It’s such a slippery and subtle slope – sliding into debt, that is. A little here, a little there and before you know it, most of your money is going to servicing debt instead of enjoying life now or saving for a financially secure tomorrow.
If you have a life partner, debt can be a symptom of a larger problem – like poor communication, differing goals and life expectations, or if one of you is a saver and the other a spender. If that sounds like your situation, you’ve got plenty of company. Only 15% of Canadian couples have never disagreed about money and one in ten Canadians have left a relationship due to disagreements over money.*
That’s why it’s important to look beyond your debt symptoms – spending too much, watching your debt mount – to uncover the real reasons for you debt issues, like identifying the behaviour that got you into debt in the first place, and taking steps to resolve the issues so your slide into debt doesn’t cause even bigger problems down the road.
Start with a detailed financial review and by establishing financial life goals that both of you share, understand, and agree to. Focus on reducing your debt load by targeting ‘bad debt’ first – high interest rate credit or retail cards, for example – and through a debt consolidation/monthly debt reduction plan.
Then, look longer term with a realistic financial strategy for saving toward your kids’ education, your retirement, paying down your mortgage … and/or other life goals that are important to you.
Your strategy could include:
· Establishing an emergency reserve using Tax-Free Savings Accounts (TFSAs).
· Protecting your family with life, critical illness and disability insurance.
· Funding your children’s education with Registered Education Savings Plans (RESPs).
· Funding your retirement (and/or your partner’s retirement) with Registered Retirement Savings Plans (RRSPs).
Depending on your personal situation, there are other debt-reduction, money-saving strategies that will help alleviate stress and get you debt-free and on track for financial security. Your professional advisor can provide both the third-party perspective and the financial planning expertise to develop the plan that will work for you.
*PayPal survey – March 2009
This column, written and published by Investors Group Financial Services Inc., presents general information only and is not a solicitation to buy or sell any investments. Contact a financial advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant. Chris Cochrane – Consultant 613-933-7777.