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Debt Roadblock: How Can Families Fight Soaring Costs?

Paying off debt while covering all your living costs can be tough. Paying off debt while raising a family can feel nearly impossible. And, with the beginning of a new school year, parents can feel even more squeezed while trying to accommodate costs of afterschool activities and childcare while balancing everything else.

How is debt negatively affecting families?

Each Canadian family is diverse in the way they manage money and prioritize expenses each month. However, many families who are living with debt or feeling overwhelmed by their expenses have even less autonomy over their money, making it more difficult to meet goals or get ahead.

For our new Affordability Index, we asked Canadians about their debt and affordability challenges. The results – as seen in our inaugural Affordability Index – are concerning, showing just how difficult it is for some Canadian families right now:

  • 30 per cent of millennials and Gen Xers are struggling to feed themselves or their families
  • Over 40 per cent of parents are struggling to pay for essential utilities
  • 34 per cent of Canadians with kids find their debt load so overwhelming they’re unsure what to do about it

The Index also found that three-quarters of Canadians have delayed expenses such as paying off credit card debt, buying a home or purchasing a car over the past two years due to lack of affordability.

3 steps families can take to lighten the load

Feeling overwhelmed with expenses can make it hard to plan. For that reason, the best approach is to take small steps to alleviate money stress and turn things around.

Here are 3 things you and your partner can do that will reduce money stress within your home:

  1. Reduce all unnecessary expenses. You might already be working with a lean budget, but it’s still worth your time to look into specifics:
  • Groceries – Buying off-brand pantry items can save you money – so can shopping around for the best deals. Check out the Flipp app to find savings each week.
  • Extracurricular activities – A recent Ipsos poll affirmed what many parents already know: kids’ activities aren’t cheap. Canadian families spend an average of $1,160 per year on kids’ after school programs, and 40 per cent have taken on debt to cover the costs. Instead of opting for expensive hockey or dance, etc., look for lower cost recreation programs in Barrie or free library programs for after school fun. Alternatively, you can apply for Canadian Tire’s Jumpstart program which helps fund sports for kids.
  1. Know your debt relief options. Knowledge is power. Understanding the options that are available to you will help you choose the best course of action. This might mean:
  • Debt consolidation – You can do this on your own by combining high-interest credit card debt onto a low-interest credit card or line of credit. Alternatively, you could apply for a consolidation loan from your bank and roll your existing consumer debt into one monthly payment.
  • Credit counselling – A non-profit credit counsellor can advise you of debt relief and budgeting strategies or set you up with a repayment plan.
  • Formal debt solutions – A Licensed Insolvency Trustee can go over all your available options and help you find the right solution. This might include a formal debt solution such as a consumer proposal or bankruptcy. To compare your solutions, use this debt options repayment calculator.
  1. Set goals. It’s hard to look forward when you’re in a tough situation, but that’s exactly when it’s so important to try to plan ahead. If your goal is to be debt free or just reduce your debt load, set specific, achievable goals that will bring you closer to your target. Also, don’t forget to reward yourself when you meet your milestones. Use this guide from the FCAC about how to set SMART goals.

Carrying debt can not only impact your goals, it can also make life’s essentials less affordable. The best solution is to slowly work away at your debt reduction goals, either on your own or with the help of a professional. The key is to maintain momentum by following a budget and saving, even a little bit each week. Small steps will eventually make big changes to your finanicial health.

Is your debt making everyday essentials less affordable? Check out our debt relief tips by connecting on Twitter with the hashtags #DebtSolutions #PaychequeToPaycheque #FinancialEducation You can also catch our podcast on our BDO Debt Solutions YouTube channel to learn more from our LITs. 

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