GetCovered.ca - Pay Down Debt

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Pay Down that Holiday Debt

This is the time of year when many people cringe at the approach of the mailman, fearfully awaiting the dreaded January credit card statement.

According to the Canadian Council on Social Development* , Canadians are racking up record amounts of debt on their VISA, MasterCard and department store credit cards. A large chunk of this debt is accrued during the holiday season. If you find yourself in this situation, here is a simple strategy to get yourself out of debt as soon as possible.

The first step is simple…stop using your credit cards! It’s a tough habit to break, but try and use credit only for absolute emergencies. Instead, use debit cards or write cheques (where accepted). This will ensure that you only spend what you have in the bank.

Second, organize your debts in order of highest interest rate to lowest. There is no sense in paying off that 8% line of credit when you are being charged 22% on the balance of your department store credit card. The same magic of compound interest that makes our savings grow is the enemy when it comes to debt, so make sure to tackle the debts on which you are paying the highest amount of interest first. Put as much as you can towards that particular debt, while continuing to make the minimum payments on your other debts.

Once you have paid off your high-interest debt, put the amount that you were paying for it towards your second highest debt, in addition to the minimum you were paying previously. Your monthly payments remain the same. However you are accelerating the rate at which the second debt is repaid. Once this is repaid, do the same for the 3rd highest debt and so on until you are debt free.

Not only have you dug yourself out of debt, but you have also developed some disciplined habits along the way. Now that your debt is paid off, why not “pay yourself” and put those monthly payments into your savings, investments or a universal life plan?

Free Insurnce quotes over the Phone

The best way to get out of debt and stay out is to have a financial plan. If you would like to reap the rewards of a disciplined financial plan, give me a call at (877)-628-5762 and I would be happy to discuss it with you.

* Canadian Council on Social Development (2003) Personal Security Index

The information contacted herein is for Canadian residents only and does not constitute an offer to sell or a solicitation
in any jurisdiction, in which manulife securities or its advisors are not appropriately licenced or registered or
where any product or service is not eligible for sale. details are available on request.
This website is not meant to provide legal or account advice. As each situation is different you should consult your own
professional advisor for advice based on your specific circumstances.
Manulife Securities and the block design are registered service marks and trade marks of
The Manufacturers Life Insurance Company and are used by its affiliates including Manulife Securities Incorporated.
Manulife Securities incorporated is a member cipf.