How to Tell If Your Debt is Holding You BackOct 15, 2018
What are your goals for the future? Grab a piece of paper and pencil and write down a few things you’d like to accomplish. Maybe it’s running a half marathon or finally paying down your student debt. Perhaps it’s buying your first home or starting a family with your partner. It could also be saving for retirement and retiring comfortably.
Now take a look at the list you just created. Will you need to put off any of these goals as a result of the debt you carry? Although your debt won’t likely affect your ability to run a half-marathon, it could seriously impact your ability to save for a down payment for your first home or put money away in a retirement savings fund.
Debt causing Canadians delays
If you found that your debt load has an effect on many of your future goals, you are not the only one. BDO Canada recently completed an Affordability Index survey focusing on Canadian’s spending habits, ability to afford everyday expenses and the impact of consumer debt. We found that those Canadians who say they have a lot of debt, many of life’s milestones are challenging to prepare for.
Over 50 per cent of Canadians indicated that they do not feel financially prepared to buy their first home. That number jumps to 79 per cent for Canadians with a lot of debt.
Over half of all millennial respondents felt that they were also not able to start a family as a result of their financial situation. Millennials are also one of the groups singled out in our poll as being overwhelmed by their debt — 34 per cent of millennials feel this way vs 23 per cent of all Canadians.
Older Canadians also indicated being negatively affected by affordability and debt challenges. For Canadians 55 years or older, one-in-five respondents said they plan to delay their retirement because they simply cannot afford it.
Dealing with debt
Unfortunately, there is no debt relief button that will make your consumer debt load disappear. However, there are steps you can take to get back on track. Firstly, understanding your money, your spending habits and the best way to manage your expenses is crucial. If you feel that you need to brush up on your financial literacy skills, there are some great online resources for managing your money effectively. A debt relief professional, such as a non-profit credit counsellor, can also analyze your current financial situation and help you establish positive money management habits.
Using a budget is also key when it comes to controlling your debt (and not letting it control you). A personal budget is quite easy to set up and allows you to monitor and plan ahead when it comes to your spending. If you’ve never used a budget before, these handy worksheets from Squawkfox.com will help you get started.