Reducing Debt a Top Financial Priority
Friday, January 2, 2015 @ 3:55 AM
Prince George, B.C.- So, did you make a resolution for 2015?
Typically, the promises made at this time of the year are to quit smoking, lose weight and exercise more. According to CIBC, many Canadians are resolving to reduce their debt level in 2015.
The poll, released this week, indicates that for the fifth straight year, reducing debt is the top financial priority for Canadians.
The resolution carries more weight among those approaching retirement.
- Among 45-54 year olds, 31 per cent said debt repayment was their top financial priority for 2015, compared to just 16 per cent in last year’s poll
- Among 55-64 year olds, 25 per cent said debt repayment was their number one financial priority, compared to 14 per cent last year
| 2015 | 2014 | 2013 | 2012 | 2011 | |
| Paying Down Debt | 22% | 16% | 17% | 17% | 14% |
| Building Savings | 12% | 11% | 10% | 10% | 10% |
| Paying Bills / Getting By | 10% | 8% | 7% | 3% | — |
| Managing Day-to-Day Spending / Budgeting | 9% | 8% | 8% | 14% | 12% |
| Retirement Planning | 5% | 7% | 7% | 11% | 13% |
Stats Canada reported in December that for every dollar of disposable income, Canadians had $1.63 in household debt (credit cards, mortgages and loans).
Comments
It seems that Governments of all stripes and all levels need to follow this advice as well.
“Stats Canada reported in December that for every dollar of disposable income, Canadians had $1.63 in household debt (credit cards, mortgages and loans).”
It should also be noted the difference between ‘good debt’ and ‘bad debt’. Mortgages are generally considered to be good debt, while most loans and credit cards are bad debt.
I agree with your first comment, but I doubt the Entitled Ones would want that.
My understanding of good debt would be borrowing to invest, or borrowing to fund your business. At least the interest is tax deductible.
Most people would be appalled to find out that they are giving their bankers between 48% and 62% interest in the first 5 years of their locked-in mortgages. The 48% being for a 20 year and the 62% would be for a 30 year. (Even though the posted rate might be 3.09%)
If you ask a banker how to pay down your debt quicker, they just suggest you bring them more money.
If you ask a Financial Advisor skilled in Cash Flow Planning, they will identify where your money is going now. It will be no surprise that the bankers, taxation and insurance dominate most of the money you part with.
This is where a good Financial Advisor begins looking to find where you can keep more of the money you earn by giving less to the banks, CRA and the Insurance companies. Now you will be in a better position to reduce your debts as efficiently as possible.
BYOB: “Most people would be appalled to find out that they are giving their bankers between 48% and 62% interest in the first 5 years of their locked-in mortgages. The 48% being for a 20 year and the 62% would be for a 30 year. (Even though the posted rate might be 3.09%) ”
I would hope people have an understanding of how this works, but it’s a good point to make.
Financial Advisors can be great, but you have to make sure that you’re getting your money’s worth with them as well. I know of a couple I wouldn’t trust to watch a piggy bank.
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