Making New Year’s resolutions is a time honored January tradition. The problem is that by February most of those resolutions have been broken and completely abandoned. But there’s one New Year’s resolution that you need to keep, that you cannot afford to give up on – and that’s paying off debt.

January is the perfect time to get going in paying off your debt.

A new year, a new approach

In truth, there’s nothing magical about a new year. It’s not as if you flip the calendar and all of the sudden life is different. It will only be that way if you make it so.

When it comes to debt a new approach is usually necessary. One of the fundamental problems with debt is that we can easily become comfortable with it. A small car payment, a long-term student loan debt and a few thousand dollars in credit card debt can easily become traveling companions in life. We’re so used to them that we hardly notice that their there. We pay them faithfully and get on with life.

The start of a new year is an opportunity to remedy that situation. Start right now to begin making extra payments on each of your loans, or even to start a debt snowball in which you begin to payoff the smallest balances first.

Last year’s debt overhang

Another factor that makes January a perfect time in paying off debt is that you usually carry at least a little extra debt from the holiday season. The holidays mean extra expenses for entertainment, gifts and travel, and all have a way of increasing debt levels.

In addition, if you’re self-employed or you work on commissions, the holiday season often brings a decline in income. The decline is often covered with credit card debt. There’s no problem doing that on a short-term basis, as long as you fix the problem after the fact.

That time is now – the holidays are over but the debts are still with you. Begin now to reduce those debts and eventually to eliminate them. The next holiday season will be here quicker than you know, and when it is you will be glad for having cleared the decks of last years debt.

Small debts have a way of becoming large ones

Let’s say that you added “only” $1,000 or $2,000 to your debt load during holidays. On the surface that certainly seems manageable, and not in any way threatening. However the problem will develop if other situations or even emergencies arise that will require you to take on a little more debt.

Add a little bit of debt on top of a little bit of debt, and before you know it the debt isn’t little anymore. It seems that most people don’t begin paying off their debts until they reach a certain pain threshold. But it will be better if you pay your debts before they reach that level.

When it comes to credit cards it’s generally said that you should have no more outstanding than you can afford to repay within 30 days. Holiday expenses are probably pushing you right up to that threshold and maybe beyond. Now is the time to take care of that before it becomes bigger problem.

The early part of the year is usually the best time to move financial plans forward

The first few months of the new year tend to be a bit boring. There are no major holidays, it’s the dead of winter and not a traditional vacation season for most people. Translation: it’s a time of relatively low financial outlays.

Since November and December tend to be just the opposite – a time of high extra expenses – the first few months of the new year are the time to restore balance. There are a few additional claims on your income at this time of the year, so this is the time to payoff old debts and even to begin saving some money.

Building momentum for the rest of the year

How a year goes financially is often determined in first few months. If you control of your finances early – if you payoff your debts and save some money – it tends to carry over into the rest of the year. This is because you will build momentum going into the rest of the year.

By the time spring and summer come, it won’t be a matter of trying to establish good financial habits, you’ll already have them and it will be a matter of building on what‘s already there. As everyone knows, habits are much easier to live with then they are to establish. By building this one now you won’t have to work so hard at it during the rest of the year.

Winter can be a difficult time in so many ways, but when it comes to finances – especially paying off debt –it’s THE best time of the year. After all, there’s little else to compete with your efforts.

Will you take advantage of the lull to do something productive?

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