The holidays are over, the gifts are piled up — and now the bills are piling up, too. According to Statistics Canada, Canadians owe $2.1 trillion in debt, and the season of giving certainly doesn’t help.
An Ipsos poll published just after Christmas showed the average Canadian owes $8,539.50 in consumer debt (which does not include mortgage payments), but Edmonton-based personal finance expert Kelley Keehn said that doesn’t tell the whole story.
“Oddly enough, I think it should be a bit more frightful,” Keehn told CBC’s Edmonton AM on Monday.
Of those polled, 46 per cent of them said they had zero debt, she explained, which means about 54 per cent of Canadians are buried under more than $15,800 in unpaid bills.
It’s no wonder, she said, that many people in deep debt can feel hopeless, especially at this time of year when the days are short and the bills are long.
But Keehn said no financial problem is unsolvable.
“There is always hope when it comes to our finances,” she said.
Comparing to a fitness journey
Keehn likens the journey of getting out of debt to a New Year’s fitness resolution. When a person makes the commitment to get in shape, the first thing they do is check where they are at now.
That is also the first step Keehn advises when it comes to changing how a person manages their money.
Keehn compares managing finances to a New Year’s fitness resolution. (www.kelleykeehn.com)
“Open those bills, take a deep breath, see what you’re paying in credit card interest, sit down with the family … and get an inventory of where you are,” Keehn said.
Another important aspect of losing weight is to count calories. In finance, Keehn said tracking expenses is often the best way to control what you spend and figure out where you can cut corners.
Budgets can be difficult to maintain, so Keehn suggests the anti-budget — keeping track of your spending habits for 30 days.
The third aspect Keehn focuses on is hiring a professional to help. People who work out may need an extra boost from a personal trainer, and Keehn said this is exactly why a money professional can help in a financial situation.
“You go [to a personal trainer] when you need help, same thing with your finances,” Keehn said. “They can see things that you can maybe not see.”
Keehn also suggests finding a way to establish an emergency fund.
“Fifty per cent of Canadians are $200 away from not being able to pay their bills,” she said.
“You’re going to feel so much better if you know that you’ve got that pot of money.”
Listen to Edmonton AM with host Mark Connolly, weekday mornings at CBC Radio One, 93.9 FM in Edmonton. Follow the morning crew on Twitter @EdmAMCBC.