Personal Debt Levels Rising

Is your level of person debt going up? If it is you are certainly not alone. As many as three-quarters of Canadians recently polled say they are in debt and owe an average amount of nearly $16,000, according to a new survey.

The average personal debt load, which doesn’t include a mortgage, jumped by $2,779 to $15,920 this year compared with last year, says RBC’s annual debt poll released on Tuesday.

As a result, young people between the ages of 18 and 34 who were surveyed were quite worried about how much money they owed, but that could also because they’re not earning as much money as someone older, and may have student debt and other expenses.

Those over 55 seemed to be the most comfortable with their debt because many said they had savings and were at ease with their plan to pay it off, she added.

The survey found that 24 per cent of Canadians surveyed indicated they were debt-free, down from 26 per cent in 2012.

Canadians were also basically split about their attitudes toward debt, with 38 per cent being very anxious about it, up from 34 per cent in 2012. The same number of Canadians surveyed — 38 per cent — were also comfortable with their personal debt.

Most people feel that they have an income problem– they feel they do make enough money. This is mostly bullshit. The truth of the matter is that most people have an outgo problem– they spend too much. They are unwilling to face the hard truths about their spending and make the necessary adjustments.

“But I need cable, and we all need cell phones, I deserve those shoes, that big screen television.”

Hey I have been there. My other mistake was that my ex handled all the finances. A lot of guys do this and it can prove disastrous. You need to both sit down early in the relationship and figure out the relationship you both have with money.

What are the priorities for debt repayment, for saving?

And how many people are a couple of paychecks away from disaster? If the income stopped could you survive for a couple of months without borrowing from family or relying on credit to get through?

You need an emergency fund. Not just so that if the refrigerator blows up but so that you could get through lean times if they arise.

“But how?! I don’t make enough to do all that!”

Well it isn’t easy but it isn’t that hard either.

  • You probably need to track your spending for a week or two maybe a month. Every penny of discretionary spending should be noted. Mark it down or keep track of it on your expensive phone! I am sure there is an app for that.
  • Get a white board and put it up for all to see. Talk about it with the whole family.
  • Look for areas you can cut back. 3 coffees and a takeout sandwich everyday kind of adds up.
  • Are there things that can be cut or reconfigured to save some money? A lesser cable package for example.
  • People will spend what they make. If people get a raise they adjust their spending up. Pretend you just got a paycut and learn to live on less.

Having excessive levels of personal debt is like having an anchor around your neck. It sucks the life out of you. It can ruin relationships.

What other ideas and tips do you have to reduce personal debt levels?

What personal debt stories do you have to tell?

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