersonal relationships. Understanding why you want to cut your debt may help motivate you to pay it off.

4. Take realistic stock of your financial situation.

You won’t be able to make any improvements to your financial life unless you look at the debt you’re really living with. Understand what you owe, the interest you’re being charged, and how long it will take to pay off your debts. Our online debt repayment calculator can help you do that.

5. Make sure your New Year’s resolutions aren’t win-or-lose.

Try to stay away from a win/lose type of resolution. A win/lose goal would look something like this: I’m going to pay back my $20,000 high-interest credit card balance by March 2022. When you have a win/lose goal, you make it more likely that you’ll give up when you don’t achieve it. This will prevent you from moving forward and toward your goal in the future.

6. Implement small changes that will help you achieve debt repayment.

If we leave our decisions up to willpower, we’re less likely to achieve our goal when an impulse hits. Imagine that your goal is to stop eating sweets. Well, if you have candy in the house, you leave it up to your willpower to not eat it. That’s incredibly hard to resist when an impulse for sweets hits you. It would be far better to not have the sweets in the house in the first place.

Rather than leaving success up to willpower, try to focus on small things you can implement easily that will push you toward your goal. This makes your goal easier to achieve. Here are some tips that have helped my clients who want to cut their debt down…

  • Leave all credit cards at home/bring only cash when shopping.
  • Lower credit card limits.
  • Create a bank account designated for debt repayment.
  • Set up an automatic transfer of a portion of your salary to go toward debt repayment.

7. Seek out the help of a Licensed Insolvency Trustee.

A Licensed Insolvency Trustee (LIT) is arguably the best financial advisor in Canada. They are federally licensed and regulated, and can offer you assistance with every debt relief option available – from simple budgeting all the way to Consumer Proposal and Bankruptcy.

After your free initial consultation with an LIT, you will walk away with:

  • A realistic view of your financial situation.
  • A workable, balanced budget.
  • A list of different debt-reduction options available to you.
  • A way out of debt that meets your objectives (e.g., you don’t want to lose all your assets, like your home and car).
  • A way to stop creditors from calling.
  • Advice on how you can rebuild your credit.

Contact Us – Get Help With Your New Year’s Resolutions

Our seasoned experts can assist you with the full range of debt relief options available, from simple budgeting all the way to Bankruptcy. Your debts aren’t going away on their own. It’s time to take a stand and resolve them. Doing so now, will help to protect your family later. Contact us today for a free, no-obligation consultation.

Derek L. Chase, CPA, CA, LIT

Being able to offer debt help assistance to individuals and corporations on a more intimate basis was a driving force in completing a “second CPA” by becoming licensed by the Federal Government as a Licensed Insolvency Trustee (previously Trustee in Bankruptcy) in 1997. It is extremely satisfying to be able to witness lives change for the positive due to a restructuring of financial affairs.