Dealing with all that debt
Posted Dec 14, 2010 04:37:32 PM.
This article is more than 5 years old.
Dire warnings from the Bank of Canada have renewed concerns about household debt.
Governor Mark Carney says record low interest rates have rapidly increased the amount of money being borrowed by Canadians, leaving us with a debt of $148 for every dollar we earn. The central bank warns an economic shock any time soon would put many Canadians into financial trouble, unable to make monthly payments or repay loans.
That’s no surprise to Doug Hoyes, a Kitchener-based trustee in bankruptcy, who sees families in dire financial straits all too often.
But Hoyes says that doesn’t mean all hope is lost. The goal, according to Hoyes, is to chip away at our debts one dollar at a time.
“Start by making a list of all your expenses and see what you can cut,” Hoyes advises. “A dollar here, a dollar there, whatever you can cut, that’s the money you start throwing at your debts. And you want to pay off the highest interest rate debts first.”
Hoyes says that list is important because it gives you a clear picture of your debtload and helps you plan a strategy. It can also appear overwhelming but Hoyes is quick to point out that debt reduction is a gradual process that requires discipline.
“You’re not going to be able to pay off everything in a month, so set yourself a target,” Hoyes recommends. “Maybe it’s $50, maybe it’s $100 this month in additional payments you can make. Gradually, you’ll start to make some headway.”
Hoyes says there is also help available through non-profit local agencies like Mosaic Counselling or not-for-profit credit counsellors.
