More Than Half Of Canadians Living On The Brink Of Debt Overload | Refresh Financial

More Than Half Of Canadians Living On The Brink Of Debt Overload

debt-overload

What would happen if your monthly income dropped by $200? Would you still be able to make ends meet? Would any of your bills go unpaid? Would you be late with any credit card payments or maybe even your mortgage? How long would you be able to keep going this way, if at all?

If losing $200 in income every month meant you wouldn’t be able to meet all of your financial obligations, you’re not alone. According to an online survey by MNP Debt, more than half of all Canadians find themselves in the same boat. That is to say, most Canadians couldn’t afford to have their income reduced by just $200/month.

We’ve talked a lot recently about the rising rate of household debt in Canada, and this newest information from MNP Debt truly puts it all into perspective. Canadians from coast to coast are clearly living outside of their means.

The most concerning part is that all of this debt consumption is the result of low-interest rates - rates that aren’t predicted to increase for at least another year. This means that Canadians will likely continue to absorb debt and live on the edge, jumping from pay cheque to pay cheque.

Here’s what you can do to combat this:

Start Saving

If you don’t have a few month’s worth of expenses saved, you’re putting yourself in a dangerous situation. Taking on more debt without having something to fall back on can leave you vulnerable to defaulting on your debts, and having to declare bankruptcy or enter into a consumer agreement with your creditors if your income changes even slightly.

Pay off your debts as steadily and quickly as you can

A great way to do this is by using the snowball method of debt repayment, as we discussed in a recent post.

Lower Your Expenses

Live well within your means. Sure, it’s not always fun to cut back on all the things we love now, but it will pay off in the future. A few less dinners out, perhaps a carpool, and maybe check out the thrift stores before you buy any clothes. Anywhere you can cut back, do it. Your bank account and creditors will thank you.

Find Other Sources of Income

Where possible, see if there is anything you can do to bring in new streams of income. If you’re a stay at home mom, perhaps you can watch other people’s kids while you’re with your own. If you’re great with tools, perhaps the odd handyman job will provide some extra dough. Be creative - with the internet, there are so many opportunities to make extra income these days.

 

Canadian trends are one thing, how you run your own finances are another. Don’t go with the flow. Fight the rising amounts of household debt and don’t accept that as your truth. Save, pay down your debts, and live within your means - you’ll find that when disaster may strike all those carrying around a heavy debt load, you’ll have positioned yourself just right to come out of it unscathed.

Are you a saver? Let us know in the comments!

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