(TORONTO, ON) – A brief period of financial frugality seems to be ending as consumer credit growth is on the rise. After expanding at its slowest rate in two decades late last year, the first quarter of 2014 has seen the pace pick up.
A study by RBC shows that outstanding balances of non-mortgage loans rose 2% year-to-year in March following similar increases of 1.7% and 1.9% in January and February. Household credit growth also grew in March at a rate of 4.1% year-to-year.
This increased spending has Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, Inc., worried about what it means for the average Canadian.
“Debt can be our enemy. When I see these figures I wonder what changed that people have stopped saving, and started spending” says Schwartz. “Purchases on credit can have short term gains resulting in long term pains”.
Consolidated Credit believes avoiding debt should be a goal for most Canadians. Simple tips to avoid debt include:
· Rainy day fund – The purpose of a rainy day fund is for you to have access to money when you need it. Unexpected events like the loss of a job, a medical emergency while travelling or even car repairs require quick access to liquid cash. Without some accessible savings, you may be forced to rely on credit to stay afloat. But, in the end, that debt will not let you keep your head above water.
· Make a budget and stick to it – Planning is the most important thing you can do to keep your finances in order. Making a budget allows you to see exactly where your money is going – and needs to go. Keep track on a daily basis instead of at the end of the month or you won’t realize you’ve spent yourself into a debt hole until you are already in too deep.
· If you don’t have it, don’t spend it – Simply put, debt occurs when you spend what you don’t have. Thus, the easiest way to avoid it is to live within your means and don’t spend more than you earn. Avoiding debt will help you meet financial success.
Schwartz believes that Canadians should keep up the saving momentum if they hope to achieve debt freedom.
“The biggest benefit of a healthy bank account is peace of mind. Avoiding debt also means avoiding stress and sleepless nights” – advises Schwartz
The uptick in household debt levels is alarming news. Any rise in personal debt over it’s current levels may cause financial problems down the road. Saving more and spending less is the best way to achieve financial success.
For more information or to request an interview with Jeffrey Schwartz, please contact:
Eric Spence, Public Relations Coordinator, Consolidated Credit Counseling Services of Canada, Inc., T: 416-915-7283 ext.1041, C: 416-731-5588, F: 416-915-5200, E: [email protected]