Paying down debt: How to take control of finances after holiday spending, rising inflation

Getting your finances on track in 2023 We get timely tips to help you start off the new year on the right financial foot.

After holiday spending and as inflation continues to rise, many are trying to implement money management principles for the new year.

“It’s important to get back on track and to avoid an avalanche of financial despair that you may not be able to get out of,” says Tina Powell, who is an MNP insolvency trustee.

According to a CIBC report, paying down debt is a top priority for Canadians this year.

A way to tackle this goal would be to review household budgets, ensure each expense can be handled, then determine how much is left over for debt repayment, says Powell.

“We also encourage people to make a list of their debt, starting with the type of debt, the amount of interest they’re paying on their monthly payment to best determine where they can best make adjustments to their budget to be able to pay down this debt,” she says.

In addition to focusing on debt repayment, she also urges people to avoid spending money on products that aren’t deemed essential, and to stop using credit to subsidize income.

“If it’s not a necessity, don’t buy it,” says Powell.

“Live within your means because if you’re using credit to subsidize your income, at some point you’ll run out of credit and your whole lifestyle will have to change.”

Those who are struggling to reach their financial goals are encouraged to meet with a licensed consulting trustee to create a solid plan to manage debt.