Doug Hoyes, Bankruptcy Trustee

It never fails: the Hoyes Michalos 310-PLAN telephone help line and our on-line bankruptcy evaluation service get very busy in early January, as people realize they spent too much on their credit cards over Christmas.  I expect that with the continuing recession, this January will be very busy.  So before you get into financial trouble, here are my top three tips for financially surviving Christmas.

First, reduce your debt.  If you already have credit card debt, take steps to reduce it.  If you just pay the minimum balance on your credit cards you can easily spend twice as much for an item when you include the interest costs.  The real problem with high debt is that you are not in control.  The bank controls you, because they decide how much interest you pay, and when your payments are due. If you have more debt than you can handle, consider filing a consumer proposal to deal with your debts.

Second, to avoid increasing your debt this Christmas, use cash or a debit card.  Leave your credit cards at home.  You will spend less if you use cash, because it’s psychologically harder to part with “real money” than it is to swipe your credit card.

Finally, spend less.  Even if you are paying cash, keep your spending low.  Two years ago we wanted to impress everyone by flaunting our spending.  This year frugality is the new bling: the cool people are the people who spend wisely, not the lavish spenders.  Consider gifts like baby-sitting or preparing a meal.  These are gifts that are appreciated but are not expensive.  Discuss the topic with your family and friends.  They are in the same position as you are, so they will appreciate a plan where you can all avoid unnecessary spending.

A simple budget can help you keep your spending under control.

Remember, the bankruptcy rate spikes after Christmas, so now is the time to get your finances under control.  If you already have more debt than you can handle, please contact us today to discuss options for dealing with your debt, so you can look forward to a less stressful new year.