Are You Feeling Optimistic When It Comes to Debt Relief?Feb 26, 2016
Is 2016 the year you’ve resolved to pay down your debts? How optimistic do you feel about debt relief?
A recent poll conducted by Ipsos Reid, on behalf of BDO Canada Limited, shows many Canadians are feeling pretty positive about their ability to deal with their debt, with almost half of those polled expressing a belief that their overall debt levels will improve by the end of the year. What’s surprising – or even concerning – is that the same Ipsos Reid poll also revealed that an increase of just $100 each month in debt payments would financially challenge three in 10 Canadians. If you’re going to make progress on dealing with your debt this year, it’s important to have a plan.
Many opportunities for debt relief in 2016
Look for opportunities that could potentially help with your debt relief efforts. As interest rates currently remain low, consider consolidating your higher interest debts with a debt consolidation loan. You’ll make one monthly payment at a lower interest rate, which might free up additional funds in your budget to accelerate your debt payment. Lower gas prices might also represent another opportunity. Savings at the gas pump could be redirected towards paying down debt.
Don’t be overly optimistic
It’s also very important to try to remain grounded when it comes to debt relief. Debt in Canada remains at record high levels, with the average Canadian now owing $1.71 for every dollar they earn. The number of insolvencies filed in Canada also increased in 2015. Even if you’re comfortable with your own level of debt, it’s always a good idea to plan for the unexpected. Although you may be comfortable with the amount of debt you carry now, what if an unexpected life event were to occur, such as a divorce, an illness or a job loss? Would you still be able to make your debt payments if your circumstances were to drastically change? 70 per cent of Ipsos Reid poll respondents said that a long-term injury or illness would challenge their finances.
An increase in the cost of living is another thing to be mindful of when considering your debt relief plans. Food, hydro and television and internet are just a few of the basic expenses that will cost you more in 2016, meaning less room in the budget for debt repayment. It’s also important to note that a significant number of Canadians have little “wiggle room” to begin with. According to the poll, 29 per cent of Canadians would struggle financially if their monthly debt payments increased by $100. 53 per cent of respondents indicated that an increase of $200 would pose a serious risk to their financial stability and well-being.
You still need a debt relief plan
Whether you are feeling optimistic about your debt or not, debt relief is unlikely without a plan. Although there may be some challenges, you can still make 2016 the year you focus on reducing your debt burden. If you’re not sure where to start, debt counselling may be a good option. A debt counsellor is trained to listen to your needs and goals and help you devise a debt relief strategy that will really work.
Are you feeling optimistic about debt and debt relief? How will you make 2016 the year you reduce your debt burden? Join the conversation and share your thoughts with BDO Midland using the hashtag #BDODebtRelief #DebtRealityCheck