Monday January 18 marks Blue Monday – the most depressing day of the year. The third Monday of January is the period when Canadians see less sun, abandon New Year’s Resolutions, and begin receiving credit card bills from the holidays.
Despite several economic forecasts indicating that most Canadians would be spending less than usual on Christmas due to the pandemic, early reports from the U.S. paint a different picture.
Mastercard’s SpendingPulse report indicated that U.S. retail sales rose 3% during this year’s holiday shopping season – from October 11 to December 24. While statistics have yet to come out for Canada, it’s likely that consumers have modeled behaviour south of the border.
“Shopping trends in the U.S. are often mimicked here in Canada, so I wouldn’t be surprised if statistics show that Canadians spent more this holiday season,” says John Eisner, President & CEO of Credit Counselling Services of Atlantic Canada. “A lot of parents may have been feeling the need to offset a bad year by making Christmas extra special for their families, but this type of spending during tough financial times just makes a bad situation worse.”
A 2020 survey by Equifax, a data analytics company, found that almost 20 per cent of Canadians regret their holiday purchases when they get their credit card bill, and about 30 per cent say it would take a month or more to catch up on paying for holiday purchases.
“With the pandemic nowhere near over, it’s pretty scary to think that people are going to be further indebted due to holiday shopping.”
In honour of Blue Monday, Eisner offers five tips for Canadians to help manage increasing holiday debt.
- Stop adding to the total. Even though it might seem like a very simple concept, you have to stop adding to your total debt. If you keep adding to it while you’re trying to pay it off, you’ll simply run in circles and will never make a dent in the debt. Put the cards away, cut them up, or do whatever you must to put a freeze on credit spending. With much of the country in lockdown right now, there’s not much to be spending money on anyway.
- Add extra income. While the economic situation is tough right now, many people are finding themselves with excess time on their hands. If possible, it might be a good idea to look for a way to supplement your income. Consider selling some household items that you don’t use anymore, ask for more hours at work, or look for a side hustle in the gig economy to help bring in some extra money. Make sure you put that additional income towards your debt.
- Scrutinize your expenses. Review your expenses regularly and identify if there’s anywhere you’re able to cut back. For example, perhaps your gym membership has been put on hold temporarily. Can you put that money towards debt in the interim? Try to identify which of your monthly expenses are non-negotiable and which ones you can eliminate or reduce.
- Look for better terms. If you’re always making at least your minimum payments, consider asking your creditors to lower your interest rates. If your history with them is good, they might help you out, which will ultimately help get you to your goals faster. Going to your bank and trying to have your service fees lowered is another way you might be able to save some money each month. Better yet, switch to a free bank.
- Get some help. If these changes aren’t working for you or you can’t seem to find the motivation, consider credit counselling. Sometimes a professional is better able to take an objective lens to your finances and help you identify ways you can cut back on your budget. They can also help you with debt consolidation and work directly with your creditors.
For more information on credit counselling, visit www.SolveYourDebts.com.