Its Time To Go On A Spending Diet

MNP LTD Trustee Randy Kobbert was interviewed by The Lethbridge Herald to discuss post-holiday debt and budgeting for the New Year. The original article was originally posted in The Lethbridge Herald on January 3, 2015.

Dave Mabell

LETHBRIDGE HERALD

[email protected]

Santa isn’t due for another 12 months. But most of his commercial cohorts remain open every day – and they’ll be reminding you of all the gifts you bought.

January’s bills come just as predictably as winter’s snowdrifts and Arctic chill.

And for some Albertans, reports Randy Kobbert, the financial pain can be even more severe. Kobbert, a Lethbridge bankruptcy trustee, says that’s when professional advice may be needed.

Trustees see their appointment schedules fill every January, as credit card bills or past-due notices arrive in southern Alberta homes. While the Lethbridge economy isn’t as directly tied to the energy industry as in cities to the north, some residents may nevertheless be overcome by their accumulated debts.

“We anticipate many more people will have trouble paying off their post-holiday debt this year,” Kobbert says.

Continuing low rates of consumer credit interest are another factor, he points out – although department store rates remain at 29.9 per cent – with credit cards so readily available.

Southern Alberta’s agriculture-related industries create an economic buffer, Kobbert points out. So it’s uncertain how serious an impact the current low returns on oil will make in southwest Alberta.

“But there’s still a lot of people who travel to work in the oilpatch,” and they could be hit hard.

Seniors remain vulnerable as well, Kobbert says, and not just because some are hard-pressed to pay higher property taxes and utility bills from their pension cheques. They’re still falling victim to a variety of scams, he warns.

To safeguard their savings, he advises seniors to check with other family members before putting their savings at serious risk.

For everyone, Kobbert says, in January it’s time to go on a “spending diet” despite the appeal of pay-later plans for clearance items.

“A bargain isn’t a smart purchase if it’s going on credit,” he warns.

Now is also a good time to count how much you’re spending on drive-through coffee and other routines, he adds.

It’s also important to take an honest look at your debt situation, Kobbert suggests.

“With a clear picture of your financial situation, you will be much better prepared to begin paying off your debt.”

Rather than making just the “minimum required” payment, he adds, it makes sense to pay down the highest-interest cards as quickly as possible.

If those bill payments and winter-time expenses are too high – or your household income too low – Kobbert says it might be worthwhile to consider a consolidation loan at a lower interest rate. But once that’s in place, he warns against incurring new debt.

“Halt all your credit card spending,” he advises. “Concentrate on paying with cash or debit.”

And if those steps aren’t enough? Expert help is available.

“Trustees are the only debt professionals that can offer a full range of debt relief options,” Kobbert says. “And they can guarantee legal protection from creditors.”

Putting off a visit – like delaying payment on overdue bills – can lead to further consequences, he cautions.

The sooner the debt resolution process begins, “the more likely you will be able to avoid financial problems like wage garnishments, ruined credit and tax liens.”

Hopefully, a frank discussion with a debt professional will also head off problems in the future. Santa and all his retail friends will be back again, soon enough.

“Take a look at your total spending for the most recent holiday season to create a budget for next year,” Kobbert suggests.

If gifts, parties and travel add up to $4,000, for example, it might be possible to slide $350 each month into your savings account for next December. Knowing they’re already covered might make the season just little brighter.