TORONTO, ON – Consolidated Credit Counseling Services of Canada, Inc., today challenged Canadians to tackle their debt head on, and not let high debt and low savings become the new normal.
Consolidated Credit’s challenge comes as a reaction to a new Harris/Decima poll that finds most Canadians are quite comfortable with using debt as a financial strategy in the face of unexpected costs.
“The number of Canadians who say they wouldn’t be able to raise $2,000 to cover unexpected costs is astounding,” says Jeffrey Schwartz, executive director at Consolidated Credit Counseling Services of Canada, Inc. “The loss of a job, a change in income or an unexpected illness could be disastrous for these Canadians. With no savings strategy in place, the slightest shift in economic conditions will cause these people to fall off the financial cliff.”
To help Canadian consumers avoid falling off that cliff, Consolidated Credit challenges anyone carrying debt to find 20% of their net household income to put towards debt repayment and savings each month. “That means, if you bring in $3,000 a month, we challenge you to find $600 to help get your financial house in order,” adds Schwartz.
These tips will help consumers recognize the warning signs of unmanageable debt and provide steps to lead you away from the edge of the financial cliff:
Debt Warning Signs
- You are struggling to keep up with minimum payments;
- Your credit cards are maxed out;
- You are paying one credit card with another;
- You are dipping into your savings or retirement accounts to pay bills.
Tips to Avoid the Debt Spiral
- Create a monthly budget – this will give you a personal financial snapshot
- Apply 20% of your net income to savings or debt repayment
- Apply the 20% right away – don’t wait until the end of the month to see what’s left over.
As a general rule, 10 to 15 per cent of net income is the maximum amount of debt service an individual can reasonably manage. If you are borrowing more than this, you can quickly find yourself on a downward debt spiral. If you find that high debt has become your new normal, speak with a trained credit counsellor for a free debt and credit evaluation or take the first step online with Consolidated Credit’s Free Debt Analysis tool.