11 New Year’s Resolutions For Getting Rid of Debt

Official blog of Refresh Financial

11 New Year’s Resolutions For Getting Rid of Debt

 

2020 was a tough year financially for many Canadians. The Chartered Professional Accountants of Canada (CPA Canada) reported in its 2020 Canadian Finance Study that one in three Canadians are concerned about COVID-19’s impact on their personal finances. However, a New Year means time to start fresh, and while lots of people are making resolutions to lose weight or procrastinate less, why not consider making your resolutions about your money?

We want you to make 2021 the year you turn your debts and credit around, starting with making and seeing through these resolutions:

1. Get your free credit report from both bureaus.

Your credit habits are reported to both Equifax and TransUnion here in Canada, and you are entitled to one free credit report per year from each of these. No matter how terrified you are of seeing what’s on there, you will not clean up your credit without knowing. Although these do not show you your actual credit score, they are a fantastic resource to see what it is in your credit history. So grab your free credit reports from the bureaus and start going through everything that needs to change.

2. Clean up your credit report.

Skim through your reports with a fine-toothed comb, ensuring that everything that’s on there is really yours. Reviewing your credit report can reveal identity theft or even miscommunications between you and your lenders that can be cleared up with a simple phone call. Cleaning up all of these small issues on your credit report could have a significant impact on your overall credit score.

3. Stay on top of your credit score with a credit monitoring service.

Now that you have your credit reports, you also need to know your score and how you measure up. Staying on top of your credit score and credit report is half the struggle of improving your credit. Refresh Financial's Black Tier dashboard includes the ability to log in and check your credit score anytime you want. Learn more about Black Tier here.

4. Get a credit product designed to bring up your credit score.

Whether you choose a secured card, secured line of credit, or a credit builder loan, each of these credit products will help you bring your score up from where it was. If you want to get started now, check out Refresh Financial’s Credit Builder Program.

5. Spend less.

While this may seem like a no-brainer, a list of resolutions for people looking to improve their credit would not be complete without it. You must learn to live within your means. You have to see the value in putting off gratification in favour of your future financial security.

6. Set up automatic payments for your debts.

Making payments late is both expensive and terrible for your credit score. You’re going to see each late payment show up on your credit report if you’re not careful. So, why not prevent any payments from potentially being late by setting them up to come out of your bank automatically on payday. Just set it and forget it and you never have to worry about being late again.

7. Pay more than the minimum payment every month.

Interest on credit products is costly, but you can minimize the amounts you pay in interest by paying down your debts faster. Unfortunately, you won’t do that by only paying the minimum payment. Set your payments to be as much as you can possibly afford, to start bringing those debts down and minimizing what you pay in interest.

8. Limit your credit usage.

Leave your credit cards at home and pay with cash in hand instead. Even if you’re a points collector and your card gives you great rewards. Just ask yourself this simple question: do I have a debt problem or do I have a lack of points problem? Chances are, the answer is that you have a bigger debt problem than you do with rewards points. Of course, they are great to collect, but not at the expense of your financial well-being.

9. Start saving.

Assess your finances and see where you can cut down. Choose an amount to start putting away every month and grab yourself a high-interest savings account to keep it in, then watch your money grow.

10. Start an emergency fund.

Experts say to put between 3-6 months worth of monthly expenses away for those just-in-case moments. While we hate to think anything terrible will happen, don’t bank on it not happening to you. Be prepared instead.

11. Switch to lower interest credit products.

Some credit cards have astronomical interest rates. Do some comparison shopping and find a new card with a lower rate to transfer your balance to. You’re going to save yourself a ton of money in interest this way.

Even if you just resolve to do some of these things in 2021, you’re going to be well on your way to an improving credit score. None of these are difficult. The hardest part is always making the decision to get these things done, and mustering up the motivation to keep it up. At Refresh Financial, we believe in you. 2021 is going to be your year!

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