3 Important Things to Remember About Debt ReductionJul 14, 2016
You may or may not be surprised to learn that the amount of consumer debt held by the average Canadian continues to climb. In fact, according to recently published statistics, Canadian consumer debt reached $1.618 trillion in the first quarter of 2016, an increase of almost five per cent in comparison to the previous year. In addition to increasing consumer debt levels, the rising housing prices in Ontario have experts predicting a decrease in economic growth in the near future. Perhaps motivated by this news, a recent Equifax poll shows that a majority of Canadians are focusing on reducing their debt in 2016. If debt reduction is your top priority, here are three important things to keep in mind.
1.) You’re not the only one
Often, when dealing with debt, it can seem like you are alone. Not true. As the Ipsos Reid poll demonstrates, many Canadians are struggling with debt on a daily basis, with one in three Canadians reporting that they carry “a little bit of consumer debt,” two in 10 indicating that they have “a good deal of consumer debt” and four per cent suggesting that they currently carry “a lot of consumer debt.” Additionally, although many Canadians feel confident that they can work towards being free from the debt they carry, almost one quarter of Canadians polled reported feeling that they would always carry some type of debt.
2.) Balance is key
When working towards being free from debt, it’s tempting to put aside other financial goals, such as saving for retirement or adding to an emergency savings fund. Recent polls suggest that this may be the case for many Canadians as almost half of all respondents nearing retirement age indicated that they did not have adequate retirement savings, despite not have an employer-supplied pension program. And 45 per cent of Canadians admitted that they did not have an emergency savings plan in place in case of a financial emergency.
Although debt reduction is important, focusing on managing your debts should not mean neglecting your other financial goals and priorities. Although it may seem difficult to focus on debt management and saving for the future, it is possible. Creating and following a financial plan and following a budget, as well as utilizing debt reduction strategies — like debt consolidation — are essential tools that will help make this balance possible. If you aren’t sure where to begin, a debt or credit counsellor may be a good resource, as they can provide information and guidance when it comes to managing your debt and achieving balance.
3.) Help is available
When you are carrying a lot of debt, the task of balancing your finances can feel overwhelming. If your level of debt is such that you have no room in your budget for saving, your next step is to seek professional debt assistance. Consulting a Licensed Insolvency Trustee does not automatically mean you will need to file a consumer proposal or declare personal bankruptcy. The role of a Trustee is to present all options for debt reduction or relief, helping you decide which one will work best for you.
The high consumer debt and predicted slow economic growth in Ontario in the near future are indications that it’s time to start really dealing with debt and focusing on debt reduction. Remember these three things and take action in order to regain control over your debt and your financial health and well-being.
Are you, like many Canadians, dealing with debt? How do you achieve a balance between reducing your debt and focusing on your other financial priorities and goals? Join the conversation and share your thoughts with BDO Midland using the hashtag #BDODebtRelief.