Did you spend more than you could afford over the holidays? If so, right now…
The time has come once again…
Merry Debtmas is back again, but it looks a little different this year. The pandemic has split people into two camps: those who spent less over the holidays to save money, and those who blew their budgets out trying to help the holidays feel normal.
If you’re part of the second camp, then Merry Debtmas indeed. You might be thinking to yourself, “How am I supposed to pay everything off?” You know those bills will be rolling in soon, and the last thing you want is to still be paying off 2020 holiday bills by the next holiday season.
Don’t fret – we’re here to help your debtmas be as painless as possible. It’s important to reach out to an unbiased mortgage professional early to make sure you start the new year off on the right foot.
Whether you’re a current homeowner or looking to purchase your first home, you could be saving thousands of dollars per year. For existing homeowners, there is an opportunity to secure a lower interest rate on your home. For both existing homeowners and those looking to purchase, it is a great way to consolidate your unsecured debt and finance your dream home!
First things first
Start the New Year off right – think about your debt and your goals. What do you want to achieve this year? Make a plan and create a realistic budget based on that. The best first step is to get a grasp on what you have versus what you owe. Until you have those numbers, you can’t create an attainable plan for yourself. In general, most of those bills will likely be in by mid-January. Once that’s all set, you can begin thinking about clearing out that holiday debt.
Where can you save?
When you hear people telling you to just “start saving your money,” that sounds simple enough. The question is, where can you actually find that extra money? It can be tricky to think of places where you have funds lying around for your debtmas recovery. The answer might be in your good debt.
Good debt is debt that has long-term value, and something that you will fully pay off down the road. If you have a house with a mortgage, that mortgage is good debt – your home is valuable and worth the debt you have now. Maybe you can refinance your mortgage for a lower rate – especially now when mortgage rates are down in much of Canada. With a lower rate, you’ll be paying less interest on your home, and putting more of that money aside for your savings.
If you can, it’s also a good idea to make more frequent mortgage payments. You can chip away at your debt and pay it off faster, which will save you extra money for future debtmases.
Refinancing can be confusing, but we’re here to help make sense of it! You can also check out some of our other postshere to help you understand what you need to know.
Avoiding bad debt
On the other hand, do your best to avoid that bad debt. Your bad debt is your credit card debt and loans, which become even worse if you have high-interest rates on the balances you owe. Most of us use credit cards – the trick is to use them wisely. Pay off your credit card debt often to save money from those interest rates. It seems like an insignificant amount right now, but it will help you down the line.
Apart from good and bad debt, consider your daily spending habits too. Maybe there’s some room for saving there. Stay realistic – don’t pretend you’ll cut out coffee runs if you know deep down you won’t. Think hard about what you want to continue spending money on, and what you can live without. Even if you only save a little bit each month, that amount will add up to help keep your head above water as you navigate your debtmas payments.
Don’t be afraid of Debtmas
Your debtmas recovery might seem a bit shakier this year, and that’s okay. A lot of people’s financial situations have been uncertain in 2020. Just don’t avoid your debt; the longer you leave it, the scarier it becomes. It’s hard to get started on those payments, especially in this post-holiday gloom, but you’ll thank yourself later.
Not sure where to begin with the bills? Take a look at the bills with the highest interest rates. It’s best to get those out of the way so you don’t end up drowning in interest. If there are any payments you know you can pay off easily, start hacking away at those. Keep at it until your debtmas is down for a long winter nap.
We want to help you understand your financial options. If you’re thinking about refinancing your mortgage to leverage your home’s equity, or buying a home in 2021, reach out today! Give us a call at Clinton Wilkins Mortgage Team at 902-482-2770, orget in touch with us here.