The third Monday in January, also known as Blue Monday, is generally regarded as the most depressing day of the year.
While there isn’t much scientific merit behind the reasoning why, there are a few factors that make it feel like an accurate term. The cold weather might prevent you from going outside and enjoying the (little) sunlight there is, plus the holiday bills start rolling in.
As you grapple with the season, you may be feeling the weight of your financial situation. Maybe you have greater credit card debt than you thought. Did you overspend on holiday gatherings and now that’s catching up to you?
According to Equifax Canada, in Q3 of 2024, non-mortgage consumer debt rose to $21,810 per person, a rise of $796 from the same time in 2023. Additionally, combined credit card debt saw a year-over-year increase of 9.4%, which can be attributed to population growth and an increase in average balance for consumers unable to pay their balance in full.
If the lingering anxiety of holiday bills is adding to your Blue Monday doldrums, here are some strategies you can employ to help you from sinking even further.
Take account of your income
If your income is lower or equal to your expenses, then you don’t have any room to pay off your debt. You will need to seriously consider a new job, and maybe even taking on a side hustle while you look for one. While your income remains low, you will need to be strict with any non-essential spending and ensure that the money you’re bringing in is being allocated to necessities such as rent.
If you are in a situation where your income allows you some room for non-essential spending, you may still feel like it’s difficult to set money aside to clear off debt.
However, small changes to your daily habits can have a big impact. If you get takeout a few times a week, you can cut it back to a few times a month, or even cut it out entirely, and put the money you would have spent straight to your debt. These small steps can quickly lead to hundreds of dollars saved over the course of a few months. The important part is to follow through and apply those savings to your debt.
If you aren’t able to forge a path out of debt on your own because of high interest rates, or your inability to service the debt based on increasing gas and food costs, that may be a sign to seek help.
The strategy you use to get out of your debt will depend on your particular situation.
That may look like refinancing a house, a debt consolidation plan or even bankruptcy.
Know your spending type
Before you can come up with a plan of action, it is important to understand how your personality impacts your relationship with money and debt.
For example, if you’re generally a cautious person, you may have little debt to begin with. You’ll also be focused on getting rid of your debt as quickly as possible.
If you’re more of a risk-taker, you may find yourself willing to assume more debt — from investments or other expenses — with the potential for a greater payoff. However, that tendency can also put you at higher risk of getting in financial trouble.
Emotional spending is also a common habit that can be hard to control. Retail therapy, or spending money on yourself, can provide quick hits of endorphins that provide a pleasurable fix. But making purchases as a way to make you feel good can also have long-term repercussions.
If you’re an emotional spender, figuring out the source of your spending issues can help address it in a healthier way. Talking with a financial advisor can help you through this by focusing on attainable methods to get your spending under control.
Envision your future
Creating a long-term goal creates an end game that can help you stay focused and motivated.
Envision what your life is going to be when you no longer have that debt hanging over you, and make choices each day that are consistent with the journey you need to take to get there. Not only will you find yourself making progress towards your financial goals, but you might also find yourself feeling confident and in control.
For instance, if you envision yourself eliminating $500 of your debt in one month, this gives you a tangible objective to work toward. By identifying a goal, and recognizing how you’ll feel when you accomplish this, you fuel yourself to achieve your objective.
Don’t forget to give yourself some grace as you adjust your spending habits to a new reality and focus. If you don’t meet your goal, acknowledge the progress that you make and continue to build on your successes. If you only pay off $300, realize that you still reduced your debt, even if only a little, rather than adding to it.
Try either of these two debt conquering methods
Getting over the hump of Blue Monday is a challenge. With the cold, dark days of winter, you might feel particularly drained as you look at your debt load.
But after every winter comes spring.
In order to climb out of your debt, you could try either the debt snowball or the avalanche method of debt reduction.
Using the snowball method, you pay off your smallest debt first, while only paying off the minimum monthly amount on your other debts. Once the smallest debt is paid off, you start paying off the next. Gradually, all your debts will be paid off in full.
With the debt avalanche method, you tackle the debt with the highest APR first, and pay only the minimum amounts on the others debts. With this method, you ensure that you don’t continue to throw a penny more of your hard earned money than you need to on interest, rather than the principal amount of your loans.
The method of tackling debts that makes the most sense for you will depend on multiple factors that should be considered and weighed before you start on the path to debt repayment. But, with the right guidance and drive, you can get your debt in the rear view sooner than you think.
Consider talking to a company like Credit Canada to create a consolidation plan, or go to your bank to get a lower interest loan, to start your year with a plan in place.
Bottom line
Your financial debt doesn’t have to be crippling, and Blue Monday doesn’t have to colour your year. You can forge a new path this year and get your debt under control and create new habits that will prevent you from feeling the weight of being in debt.
Devise a plan — whether on your own or with the help of an advisor — and stick with it.
Sources
1. CAMH: Blue Monday Survival Guide
2. Equifax Canada: Interest Rate Cuts Begins to Ease Consumer Credit Burden – But Not for Everyone (Nov. 26, 2024)
This article Blue Monday 2025: Avoid the post-holiday financial gloom with these budgeting and saving hacks originally appeared on Money.ca
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
