New year, new spending habits
Money Mistake #1: Not Repaying Debts Quickly
If you’re in the red, you’re not alone. In 2022, the mortgage burden in Canada saw the largest year-over-year increase in more than a decade, and everyone is feeling the pinch as inflation raises the price of everything from groceries to holiday gifts. Budgets are tight, making it difficult to pay bills.
Not all debt is created equal. Some debts, like a low-interest line of credit or a student loan with an interest-free grace period, might not be as pressing as those with higher interest rates. Overall, however, debt reduction is still a good strategy. This is because, of course, over time the interest due on a loan will really add up. In fact, an estimated 41% of Canadians wear a credit card balance each month. (Having a credit card that pays you back is key; read on for tips on how to find the right one for your family.) Start the new year off with a clean slate, or at least a strategy to get you started. in the dark as soon as possible.
You do not know where to start ? There are three main methods for dealing with debt. You can try the snowball strategy, where you pay off the smallest line of credit or credit card balance first, accumulating payment amounts for greater impact as your debts are eliminated. Another option is the avalanche method, where you first focus on writing off the debt with the highest interest rate, then snowball that payment onto the next largest debt, until everything is paid off. Or, if you have a low interest rate credit line linked to the equity in your home, for example, you could consolidate several small debts into one easy-to-follow payment.
Money mistake #2: Using the wrong credit card
Paying with plastic has certain advantages. In addition to being super convenient, grocery shopping and paying household bills with a credit card can also help boost your credit score. According to Equifax, one of two credit bureaus that track Canadians’ credit history, having two or three active credit cards, in addition to other types of credit, such as a line of credit, looks good on a credit report. And a good card will pay you back in rewards that ultimately save you money. In short, using the right card is a win-win.
When comparing credit cards, consider the terms of the account, including interest rate and rewards, to choose one that meets the specific needs of your family. If, for example, you’re not a jet-setter, a travel rewards card might not be worth it.
The Walmart Rewards Mastercard and Walmart Rewards World Mastercard have no annual fee and they reimburse you for your purchases at Walmart stores, gas stations and just about everywhere else. If you’re more of an online shopper, the Walmart Global Rewards Mastercard lets you earn 3% in Walmart Reward Dollars at Walmart.ca. You can watch your Walmart Reward Dollars pile up, then use them for all sorts of free things, from cleaning supplies to new snowsuits for the kids, or anything in between.
Money Mistake #3: Not Talking About Money
Even though we’re more relaxed than generations ago, it’s still generally taboo to talk about your income, your investment portfolio, or your retirement savings plan. Most people avoid financial discussions with colleagues and friends. For those who grew up in a household with a moneyless mantrait can be particularly difficult to have open and constructive conversations about finances, even with a partner.
You do not know where to start ? Start by introducing simple conversations about household expenses into dinner conversation, even with the kids. Let them hear and participate in discussions about saving for a family trip, for example.