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New Year Resolutions: Tips to Pay Down Debt and Grow Your SavingsRateSupermarket.ca Challenges Canadians to Get Financially Fit in 2012 (December 29, 2011)
TORONTO, ONTARIO -- (Marketwire) -- 12/29/11 -- Millions of people commit to getting in shape for their New Year's Resolution, but RateSupermarket.ca is challenging Canadians to get financially fit as well. Canada's rate comparison website for personal finance products urges consumers to tackle their personal debt and grow their savings in 2012.
"Getting healthy and starting a new hobby are all great resolutions for the New Year," says Kelvin Managroo, President of RateSupermarket.ca. "But given the current global economic situation and forecast for low growth over the next few years, the best thing Canadians can do in 2012 is pay down debt and grow savings."
Here are RateSupermarket.ca's top tips to get you started in the New Year:
1) Get Real About Your Debt
First things first, how much debt are we talking about here? With automated payments coming out of your account, it's easy to lose track of the total amount you owe. Start by making a list of all your debts and their respective interest rate charges. This includes balances owing on your credit cards (don't forget the store cards), your student loan, line of credit, car loan and your mortgage.
2) Pay off Your Highest Interest Debt First
Sort your list of debts from highest to lowest in terms of interest rates. Tackle the debt with the highest interest first. This is likely to be your credit card debt which can have interest rates of 19-22 per cent.
In order to start paying this off you need to do 2 things: 1) STOP racking up more debt and 2) Make a BUDGET and stick to it. Allocate a minimum of 10% of your after tax income to paying off your debt.
3) Build Equity in Your Home
Buy building equity in your home, not only are you paying off your mortgage faster, but you end up saving a ton of money in interest fees. It's also a great way to reduce your risk exposure when interest rates eventually increase.
Start by switching your monthly mortgage payments to bi-weekly rapid payments. When you pay every 2 weeks instead of every month, you can save over $13,000 in interest over the life of your mortgage (assuming a $200,000 mortgage amortized over 25 years). Then try to shave a year or two off of your amortization period when it's time to renew or refinance, especially with today's low mortgage rates. Finally, take advantage of lump sum payment privileges and make an annual payment against your mortgage principal.
4) Be a Smart Shopper
Savvy shoppers save money. Compare the market and take advantage of offers that can help you pay off debt faster or grow your savings more quickly.
If you have an outstanding credit card balance that you can't get on top off, consider moving it to a low interest balance transfer credit card. There are cards out there offering 0 per cent interest on balance transfers for up to 10 months, which enables you to pay down the balance rather than paying interest.
If you're looking to build your savings, go with a provider that doesn't charge fees, and always make sure that the interest rate, on products like high interest savings accounts, are competitive. Take advantage of government incentives and top up your RRSPs and open a TFSA.
5) Get Some Expert Advice
If you feel like you're in over your head and that no amount of budgeting can help you pay off your debts, then speak to a credit counsellor. There are many not-for-profit agencies that can help you put a plan in place to get you back on the right track.
"With a little bit of planning and a whole lot of discipline, we can all become more financially fit in 2012." says Mangaroo.
About RateSupermarket.ca (http://www.ratesupermarket.ca/)
RateSupermarket.ca is the largest impartial rate comparison service for personal finance products in Canada. Founded in May of 2008, their easy to use comparison engines provide much needed transparency into the Canadian financial market and allow visitors to quickly find the best rates. Over 1.5M Canadians have turned to RateSupermarket.ca to save money on their mortgage, insurance, credit cards, savings account and GICs.
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