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Help with Record Amounts of Household Debt

    Canada closed out 2015 with a few record-breaking numbers; unfortunately, some of these records aren’t the kind that we want to break. Specifically, we’re talking about Canada’s total household debt burden, a number that hit record highs by the start of 2016. This is a telling figure on several levels. Of course it indicates that for many Canadians, their debt is increasing faster than their income. More specifically, indexes show that household disposable income is increasing at roughly half the speed of household debt. A difference of less than a percentage point, but enough to create a very noticeable countrywide debt bubble.

    Canadians Struggle with Record Amounts of Household Debt

    If you’ve been watching the trends, you’ll know that this isn’t really surprising. Canadian household debt levels have been touching – and breeching – their upper limits for years, a situation that can be largely attributed to a combination of low interest rates and high real estate prices.

    When we look beyond the statistics, it’s clear how this situation is effecting many Canadians throughout the country. Some are fighting with their debt burdens, while others are being pinned beneath them without much hope for escape. For the large swath of the population who were feeling trapped, the answer has often been to turn to a professional for guidance.

    Credit counselors are quickly becoming the heroes of this nationwide ordeal, using their experience and expertise to help clients take control of their debt situations. They’ve been doing their part to turn these record-breaking numbers around through budgets, spending plans, and even debt consolidation plans. For those who are still in a manageable situation, debt and credit counselors will often give the following pointers:

    • Start lowering your expenses ASAP. Living frugally is one of the best ways to start fighting back against your debt. Cancel any subscriptions you don’t need, start bargain shopping, and stay away from the department stores for a while.
    • Take stock of your debts. Create a spreadsheet containing all of your current debts, including outstanding balances, interest rates, due dates, and any available credit on each account.
    • Prioritize these debts. In most cases, you’ll want to focus on debt with the highest interest rates first.
    • Forget minimum payments and start paying the most you can afford. Minimum payments aren’t the best way to get to the finish line. If you want to end your debt troubles, start paying down the highest interest rate debts as aggressively as possible.
    • Try to negotiate the interest rates on your unsecured credit lines (such as credit cards.) Believe it or not, many lenders are willing to flex a little bit on the APRs as long as you’re polite . . . and a bit stalwart.

    While these tips can certainly help, you may find yourself among those who can benefit the most from a bit of objective intervention. If you’re struggling with your household debt, then a consult with a reputable credit counselor could make all the difference. More often than not, these consults are completely free.


    Christopher - BSc, MBA

    With over two decades of combined Big 5 Banking and Agency experience, Christopher launched Underbanked® to cut through the noise and complexity of financial information. Christopher has an MBA degree from McMaster University and BSc. from Western University in Canada.

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