As written by Sean Rankin, Mortgage Agent
A new year brings a host of new year’s resolutions. It’s very common for people to make these resolutions around family, friends, eating better, or even the cliché going to the gym more. This year, ensure to set some resolutions around your finances.
Many homeowners are feeling caught between competing priorities at this time of year. From paying off added expenses incurred over the holidays, to making an RRSP contribution before the March 1 deadline, while adapting to the increased cost of living and higher interest rates. It may be possible to simplify debt and generate cash flow to tackle these challenges in an effective way.
Review your monthly spending
Are there subscriptions to services you are not actively using? Are you on the correct phone plan? Are delivery services or dining out consuming more of your monthly budget than they probably should? A fresh new year is a great time for a reset to try and curb some of those habits that may be costing you money.
Check for high-interest debt payments
Leaving a balance on a high-interest expense, such as a credit card, can quickly create shockingly high monthly payments that are almost purely interest. Tackle those first. If you’re finding it a little difficult to manage, we can discuss some options for consolidating your high-interest debt into lower-rate options such as a home equity line of credit.
Renewing this year?
Let’s have a discussion early so we can fully explore your options to give you a sense of what your possible future mortgage payments will be. Being able to forecast future expenses more accurately will help you make any necessary adjustments in advance, which can lessen your reliance on high-interest credit.
Get ahead on your income taxes for the year
Getting your taxes done, or at least having a good idea of what they will be before the RRSP contribution deadline has passed, can help you avoid unnecessary payments and gives you time to plan and budget accordingly.
Invest – even a little!
It can be difficult to find money to invest, and after working hard to reduce expenses and increase your cash flow, it’s tempting to treat yourself by spending your newly “found” money. How about setting a goal to direct these funds to purchase investments instead? Investing in a market downturn is effectively purchasing investments on sale!
Plan to put some money away for a rainy day
Even the best-laid plans can experience pitfalls. An emergency fund is essential to helping you absorb unexpected expenses without turning to credit.
No matter how your 2022 was financially – be it great or challenging – starting the new year with a plan and a realistic budget is the solid foundation you need to tackle any financial hurdles head-on.
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