Smith: Advice on how to endure the financial blues of January

Financial columnist Doreen Smith on dealing with the post-Christmas personal finance crunch.

Along with the cold winter winds of January come the cold reality of the financial blues after the festive season.

Most people spend extra during December and the financial hang over starts in January.  This may be a time for belt tightening.

A $2,000 credit card balance at 18% interest costs approx you close to $400 a year in interest costs, a credit card balance at 28%—the interest rate charged by most credit cards will cost you $560 per year.

Some people always carry a balance on their credit cards – you are making the credit card companies richer and yourself poorer.

If you need to get your credit card out of constant use, put it in the freezer and freeze it in a container of water or perhaps cut your credit card up.  How many credit cards do you need?

Now when I am shopping in the big local department stores, the cashiers routinely give discounts and encourage customers to charge their purchases on the store credit card instead of paying cash or using a non store credit card.

When large department stores pay staff during every transaction to encourage credit card use to benefit their store, this is big business and big profit.

The reality is about 50 per cent of people carry a balance on their credit card and this is a huge profit centre for department stores.

The beginning of the year is a good time to review all your costs to see if you can trim some of your expenses.

Review your telephone, cable, internet, and utility costs.

Are you paying too much for your home insurance, mortgage or life insurance?

Can you reduce energy costs by turning down your thermostat or driving less?

Can you car pool with a family member or neighbor to work or to shop, or can you walk instead of driving some of the time?

Can you slash your social or entertaining costs?

By eliminating the daily stop for coffee in a drive through will save the cost of the coffee purchase and the cost of idling your vehicle in the long drive through.

If take-out coffee and restaurant food is costing you money you don’t have, then brown bag your lunch.

You may reduce your waist line along with reducing your food costs.

Keep a list of what you spend your money on.  You can then decide what is important to you and what you can easily give up.

We all lead busy lives but we should be able to find time on the weekend to make a big crock pot of soup or chili to enjoy for lunches or dinner. Dust off your cookbook and take turns preparing meals in your family. Make it a fun family theme.

Look for low-cost or no-cost things to do.

Make it a game in your family to come up with new ideas on how to not spend money.  Write down your ideas and share them with each other.

If you have a goal of a family holiday costing you thousands of dollars that never seems to happen, make some lifestyle changes to make it happen.

Instead of spending money daily or weekly on coffee, take out lunch and restaurant food,  save the dollars for a family get away.

Saving money can be healthy and fun.

Doreen Smith is a Certified Financial Planner with Capri Wealth Management.