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Canadians struggle to live without debt

September 5, 2017

Job stability and income are both in decline but the use of debt continues to increase.

A saving grace for some Canadians has been the recent surge in real estate values, but that value increase can create a deeper debt problem for many others.

Moving unsecured debt from credit cards and lines of credit to secured mortgage debt is a fool’s paradise, it increases the depth and breadth of debt. Mortgages may seem to offer a lower interest rate but when higher interest unsecured debt is compounded over the life of the mortgage the amount of interest paid is surprising for most consumers.

Consolidating into mortgages means the payment of substantially more interest on mortgage debt – easily an additional $60,000.00 in interest charges (look again at our earlier blogs) – and it often means continuing use of credit cards that then have more room on them.

Think about how often you pay for something using a credit card, a line of credit or an overdraft facility. If you do it more than once every couple of months you ae probably overly reliant on debt to fund your lifestyle. There are only two things to avoid that possibility: 1. Increase your income; or 2. Decrease your living expenses.

Getting out of debt by resorting to either a proposal or a bankruptcy is really quite simple – staying out of debt by avoiding its use afterwards is far more difficult than you may think.