Canadians continue to dive deeper into debt
Canadians have travelled so far down the rabbit hole that the average insolvent debtor is now carrying $56,545 in unsecured debt, according to a recent study published by Hoyes, Michalos & Associates.
And the study indicates that debt does not discriminate:
- Seniors (those over the age of 50) account for 30% of all insolvent Canadians;
- Single parents continue to make ends meet by relying on credit and account for 18% of bankruptcy filings;
- Women, who carry the largest student debt burden, are more likely to fall into insolvency as a result of this debt; and
- Those that rely on payday loans and easy installment lending continue to be high-risk debtors – with 18% of all insolvent Canadians carrying this type of debt.
Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, says the continuing trend of Canadians taking on high-risk debt is cause for concern.
“Despite repeated warnings, Canadians continue to fall further down the rabbit hole when it comes to their debt,” says Schwartz. “What is more concerning is that those who are relying on consumer credit don’t seem to understand the true cost of servicing their debts.”
While Alice eventually found her way out of Wonderland, Schwartz worries that consumers may think the only escape hatch for their indebtedness is to file for bankruptcy.
“Bankruptcy has the potential to stay with you and effect more than your financial well-being,” adds Schwartz. “It is essential for consumers to get their finances in order, and develop a clear debt repayment plan. Don’t get so far down the rabbit hole that your only way out is through insolvency.”
As part of their ongoing efforts to help consumers overcome issues with credit, Schwartz and the team at Consolidated Credit offer these tips to avoid unnecessary debt:
Avoid being late for that very important date. For those who have fallen down the rabbit hole of debt, there is no more important date than the one on your credit card statements. Making late payments or missing a payment all together will result in added charges, finance fees and potential over limit charges. One of the simplest ways to avoid trouble with your debt is to pay your debts on time, and in full.
We all go a little mad sometimes. Everyone is guilty of making impulse purchases, buying something outside of their budget, or spending money they simply don’t have. The key is to pay off these debts quickly and to not get in the habit of relying on credit. Better yet, avoid the money madness by only making purchases you know you can afford.
Don’t be Tweedle-Dee or Tweedle-Dumb. When it comes to consumer credit, most Canadians don’t know up from down or here from there. Credit agreements and bills can be tricky to understand, but you can avoid a great deal of financial uncertainty by reading your agreements and taking the time to understand the terms and conditions of your credit card and other financing plans. If you truly understand the costs of late payments, minimum payments and how your interest is calculated, you may think twice before relying on credit.
When all else fails, begin at the beginning. If you find yourself in a downward financial spiral, there is a good chance your spending is out of control and you’ve lost track of you budget. If this is the case, start at the beginning and get your finances in order. Take some time to list all of your debts, financial obligations and sources of income. By creating a clear picture of what you owe and what you’re owed, you can begin to budget and build a plan for a successful financial future.
Consumer debt is no adventure in wonderland! If you have fallen down the debt hole and can’t find your way out, we can help. Call today to speak to a trained credit counsellor and find out how you can get your budget under control. You can also try our Free Debt Analysis online and a counsellor will reach out to you.