How to pay down consumer debt with grit and tenacity
(TORONTO, ON) — The Stanley Cup Finals are just around the corner. The teams that make it to the finals represent the total package of hockey excellence; they have to be perfect units to get through the grueling playoff brackets to play for their chance to raise the cup.
For some, the quest to shed consumer debt can feel as gargantuan as the quest to win Lord Stanley’s Cup. According to TransUnion, the average Canadian non-mortgage debt is $21,428, with Calgarians owing the most – a Saddledome-sized $28,922.
With half of Canadians living paycheque-to-paycheque, Jeff Schwartz worries that many will have a difficult time digging out of their debt hole. The executive director of Consolidated Credit Counseling Services of Canada is concerned that cash-strapped Canadians are only making minimum payments on the credit card bills.
“Sure, making minimum payments will keep your creditors off your back,” says Schwartz. “However, you have just put yourself on the forever and ever plan-taking decades to pay off the debt.”
Using Consolidated Credit’s credit card debt calculator, Schwartz found the following:
- It will nearly 50 years to pay off a balance of $3,720 (the average Canadian credit card debt) making only the minimum payments (based on 19% APR and a minimum monthly payment of 2% of the balance).
- During that time, you will be charged roughly $13,000 in interest.
- Adding just $50 to the monthly minimums will bring the total time down to just over 5 years, and would save you more than $10,000 in interest payments.
“Even the worst NHL team could rebuild and win a Stanley Cup in the time it would take you to pay back a debt of $3,720 with minimum payments,” says Schwartz. “If you don’t have a goal to pay down consumer debt as quickly as possible, the interest could keep you on the penalty kill for a long time.”
Schwartz says we can learn a lot from this year’s bullet-proof Stanley Cup finalists, and he put together a list of must-haves if you want a championship financial outlook:
- A solid playbook – Successful teams aren’t winging it – they’re executing plays that were carefully thought out and practiced. Don’t improvise your finances – develop a budget and make a game plan in order to maximize your efforts.
- Gritty defence – Champion teams have stingy defencemen and goalies, and you will need to have the same mentality with your credit usage. Use cash when you can and try to prevent your balance from getting any higher. Better yet, earn a shutout by leaving your credit card at home the next time you go shopping.
- Goal scorers – Teams can’t win if they don’t get goals, and you won’t get ahead of your debt if you don’t put up some numbers of your own. Even the odds against your balance by paying extra every month – every little bit helps.
- A punchy power play – Your fortunes might rise and fall over time, and you need to be prepared. Teams that fail to capitalize on a power play are wasting an opportunity to get ahead, and the same goes for times when you’re earning more money. If you receive a tax refund, bonus, or extra tips, use it to pay down debt.
- A wise coach – Every great team needs strong leadership. Even seasoned veterans can use some calm guidance. If you are overwhelmed by your debt level, try reaching out to a professional like a financial advisor or credit counsellor – a lot of these tips are easier said than done.
About Consolidated Credit Counseling Services of Canada, Inc.:
Consolidated Credit Counseling Services of Canada is a national non-profit credit counselling organization that teaches consumers about personal finance.
For more information or to request an interview with Jeffrey Schwartz, please contact: