Are we surprised to hear that consumer debt is increasing in BC faster than any other province? When we talk about consumer debt we mean all debt excluding mortgage debt or non-mortgage debt. Although the average non-mortgage debt across Canada is down 2% from the end of 2014 at just under $27,000, British Columbia is the only province to increase consumer debt. We are up almost 4% at nearly $39,000. Generally this can happen due to something changing in our lives such as a sudden illness or loss of employment. It can also be attributed to people just not dealing with their debt until it is too late.
With consumer debt increasing faster in BC than other provinces, many consumers can find themselves barely able to pay the minimum amounts on their credit cards; never mind trying to pay down the principal. Most credit cards are between 19 and 29 % interest and if you read the fine print on your contract, that is not an annual interest rate, it is calculated monthly and sometimes even daily. It can be shocking when you find out the real rate of interest on your credit cards is much higher than you thought. No wonder it can be so difficult to pay down your debt when so much of your payment goes to interest.
The only smart way to use your credit cards is to stay on top of them and pay them off at the end of each month. If you can’t afford to pay it off at the end of the month – you can’t afford to buy it. Credit cards can be very useful if you treat them as no interest loans. Paying your card(s) off each month = 0 interest and no surprises. Lines of credit generally offer lower rates than credit cards but again, they should be used in the same way and paid off each month.
Being in debt and unable to make your payments can cause a great deal of stress. This stress spills over into other parts of your life like your relationships and your job/career which can tend to lead to drug, alcohol and even mental abuse. Living within your means, creating a budget and sticking to it is the best way to avoid financial stress. If you are already finding yourself in an un-manageable debt situation, contact a professional like a federally licensed bankruptcy trustee and get the best advice for your situation. This is always offered as a free consultation. You may have to make some changes in your life, but you can be debt free.