D is for DEBT

Debt affects people’s health and well being, causes undue stress and is a leading cause of divorce.

Canadians owe $2.3 TRILLION.
Canadians owe $1.77 for every $1.00 they have to spend.
Credit Card companies worldwide generate $200 Billion in fees and interest annually.

Credit Card debt is very expensive and since banks and credit card companies generate so much revenue they will not likely change their business model.  Canadians therefore need to be much more prudent with these financial products.  Since the start of the pandemic many people have been using credit to maintain their lifestyle.

With many Canadians working from home, there’s been an increase in spending on home improvements. The next time you look at your credit card statement find out how long it will take you to pay it off, if you only make the minimum payment. Here’s a quote from Albert Einstein:  “compound interest is the 8th wonder of the world. He who understands it, earns it…he who doesn’t…pays it”.

If you are carrying a balance on your credit card, I encourage you to make a plan to pay it off. If you don’t have a “written” budget, now is the time to start one. By writing down a budget you can visually see your income and expenses, you will become more organized, more accountable – to both yourself and your family, and it will help you plan for your future. As Benjamin Franklin said:Start with your monthly income and then make a list of your fixed expenses. These expenses do not change, for example, your rent, car payment and car insurance. After you deduct your fixed expenses from your income the amount left over is for variable expenses, debt and hopefully savings.  Go to your on-line banking for the past few months to get an idea of where you have been spending your money.

Look for ways to cut or reduce some of these expenses, for example, cut back on eating out or take out, meal plan so you are not throwing food out, buy fruit and vegetables in season which is cheaper. You can also find great savings through electronic coupons like FLIPP.  Challenge yourself to find a few more ways to reduce some expenses. These savings can be used to reduce your credit card debt.

Many people spend more time planning their vacation than managing their money.  A budget is quite easy to set up on spread sheet, but it takes discipline to follow.  Of course we all have on-going expenses but try to be intentional with each purchase.

It’s hard to stay motivated unless you have a goal and it’s best to write it down because you are more likely to follow it.

For example:  Goal – Pay off credit card in 8 months.
Balance – $2400
Monthly payment – $300 + interest.
The interest amount is written on your statement.

Please note:  this will only work if you stop using your credit card.

It’s also important to continue to save rather than pay more on your credit card. What typically happens is that some unexpected expense comes up, and if you don t have the savings to pay it, then you are back using your credit card.

Many people have all kinds of payments being charged to their credit card on a monthly basis like Netflix.  If you are not paying your balance in full every month then you are paying credit card interest for these purchases which could have been paid from your bank account.

Congratulate yourself once your credit card is paid off and continue to be vigilant in keeping it paid in full.

Now you can start $aving…Write out a savings goal and think about what Albert Einstein stated about compound interest.

Having a plan to repay your debt will go a long way in reducing your financial stress.  Take a look over this step-by-step guide to begin to pay down your debt: https://www.canada.ca/en/financial-consumer-agency/services/debt/plan-debt-free.html or give us a call at 1 800-379-5556….. we are here to help.



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