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Managing Your Money
Lose the winter blues with a debt-free vacation - here's how
How do you cope with the winter blues? If a change of scenery is all you need, an exhilarating ski vacation may be just the ticket. If it's the bleakness and bone-chilling cold that has you in a funk, the siren song of a southern sojourn can be impossible to resist.
Either way, that holiday is likely going to consume significant cash - and the one winter storm nobody wants to face is a blizzard of bills. So, here are a few debt-defeating rules for enjoying a winter-blues-busting vacation on the slopes or the sand without breaking your personal bank along the way.
Think big, plan small. A vacation is a short time-out in a long, real-world life - so order your priorities accordingly. First, make a list of your longer-term financial goals (like having a family, owning a home, or retiring in comfort). Then, list your more immediate goals (here's where that winter vacation comes in). These lists form the foundation for a budget that will help you to achieve your financial 'life' goals as well as freeing up cash to cover shorter-term needs like your winter holiday.
The key is to establish a realistic budget that works for your situation - and to do that, you must get a firm handle on your finances. If you're computer-savvy, there are personal finance computer software programs that can help you out. Or, you can always rely on the tried-and-true pencil and paper method.
The personal budget basics. Here's how to develop a workable budget:
Calculate your monthly net income. List all your sources of income and the appropriate dollar amounts for each -- salary, bonuses, overtime pay, commissions, tips, pension income, investment income (from stocks, bonds, mutual funds or rental real estate) and alimony or child support. Add it up and subtract income tax.
Calculate your monthly expenses. Gather expense records (receipts, bank statements or your chequebook, credit card statements and so on). List these and your other expenses (mortgage or rent payments, property taxes, utilities, loan payments, private health insurance, car lease payments, car and property insurance, parking fees, public transportation, dry cleaning, gifts, clothing, groceries, child care, restaurant meals, charitable donations, life insurance, entertainment, home improvements or repairs, gifts and any money you set aside for savings or investments, such as RSP and RESP contributions). Add up your monthly expenses and average them over three or four months to smooth out spending peaks and valleys.
Subtract your expenses from your income. If there's any extra money left over, you can save it, invest it or put it toward a vacation. If there isn't much or any money left, you'll need to adjust your spending. So, make a list of what you'd prefer to spend for expenses each month -- keeping in mind that some expenses are fixed and can't be reduced and that unrealistic expense chopping can quickly lead to terminal budget breakdown.
Keep a watchful eye on your bottom line performance. Every couple of months, check to make sure you're meeting your budget and other financial objectives. If you are, look for opportunities to do even better; if you're not, take steps to get back on the right budget track.
Stick to your budget like glue and, before you know it, you'll have enough cash in your stash for a debt-free, blues-busting holiday - and you'll be well on your way to achieving all your financial goals. A financial advisor can help tailor a budget that'll get you to your desired financial destination. Your holiday destination is up to you.
This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.
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