Drowning in January debt?

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If you loaded your credit cards last month,  now that Christmas is over and the credit card companies and various department stores are busy sending out the statements, you might just want to run for the hills or sleep until Spring because you feel like you are drowning in January debt.

Debts cost money, and your health and your relationship too

Unless you have budgeted for the Holiday expenses and only used your credit cards to take advantage of the points,, you may be one of the millions of people who used credit because there was no other way to pay for expenses around the Holidays.  If this is so, you probably try avoiding to think about the coming bills. If the bills have started coming in, you may even have put them out of sight because you feel totally stressed at finding out the total of what you now owe.

And this can be you whether you make $30,000 or $150,000 a year.  Unless they make a conscious choice to save, there is usually an increases in expenses as the income goes up.  I have worked in financial services and I regularly met families with incomes of $150,000 a year who were also strapped with consumer debts almost equal to their income.  The advantage you have if you are in a higher income bracket is that you can most likely cut unnecessary expenses just because you have more of them.  The drawback you have is you may be afraid to lose your standing with your social network.

Let’s be real.  Unless you are facing a financial crisis because of illness or because you lost your job, if you are drowning under credit  card debts or other consumer debts, it most likely means you have a pattern of overspending and it will not resolve itself overnight.  And you will most likely find it painful.

But for me nothing is as painful as staying awake at night and worrying about having enough money to pay the mortgage or the rent, the food and other necessities like insurance and medication.  Nothing is as painful as seeing what you could end up paying in interest alone if you don’t clear those debts.

I recently had a credit card statement of $2,890. (which I paid in total before the due date) and I saw the small print that indicated it would take 35 years and 5 months to pay if I only made minimum payments of around $65.00 (interest rate 19.95%).  I was curious and calculated it would cost me over $12,000 in interests alone if I chose to go that route.  Scary.

Needless to say that putting the bills out of sight will not make the problem go away.  You have to open the statements and figure out a plan of action to pay those debts.  If you use denial you could end up with a collection agency at your doorstep or worse.

While paying 3 or 4 times the cost of your purchases in interests alone is painful on your wallet, the stress caused by debts will also damage your health and it can also damage your relationship.  Fights about money is one of the leading causes of unhappiness and divorce.  See this article about debts and divorce.

A plan to attack the debt

My first piece of advice is make sure you are well rested before you tackle the problem.  So no trying to do this in the evening after a full day of work.  Better wait until you have some quiet time in the morning, after a good night’s sleep.

If you have children, now would be a good time to ask grandma or a friend to have them over for a few hours so you can concentrate on the task.  If you are a two parent family, you need to do this together, whether or not both of you bring in income.

Get dressed, have a good breakfast and make your favorite cup of coffee, or tea.  It’s important to see this as work, because it is.  Hence the “get dressed” note.

Clear the table, gather the bills, as well as pens and paper and your bank statement for your checking account

Make a list of all the bills, including date due, and the interest rate of each.

Add to get the total of what you owe

Looking at the total and the balance in your checking account, determine if you can pay all your bills in totality before the due dates.  If so, write the cheques – and post date them as appropriate, or make the payments online, again setting the date of payments appropriately so that you don’t pay a penny in interest.

Get up and dance.  Well done.

If on the other hand you see that there is no way you can pay it all, you will now have to set a payment schedule.   Before you do that step, I want you to take some time to look at and think where you can cut expenses so you can add more money to your payments.

Here are some ideas to find money to pay down the debt (and avoid adding more)

. Put the credit cards away – from now on it’s cash only.  This is not punishment.  It’s to ensure you succeed.

.  If you normally eat out at lunch time, commit to bringing your lunch every day.  This can save you $75- $150 a month

.  Make a thermos of coffee at home to bring to work.  Savings: $35.00 or more if you normally have cappucino or other fancy brew

Learn to do all your errands in one outing.  Gas is expensive. Turning your engine on requires a lot of gas, especially in cold climate, so avoid short, unnecessary trips.  Walk instead.

.  Vow to shop in your pantry, freezer and fridge until you run out of a particular group of food

.  Eat seasonal food: cabbage, carrots, rutabaga, potatoes are cheaper than the asparagus at $7.00 a pound.  Lentils add protein to a good vegetable soup and chickpeas, kidney beans and other legumes cost about 20% of what meat costs.

.  Commit to “no take out” – learn to make your favorite at home.  There are litterally thousands of websites with great recipes.  Calculate how much you normally spend on take out and see it as savings.

.  Downsize your cell phone plan.  If you have a computer at home, learn to use your phone for phone calls only.  This alone can save you over $1,000 a year.

.  Put your cable service on ice.  You can either cancel for six months and then pay the $50. installation fee if you decide you “need” it or I know some companies will allow you to pause the service, as if you are going away for the winter, pay a minimal fee of around $5. a month and you don’t need to pay for installation fee when you want to activate it again.

. If you live in cold climate, wear a sweater inside and lower the thermostat.  Definitely lower the thermostat during the night.  A lower house temperature not only saves you money.  You sleep better when it’s cooler, cooler temperature is also better for your health.

. Unless you need your car for work, if you normally drive to work and also pay for parking, try co-sharing, taking the bus or walking.

. If you splurged on a big item for yourself, brainstorm whether you can return it and get a refund.  I know this hurts but you’ll be proud of yourself.  That’s priceless.

. Brainstorm whether there is a possibility to take on a second job.  Even if only for 6 months, an extra few hundreds a month can save you lots in interests costs.

Last but not least: making payments

Now the bills.  Redo your list and put the one(s) with the highest interest rate at the top.  In my example above, the interest rate of my credit card is 19.95%, which is high but not as high as department stores rates which usually hover around 29%., in which case a $2,890. bill paid with minimum payments would likely cost you $15,000+ in interests alone.  This is the one you will concentrate on paying first.

Write down and add the total of the minimum payments for all bills.  You must pay at least the minimum payment.

Looking at your finances, determine how much you can pay on the bill(s) with the highest interest rate.  You need to put the maximum you can on those highest interest bills.  The more, the better.

As any extra money becomes available during the month – either from sold purchases or from a second job, put the money toward those highest interest bills.

Of course, as soon as a bill is paid, the “liberated” money goes toward the next highest bill, until all bills are paid.

Put all your bills and your payment schedule in a file.  Every month  any time you make a payment,  enter the date, the amount paid and the balance as per your statement.

Find a low or no-money-needed way to reward yourself as you see the total of your debts melt under the Spring sun.


After you have done the work, if you still feel you cannot possibly either make minimum payment or cannot do more than minimum payment on all your bills, the best thing is to find a social service agency that deals with debts, consolidation and other solutions.  Do not go to private companies who promise to solve your problems.  Ask around you.  Again the best places where you will get real help are usually government funded agencies in the US. In Canada, see this site

Let me know if you found this article useful and if so, please share it with your friends and on social media so I can reach more people.  Thank you










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7 thoughts on “Drowning in January debt?”

  1. I love this suggestion “Vow to shop in your pantry, freezer and fridge until you run out of a particular group of food”. I have adopted this theory this year. Along with saving all my $2 and $1 coins, which paid for Christmas last year (I saved $1181.00 without really noticing). Great post.

    1. so glad you enjoyed and found something useful Sandi – although I am not drowning in January debts, I am shopping my pantry and freezer this January hoping to limit my food budget to $50. max instead of the usual $200+ I have rozen turkey, frozen meat pie as well as chicken, even smoked salmon and my pantry is full: pasta, rice, potatoes, canned tomatoes, canned tuna and salmon as well as peanut butter and 20 lbs of flour to make dessert and tortillas and my fridge has cabbage, apples and oranges, goat cheese and mozzarella- so let’s see if I can limit my shopping to the planned $50.

      good for you to save your coins, I had planned to that last January but it did not happen. Will try for this year.

      take care

  2. It’s unfortunate that we aren’t taught about credit and debt before we get into the habit of spending. The other issue is when you fall on hard times, then it’s more tempting (and for some necessary) to use more credit. But then it’s also harder to break that habit.

    1. Yes, you are right – and it’s so important to build some savings and an emergency fund so as not to have to use credit when life happens. Breaking bad habits needs more self-love to build habits that bring real joy and happiness vs temporary pleasures. Pleasures are good as long as we don’t have to pay with peace of mind.

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