How to pay down debt and increase your cash flow

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(NC)—Let 2013 be your lucky year—the year when you

pay off your debt and build up extra cash for a great

vacation, the newest smartphone, or increase your

savings. Now that the holidays are over and the bills are

in, you may think paying down your debt is not possible.

Don't despair—one way to tackle debt is to create a

budget that will show you how much you are earning,

spending and saving.

Consider some quick ways to save money. Spending

$2.50 a day on coffee costs you $912.50 a year. You can

make coffee at home and cut back on the amount you buy.

If you have a balance on your credit card, try to pay it off,

or pay off as much as possible of what you owe. Carrying

a balance on your card means that everything you charge

to that card actually costs you more than the purchase

price, because you are paying interest. If you buy a new T.V. for $1,000 and pay only the minimum each month, it will take you almost 11 years to pay it off in full and it will have cost you $1,989 ($989 in interest)—almost twice the original price.

The Financial Consumer Agency of Canada has tips on beating your debt, doing a debt check-up and creating a budget on its website at itpaystoknow.gc.ca. Interest rates are still low, so you may want to get a consolidation loan to pay down debts, especially those with high interest rates. Remember that if interest rates go up this year, your payments on any variable interest rate loans like a line of credit or a mortgage will increase.

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