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Up Against a Debt Wall: Who Faces the Most Challenges?

Let’s start with some good news: Canadians are a resilient bunch. And, their optimism toward paying down debt shows this.

Although each demographic is facing serious money challenges, BDO Canada’s Affordability Index outlines that the majority of Canadians are taking steps to pay down their debt.

Fifty-five per cent of Canadians with personal debt have reduced their non-essentials by cutting down on dining out and entertainment costs, and 40 per cent have reworked their budget to cut down on expenses.

But not all Canadians have been able – or willing – to take extra steps to reduce their personal debt.

Overwhelmed by expenses? You’re in good company

No matter your age, income level or life circumstances, chances are you’re facing your own set of money challenges. Most groups are. And those with higher debt are less likely to be able to afford basic needs, let alone feel good about their financial situation.

Millennials – 34 per cent tell us they’re feeling overwhelmed by their debt. And it’s no wonder. Many Canadians in their 20s and 30s are contending with student debt, overpriced housing and precarious work situations.

Gen Xers – Raising kids isn’t cheap. Neither is paying a mortgage, old student loans and carrying a consumer debt load. 57 per cent of Gen Xers are likely to be carrying heavier consumer debt than all other demographics and 29 per cent struggle to feed their families.

Canadian women – 52 per cent of women in Canada are likely to be carrying a heavy debt load (vs 45 per cent of men). Also, nearly half of women are likely to struggle with transportation expenses and housing costs.

The biggest challenge: lack of affordability

It’s no surprise that the above demographics share some of the same issues with affordability.

  • Half of Canadians say it’s a challenge to afford essentials such as utilities, groceries, transportation and clothing.
  • Half say they don’t earn enough money to live without consumer debt.
  • 69 per cent of Canadians say saving for a major purchase and saving for retirement are their biggest affordability challenges.

What’s the solution?

Unfortunately, adding debt into the mix when many Canadians are already challenged by affordability can be a recipe for disaster. Average debt loads for Gen Xers, millennials and women are higher than other demographics, with average personal (non-mortgage) debt sitting at around $20,000.

It is promising that so many Canadians are taking steps to alleviate this type of financial stress and regain control over their finances. Here are some solutions:

  1. Deal with debt – Adding to credit card debt in order to fill in the gaps is a slippery slope. Since many Canadians are feeling overwhelmed, it’s a good time to seek help from a debt professional such as a Licensed Insolvency Trustee (LIT). An LIT can go over your specific details and find a solution that works for you. This can free up cash, allowing you to afford more essentials and rebuild. Compare your debt relief options here.
  2. Save for emergencies – Once you’ve got a handle on debt, a crucial part of your financial security is savings. Without a safety net, you’ll be more likely to lean on credit card debt when unexpected situations arise and more likely to live paycheque to paycheque. Use this guide to start an emergency fund.
  3. Budget, budget, budget – If you don’t have one, autumn is a great time to start one. It will help you get a grasp on your money and give you a good motivational push before the new year. You can either jot out your budget using a printable worksheet, or use an app like com to get started.

What do you find most challenging to afford? Is your debt a factor in your ability to afford milestones, events or goals? Check out more debt advice and connect with other Canadians on Twitter using the hashtags #DebtSolutions #PaychequeToPaycheque #Millennials

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