How to get ahead of your holiday debt

Merry Debtmas! If you find yourself dealing with holiday debt this month, you are not alone. Most of us overspend during the holidays, and many people find themselves in similar situations in the new year. The good news is there are several methods to help you pull ahead of your debt this month. Starting off strong can limit the stress of meeting your financial obligations. Here are some tips to reduce your holiday debt and put you on the right track for 2024.

Use your home to your advantage

If you are a home owner with holiday debt, you might be feeling especially overwhelmed. After all, mortgage payments on top of holiday bills can add up, and this can definitely be stressful. However, is there a way you can use your home to your advantage during this time? Home owners who have built up equity in their homes may benefit from a refinance. This allows you to access extra cash flow which you can use to get your debts under control. Freeing up this equity gives you the opportunity to clear out much of your holiday debt. 

Alternatively, you might decide to lengthen your amortization period on your mortgage. This means your mortgage payments will be smaller, and stretched out over a longer timeframe. Paying a bit less each month can help take the pressure off your finances. Of course, it’s very important to speak to a broker before making any decisions about your mortgage.

Avoid January shopping “deals”

In January, you can’t avoid businesses and stores trying to sell you on their post-holiday deals. You will often see phrases such as “Boxing Week extended” accompanied by tempting offers on all kinds of products and services. However, if you are already dealing with holiday debt, it’s best not to indulge. Odds are you don’t need whatever these stores are selling, and making these purchases can push you further into debt. A deal is only a deal if you are buying something you truly need! If you are already feeling burned out from spending over the holidays, don’t extend this habit into January.

Don’t neglect any payments

If you have some debts that are much bigger than the others, or have higher interest rates, it’s tempting to prioritize those. However, be sure not to avoid any debts or forget to make your payments. When you miss payment due dates, this can result in late fees and penalties. As a result, you might find it even harder to pay your debts off. It’s best to ensure you are making the minimum payments on all of your debts, rather than focusing all your efforts on one or two. This will help you avoid late fees and will keep you on the right track with all of your payments. 

Take note for next year

We know it’s only January, but that means you can probably recall how much you spent during the past holiday season. You can use that amount to think about how much you should expect to spend during the 2024 holidays. This allows you to start setting aside money if you want to build up your savings. It can also help you determine areas where you can cut back on spending next year. We often overspend during the holidays, but if you know your own spending habits, you can prepare for the upcoming holiday season. You don’t need to buy all your gifts in January, of course, but you can gain an understanding of your typical holiday expenses.

Always use a mortgage broker

Finally, make sure you use a mortgage broker if you need a hand dealing with your holiday debt. If you are a home owner, we can help you determine whether you can use your home as part of the solution to your debt payments. If you are thinking about buying a home but aren’t sure whether you can do so with existing debts, we are here to help you understand your options. The 2024 market is just starting to unfold, and we are ready to guide you through it!

Holiday debt can be stressful, but you are certainly not alone. Many Canadians are in the same situation, but the route you take will not be the exact same as anyone else. We all have unique circumstances, which require tailored solutions. Let a broker be part of yours!

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.