According to a survey by Statistics Canada, three out of four Canadians have some debt, which is not surprising. Good debts like mortgages and bad debts like unpaid credit cards are part of most people’s daily lives. When you have a stable financial life, getting your debt ahead of time is the same as paying your utility bills. So it’s a daily routine, but only until you encounter financial turmoil — the kind that the pandemic created last year.
According to the latest MNP Consumer Debt Index Report, 4 in 10 Canadians are worried about debt levels. And a more stringent revelation was that 40% of Canadians believed they couldn’t afford the living expenses (food, housing, transportation, health) they needed without accumulating additional debt. This is expected to produce a snowball effect, which will drive most of the population into further debt.
If you are one of 40% of Canadians worried about their debt Some things I can do it.
Reduce your costs and create an alternative source of income
It’s easy to say, but when you risk building up more debt to survive, it’s time for brutal cost savings. The first step is to reduce costs that aren’t directly related to your necessities, and you can also include cable and streaming subscriptions. The next step is to find out what costs you need and find ways to reduce them. For example, you can switch to 100% home cooking, use public transport, and renegotiate your rent or mortgage.
If you can’t find a second job, find a freelance or gigwork. You may be able to find something you are trained or competent with. But even if that’s difficult, you can always find a gig that anyone can do. They may not pay very well, but they can help you get ahead of your debt.
Manage your current debt and don’t take on any more
Check out your options. Maybe you can consolidate your credit card debt and spread it over a longer period of time. There may be a way to pay off your rapidly accumulating debt first so that you can pay it off faster than it grows. There may be many other debt management options that may help financial professionals understand.
Another unusual statistic in the Consumer Debt Index Report was that about 60% of respondents felt it was the best time to take on more debt (interest rates are very low). This is one of the things you don’t want to do in a volatile economy.
Weave a safety net
Save and invest, so you don’t have to borrow more than you need.Once you have your finances in place, consider investing in Steady growth Inventory like TMX group (TSX: X).. Financial services companies own and operate market exchanges (such as TSX).
Although stocks recovered from the 2020 market crash collapsed rapidly, post-pandemic growth was relatively stagnant. Still, the company’s long-term growth outlook looks promising enough. The 5-year CAGR is 30%, and if you can continue to grow at the same pace, you can convert a one-time $ 10,000 investment to $ 37,000 in five years.
Preempting your debt can be quite tricky if you lose your primary source of income. However, taking on more debt to survive should only be considered after you have already exhausted all other options. Downgrading from a new car to an old car and selling some luxury goods to improve your cash position is an option worth considering before taking on more debt.
Stupid contributor Adam Ottoman There are no positions in any of the listed stocks. Motley Fool is TMX GROUP INC. / GROUPET MXINC. Is recommended.
40% of Canadians are worried about debt: this is what to do
https://www.fool.ca/2021/01/26/40-of-canadians-are-worried-about-debt-heres-what-to-do/ 40% of Canadians are worried about debt: this is what to do