5 Reasons You Need to Reduce Debt to Get AheadMar 17, 2019
Do you sometimes feel as if your life is passing you by and you’re simply treading water? Consumer debt has a way of keeping you from reaching your goals and keeping your future cloudy. This is exactly why now is the time to reduce your debt and take back control. In light of International Women’s Day this month, you owe it to yourself to put get your money on track and focus on the goals that are important to you.
Why is it so important to reduce your debt?
Even if you think you’re managing your consumer debt pretty well in the short term, you may not be thinking of the long game. Three-in-four Canadians are carrying debt and one-in-three say they’re overwhelmed by it. Women especially are feeling challenged by heavy debt loads which they say is impacting their ability to save, plan for the future and afford daily essentials.
Here are five reasons why you should consider paying off your debt sooner than later:
- Economic factors could make it harder to pay off your debt
If you’re already carrying high-interest credit card debt, you’re no stranger to increased payments due to climbing interest rates. Canada saw five interest rate hikes between 2017 and 2018. It’s still unclear whether interest rates will continue to climb in 2019. With each hike, your debt balances get harder to pay off. And if interest rates don’t go up this year, take the opportunity to clean up your debt before the economic tide turns.
Use our debt calculator to tally up your debts and interest rates.
- Debt is a major roadblock to affordability
Our recent poll about debt and affordability found that this is especially true for women, millennials and parents. Everything from putting food on the table to being able to afford a home becomes much more difficult when you’re trying to pay off high-interest credit card debt or personal loans.
Plug your numbers into our repayment options calculator to see which method can help you reduce debt.
- Your debt load can make it harder to save
When debt payments are eating up your paycheques, there’s very little left over to add to savings. Dealing with debt early, before it becomes overwhelming will allow you to strike a balance between paying off debt, meeting your monthly expenses and saving up for important future goals.
Canadian women report being very poorly prepared for retirement and have a harder time saving up for major purchases. Making a plan to reduce debt can help you build up an emergency fund and then start investing in long-term goals.
- Less debt = greater financial security
As women age, the financial gap between men and women increases. Women are more likely to end up alone later in life due to the death of a partner or divorce. And they’re also more prone to have a lower income than men later in life.
Start planning now for your future by taking steps to improve your financial security later in life. This might mean speaking to a financial advisor about smart investment strategies, increasing RRSP contributions and paying off debt that is hindering your cash flow.
Check out this mindful money strategy from the blog, The Classy Simple Life.
- Tackling debt can improve your work/life balance
It’s ok to work extra hours to get ahead. In fact, many Canadians have embraced the idea of a low-stress side hustle to increase their capital. However, if you’re working around the clock just to stay on top of your debt payments and making little progress, something’s got to give. Take a look at this minimalist budget from Mint so you can see how you can find a little more balance between your expenses, family life and enjoyable activities.
Are you ready to reduce debt and improve your financial literacy this year? Check out free financial literacy workshops offered at the Mississauga Public Library and follow us on Twitter for more daily money management tips #LeaveDebtBehind #WomenAndMoney #FinancialEducation