Debt-Ridden CanadaCanadians carry more personal debt per person than in any other developed country in the world, at a whopping $41,000+ per person. Shocking, isn't it? Look around at your family-spouse or partner, kids, parents, in-laws-and add it up. How much do you personally owe? At the same time, more than 80% of Canadians also want to be debt-free. What a conundrum. And how did we ever get here in the first place?
Some of the reasons we got into this debt-problem include the low interest rates that made mortgages, cars, boats, second homes, riding mowers, and other big ticket items attainable for many of us. Life was good in the '80s and '90s. Lines of credit opened up, and multiple credit cards became the norm. It was all about cheap dollars and spend! spend! spend! We could live large, but pay pretty small for luxuries we might otherwise have had to refuse ourselves. But it got blown right out of proportion.
In the past 18 years, Canadian incomes rose only about 12% while our personal debt rose to the tune of 72%. That's a six-fold difference between the money we earned, and the money we spent. It had to catch up with us. After all, sooner or later, you've got to pay the piper.
So what can you do if you're one of those people owing that personal $41,000+ debt? All's not lost. And 40-Gs can be paid down and back more quickly than you might think.
There are a few tough, but pretty clear and easy, rules to follow to get your finances back under control. First, you have to just say no-no to any more spending. Right now, cut back on every luxury you had planned-even if it means you forfeit down payments or security deposits. Better to lose a small amount of money than be stuck with a bill that only adds more to an already overextended line of credit. Next, start tracking your money and use cash only for every single purchase you make. Third, give yourself a budget. Allow only set amounts for groceries, gas, utilities, rent, and other costs. Going over? Figure out ways to save by buying no-name brands for food items, sharing gas costs by ride-sharing, or just driving less, turn lights out and flush less to save on utilities, and so on.
There are lots of ways to save huge when you set your mind to it. And, for every penny you save, put it towards that debt. And before you know it, you'll be one of the 20% of Canadians who's not worried about their debt-because you won't any.
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