Carlos Montes Calgary Real Estate

Time for Canadians to Cut Debt

Time to Cut Debt

A recent report released by the Vanier Institute of the Family suggests that the average family has a debt load of $100,000, nearly double 1990 levels. At the same time, personal savings rates have falling from $8,000 per year to $2,500. But what does this mean?

Of course houses are more expensive these days, as is everything. But with higher debt loads becoming the norm many Canadians may find that they simply have too much debt to service. Rather than go down the long road of bankruptcy and recover it is a good idea to cut your debt now by as much as possible. Here are some tips:

Cut Back Extravagances

Dinner and a movie every Friday night may be a tradition for you and your spouse, but it’s probably costing you a few thousand dollars per year. Get take out and rent instead, or go for a romantic walk and keep yourself in shape at the same time.

Find Alternatives

A week in Cabo may be what you need to get through winter, but how much is it putting you in debt? Book a local weekend spa getaway and skip the airport hassle, and plan to go next year.

Live in Moderation

Your home does not have to be a castle, nor does it have to be in “the” neighbourhood. Remember the more that you pay to service debt now, the less you have for everything else. Consider downsizing or moving to a more affordable area.

Get a Roommate

If you have an extra room, carriage house, or basement suite sitting idle what are you waiting for? A roommate or tenant could provide you $6,000 or more per year in extra income. Sure it’s an inconvenience, but it’s not forever.

Refinance

Before mortgage rates go up talk to your lender. By shaving a few points off your mortgage rate you could save a few hundred dollars a month immediately, not to mention the thousands of dollars in extra interest you will be rid of.

It doesn’t take much to make a difference. Even just a few of these changes could significantly reduce your debt.

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