Debt levels may be up, but delinquency is down
But the good news is Canadian Debtors are getting better at paying these debts on time.
According to a recent report from TransUnion, despite debt levels continuing to grow, the number of overdue debt payments is shrinking.
The study found that:
- The overall delinquency rate on non-mortgage debts was 2.58 per cent;
- That is down from 2.78 per cent in 2013 and 2.69 per cent in 2014;
- The average consumer debt rose to $21,028 in the second quarter of 2015; $148 higher than the same period in 2014.
Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, is encouraged by this trend in debt repayment.
“Canadians are clearly making debt repayment a priority,” says Schwartz. “With so many households living paycheque-to-paycheque, it is wonderful to see that many are including debt repayment in their budgets and recognize the importance of meeting their financial obligations.”
Schwartz and the team at Consolidated Credit are so encouraged by this trend that they offer these tips to help Canadians continue down this positive path and take care of business when it comes to paying off debt:
- Get a clear picture – You can’t fix what you don’t know. If you are serious about paying down debt, take a close look at all your loan details, including balances, interest rates and required monthly payments. Getting a clear picture of what you owe will help you devise your plan of attack.
- Go on a spending fast – This means you only spend money on your basic necessities. Start by creating a wants and needs list. Find the most cost-effective ways to fulfill your needs (housing, utilities, transportation and food), and eliminate pretty much everything else. It’s an extreme plan, but will go a long way towards crushing your debt.
- Track everything – Try signing up for a free money management app, such as Consolidated Credit’s free Budget Tool, or Mint.com’s app. They are easy to set up and will track every dollar you spend. Tracking your spending will help you target unnecessary purchases and give you a clear picture of how much you are spending – and where it’s going.
- Set small goals – Instead of vowing to pay down $20,000 in debt over the next two years, set small and attainable goals. Plan to pay down $500 over the next month, or choose one of your smaller debts to eliminate first. Achieving these small goals will feel like a huge victory and keep you motivated to the end.
These are just a few of the many strategies you can use to pay down and eliminate consumer debt. However, without a plan and a proper budget it may be difficult to reach your debt free goal. Take the time to look at your finances and create a plan that works best for your unique financial situation. Then get down to the business of building a healthy financial future.
If debt repayment is to overwhelming and you just don’t know where to stop. Give us a call, 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.