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MoneyProblems.ca was started in 1999 to provide free information about how to deal with your money problems, and now receives tens of thousands of visitors every month. Our site is based in Canada, and contains extensive information on all options available to you and listings of local credit counsellors, bankruptcy trustees and mortgage brokers who can help.
While MoneyProblems.ca has helped a lot of people, we realize that many people have more questions before contacting an advisor, or simply want to read constantly updated information. That’s why we have introduced the Money Solutions Blog, where you can read articles written by our team of experts.
We have organized the Blog into categories, so simply click on a category in the Category menu on your right-hand side to find articles and questions and answers about different topics, such as Budgeting, Debt Consolidation, Bankruptcy Alternatives (including Credit Counselling and Consumer Proposals in Canada), Credit Repair, and Personal Bankruptcy.
If you have more debt than you should, you’re not alone. Four in ten Canadians report they carry credit card debt and a quarter of Canadians have an outstanding balance on their line of credit. Who is at risk of having to seek professional debt relief solutions like credit counselling or bankruptcy to deal with their debt problems?
The truth is that debt problems affects Canadians from all walks of life – all ages, all income brackets, married or single, working, retired or unemployed. A recent study by Hoyes, Michalos & Associates, Joe Debtor: Who Is He? Who Is At Risk? revealed several ‘at risk’ groups. One might be you.
The Young Debtor
Insolvent debtors between the ages of 18 and 29 accounted for 12% of all insolvencies in the study. While working, a lack of steady employment and below average income means that the young insolvent debtor is using up most of his or her income to pay for living expenses. There is little left over to cover debt repayments. In the study, young debtors owed almost $33,000 in unsecured debts and had an unsecured debt-to-income ratio of 142%. One in three had a dependant to support and 12% were single parents.
The Family Debtor
The largest of the risk groups analyzed in the Joe Debtor study, insolvent debtors between the ages of 30 and 49 filed two-thirds of all insolvencies. Starting a family, buying a home and relying on credit to make ends meet, the family debtor soon finds his debts overwhelming. By his 40′s his unsecured debts reached over $67,000. The stress of all this debt can cause marital problems, possibly resulting in separation or divorce. Insolvent debtors are much more likely than the average Canadian to have their marriage end in divorce and the financial costs of divorce add to an already overwhelming debt burden.
The most at risk group in the study, insolvent debtors aged 50-59 have the highest level of unsecured debts of all age groups at a staggaring $84,199. Unlike other risk groups, their debts are growing. Pre-retirement debtors with heavy debt loads are at risk of a drop in income due to illness, early retirement and job loss. 30% of pre-retirement debtors are supporting a dependant and almost one-third have not yet paid off their mortgage. Soon they find themselves unable to maintain debt payments on a reduce income.
While total insolvencies have declined in Canada, insolvency filings among seniors (60+) in the study increased. One in ten insolvent debtors were senior debtors. With debts that have accumulated over time, coupled with a reduction in income due to retirement or disability, seniors often turn to even more credit to make ends meet. Their overall credit card debt, at $37,161, was the highest of all age groups. Senior debtors are trying to service larger debts on less income with many turning to bankruptcy or a consumer proposal as a solution.
No matter what your family situation or stage in life, worrying about debts has a devastating effect on both you and your family. Recognizing the need for help and talking to a reputable professional is the first step to dealing with overwhelming debt problems. Contact a debt expert today, and find out what your solutions can be.Credit Card Debt
Canadians love their coffee. According to the Coffee Association of Canada the average Canadian coffee drinker consumes approximately 2.8 cups of coffee per day or almost 20 cups per week. Of that coffee, 40% is consumed outside the home. That’s a lot of coffee being purchased ‘on-the-go’. If you are carrying debt you would like to repay, what is the ‘opportunity cost’ of buying your coffee to go rather than using that same money to pay off your debt?
To figure that out let’s continue with our average coffee drinker. And because this is Canada, we’ll use Tim Hortons as our coffee of choice. Our Coffee Drinker drinks 2 medium coffees per day, every day (after all he really like’s his Tims) and he owes $2,500 on his credit cards. What is the impact on his debt if he decided to make his coffee at home?
Let’s start with the cost of buying our coffee at Tim Hortons. 2 cups a day at $1.60 costs him $1,168 a year or $97 per month.
If our Coffee Drinker made his Tims at home what would it cost? A 343g can of Tim Hortons coffee costs $6.99. This same can will make the equivalent of about 15.5 medium Tims coffees. Even adding in a little extra for milk or cream, water & electricity that’s less than 50 cents a cup. So our Coffee Drinker saves $800 per year or $67 per month that he can add to his monthly debt repayment.
So what you say, it’s only $67 a month. Yes but that $67 a month ‘extra’ he pays towards his debts has a tremendous affect. Let’s see.
Our Coffee Drinker owes $2,500 in credit card debt. He’s paying 18% interest and, up until he kicked his coffee habit, was only paying the minimum balance each month or 3%. Now he is going to pay the same minimum payment PLUS $67 each and every month until it’s paid off.
The impact? Our Coffee Drinker will be out of debt in 2.5 years instead of 15 years! That’s 12 and a half years faster, just by drinking his coffee at home. Why? Because he saved $1,770 in interest by putting his coffee savings towards his debts each and every month.
The real lesson learned is not about where you drink your coffee. Instead it’s about looking for small things in your budget that can generate savings that you can use to pay off your debts sooner rather than later. It might have been the large things that got you into debt in the first place, but it’s the small things that can get you out.Debt Management
Personal Lines of Credit (LOC) have become increasingly popular in recent years. The financial industry has sold the allure of instant access to ‘affordable’ credit to fund large purchases, unexpected expenses, home renovations – whatever we wanted to purchase but could not afford today. The success of this product has been nothing short of amazing. more »Credit Card Debt
Let’s face it, credit card debt is almost the norm today. We are accustomed to using credit cards as part of our every day life. When used wisely, the benefits of credit cards are very appealing – they are easier to carry than cash, can help us build up our credit rating and offer rewards more »Debt Management
“Good judgement comes from experience, a lot of which comes from bad judgement”. We all know too much debt is not a good thing, but debt management is not necessarily a skill we all possess. It’s not like you set out with the objective of borrowing more than you could afford. Debt slowly creeps up more »Bankruptcy
Is the recession over in Canada? Are Canadians, on average, in better financial shape than they were during the height of the collapse? A look at the personal bankruptcy statistics in Canada would seem to say so. The Office of the Superintendent of Bankruptcy recently reported that total bankruptcy and consumer proposal filings in Canada more »Debt Management
You’re trying to improve your financial health but all the messages are getting confusing. First there are the warnings that Canadians need to pay off their high levels of debt. But now it is RRSP season, and you are wondering about your retirement savings. You’ve managed to salt away a small amount of money for more »Credit Counselling
The number of debt settlement companies entering the Canadian marketplace has ballooned in recent years. Advertising a wide range of services including credit counselling, debt settlement, debt relief, debt consolidation, and debt management, it is hard for the average person to distinguish between what is fact, what is hype, and what is a scam. To more »Credit Counselling
A article in the Toronto Star today looking into practices at Consolidated Credit Counseling Services of Canada Inc., one of the largest not-for-profit credit counselling agencies in Toronto and across Canada, found that their advisors providing counselling services to potential clients are not certified counsellors. In the story, the Star found that: Consolidated Credit Counselling more »Debt Management
Just this week The Cash Store Financial Services Inc. announced their new line of credit products in Ontario. In their words these products will ‘help build a credit history’. Edmonton based Cash Store Financial, operating under the names “Cash Store Financial”, “Instaloans” and “The Title Store”, is offering the new product in place of it’s more »