What Are You Delaying Because of Debt?Oct 15, 2018
Are you putting something on the back burner because of the consumer debt you carry? Among other important findings, the recent BDO Canada Affordability Index revealed just what many Canadians are delaying as a result of debt.
What is being delayed varies depending on the circumstances. For some Canadians, this means putting off purchasing essential items such as groceries and health care items. For others, it may mean delaying paying off credit card debt in full and continuing to carry a balance.
For those who fall in the millennial age range, delaying often means putting off buying a first home because of the debt load they carry, as well as putting off moving out of their parents’ home.
Older Canadians also reported delaying certain goals and milestones. In fact, one-in-five Canadians in the 55-plus age demographic indicate they plan to delay their retirement because they simply cannot afford it at this time. We also found that about two-thirds of all Canadians have very little saved for retirement and 30 per cent admit that they have no retirement savings at all.
Although it may feel like hitting the “pause” button is the only way to deal, when individuals and families delay things like paying down debt or paying off bills — or even saving for the long-term goals like buying a home or saving for retirement — debt problems can actually become much bigger. As such, dealing with debt is something you definitely do not want to delay.
How to deal with debt (and stop delaying)
The first step to dealing with your debt is to understand the root cause. There are many reasons why individuals experience debt. A divorce, illness or job loss can cause changes in an individual’s financial situation that can lead to debt. Overextending or overspending is another reason why debt may occur and, with the costs of living rapidly increasing, it’s not hard to see how this might happen.
Once you understand where your debt is coming from, it’s time to make a plan. Understanding that there are options, as well as help available, can make the task of dealing with your debt seem way less daunting.
DIY debt strategies, such as the avalanche method or the snowball method may be enough to get you focused on paying down your debt. For help creating a personal budget and managing your money more effectively, it may be a good idea to work with a credit counsellor who can help you develop smart spending habits and a budget that works for you. Finally, if you feel overwhelmed by the debt you carry, a Licensed Insolvency Trustee (LIT) is a resource to seriously consider. LITs work with individuals, couples and families and provide guidance to determine the best debt relief option, whether it’s consolidating debt, filing a consumer proposal or filing for bankruptcy.