Credit Counselling Society of British Columbia

January 07, 2008 13:00 ET

Credit Counselling Society of British Columbia: More Debt, Less Savings?

Financial Fitness Strategies for 2008

NEW WESTMINSTER, BRITISH COLUMBIA--(Marketwire - Jan. 7, 2008) - Canadian household debt reached a record high of $1 trillion in 2006 and 25% of Canadians have no savings plan. This shift from over 20% savings in 1982 to 3% in 2006 indicates that consumers are relying less on saving and more on credit to maintain their lifestyle. Establishing a financial plan to manage debt and build savings can spell relief for many consumers.

This trend towards more debt and less savings could have significant implications. Steadily increasing debt loads can affect all Canadians, including young families and an aging society as they allocate more of their income to service debt and less towards saving for emergencies and for retirement. According to Scott Hannah, President of the Credit Counselling Society, the non-profit debt solutions service, this could be putting Canadians at risk. "People need to get back to basics with a household budget and financial plan including specific goals," states Hannah. "It can be overwhelming. However, just like a diet, if you need to lose 20lbs set a goal to lose 1lb per week and make it more manageable."

Establishing a monthly household budget and a savings account is an important first step to wise money management. "We recommend people keep a budget by listing all their monthly expenditures, including mortgage and loan payments, taxes, insurance, food, transportation and utilities as well as setting aside an amount for seasonal expenses," suggests Hannah. "Re-learn good saving habits by setting aside 10% of net income in a separate account every month. This will establish a fund of 3 months income for unexpected situations or keep saving for a bigger purchase like a car or new home. The goal is to avoid credit for daily living expenses and use cash."

To reduce debt, take it one payment at a time. Begin by paying off the debt with the lowest balance first, while maintaining minimum payments on other debts. Then, continue by paying the next lowest balance. By exceeding the minimum payment and establishing a higher regular payment, consumers can shave years off their debt. "Our clients are amazed at how much progress they can make once they establish a plan and stick to it," notes Hannah. "They see the results faster, with more cash flow, lower interest costs and reduced debt."

About the Credit Counselling Society

The Credit Counselling Society is a non-profit organization dedicated to helping individuals and families find solutions to their debt and money problems. They provide free credit counselling and confidential guidance for debt repayment and credit education to consumers across Canada. The Credit Counselling Society is federally registered as a Canadian Charitable Organization and licensed in the provinces of British Columbia, Alberta, Manitoba and Saskatchewan. For more information, visit www.NoMoreDebts.org or call 1.888.527.8999.

Contact Information

  • Credit Counselling Society of British Columbia
    Scott Hannah
    President & CEO
    (604) 636-0211
    Email: scott@nomoredebts.org
    or
    Credit Counselling Society of British Columbia
    Reception
    (604) 527-8999 or Toll Free: 1-888-527-8999
    (604) 515-1644 (FAX)
    Website: www.NoMoreDebts.org