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Your Holiday Debt Plan

Our Holiday Debt Plan Can Have you Debt Free in Three Months

Is the road to financial ruin paved with good intentions? Household debt continues to climb, and the holiday season has stacked on another layer of expenses for Canadians.

Jeff Schwartz, executive director of Consolidated Credit Canada, is encouraged by the financial planning but worries it will not translate into action.

Just like any other New Year’s resolution, if you don’t make a concrete plan and stick to it, it’s not going to happen,” says Schwartz. “You need to think about real dates and real dollars and get this plan going.”

For example, Schwartz points to the financial worry on most peoples’ minds these days: holiday debt.

Let’s make a plan to attack the debt from the holidays,” says Schwartz. “It’s fresh in our minds, and paying it down will build momentum for us to accomplish our other financial goals for 2020.”

To start 2022 off on the right financial foot, Schwartz and the team at Consolidated Credit took the average anticipated holiday spending amount — about $1,600 according to BMO – and came up with a plan to pay it all off:

Real Dollars, a Real Date

Consolidated Credit recommends paying down holiday debt within the first quarter of the New Year. To pay down $1,600, you need to find an extra $533.33 per month for the next three months.

Knowing that number can help inform your plan. For example, knowing you need an extra ~$530 per month, you can choose a fitting job, such as:

  • Ride-sharing
  • Food delivery
  • Seasonal Retail
  • Freelancing

Another way to stick to your holiday debt plan is to restrict spending to using the cash you have on hand.

Cash-only Diet

Don’t let your credit card debt grow – it’s not easy to hit a moving target. Join all the New Years’ dieters in 2022 and limit yourself to cash only. If you don’t have the cash, you can’t buy the item.

When preparing for your cash-only diet, write down your budget and label envelopes corresponding to every budget item.

You can do the equivalent by opening multiple free online chequing accounts. You can nickname each account with the corresponding budget item. Each account represents an envelope.

To make it easier, set up direct deposit for each account to ensure each “envelope” has funds when it’s payday.


Statistics Canada says the average Canadian spends seven percent of their total income on recreation, alcohol, and tobacco. Based on the median income in Canada, that’s roughly $450 per month. Chances are, you had enough fun over the holidays – hibernate and save.

Sometimes people challenge themselves to “no-spend” days. For example, you can start with two no-spend days. The rules are: no matter what, you cannot spend on those days. Instead, you must use what you have on hand.

Depending on your level of commitment, you can later commit to 10 or more “no-spend days” per month. They require one to plan and commit to a spending strategy to avoid making impulse buys.

Frugal grocery shopping

Statistics Canada also says we spend an average of 10 percent of our total income on food or roughly $765 per month. Food is a basic necessity, but treating yourself is not. Buy generic goods, plan your meals, pack your lunches, brew your own coffee, and comparison shop with apps such as Flipp. Shaving 15-20 percent off your grocery spending is well within your reach.

Remember low-cost bulk items such as cereals, rice, pasta, eggs, and canned items. These items can go a long way to stretch your dollar. There are also crackers, cup of noodles, and casseroles to consider.

Forget Wants

The clothes and gadgets you received from Santa should be enough to satisfy for the next three months, if not longer. Impose a moratorium on wants and only buy what you need.

Keep up the momentum

Making these budget cuts will easily save you enough money to pay down holiday debt by April. But don’t stop there – use the payments you were making against your holiday debt to advance other financial goals like existing debt and retirement savings.

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