By Jasmin Brown

BDO Debt Solutions

Causes of Debt and What to do About It

Oct 21, 2024 | 12:01 PM

“The views and opinions expressed in this article are those of the author and do not necessarily reflect the position of Pattison Media and this site.”

If you are struggling with debt, it may keep you from meeting your financial goals and creating the life you dream of.

Debt can become a major problem if not handled correctly, but there are ways to treat and prevent financial difficulties. Consider the following questions:

• Do you make only the minimum payments on your credit cards, or even miss payments?
• Do you apply for new credit when what you have is at the limit?
• Do you turn to high-interest lenders to pay your other bills?
• Do you rely on extra jobs or overtime to meet your expenses?
• Do you find it difficult to save?
• Do you panic when unexpected expenses, like a car repair, come up?
• Do you spend money on “wants” and struggle to cover “needs”?

If you answer “yes” to any of the above questions, it may be an indication that you could have a debt problem in your near future.

City council candidate

P.A. business owner sets sights on Ward 5 council seat, promises to ask the tough questions

2h ago

Green round up

Here are your Green Party candidates for local constituencies

4h ago

BDO Debt Solutions

Causes of Debt and What to do About It

5h ago

Is Debt Always Bad?

Being in debt isn’t always bad. Many people borrow money to purchase a home and spend years paying off a mortgage.

That can be a good thing since you are buying a house and presumably will have a valuable asset at the end of the term. Homeownership is considered a good investment, and most people need to borrow money to buy a house.

However, many people get into trouble by spending more than they earn. Recent statistics show that the average Canadian has $1.84 of debt for every $1.00 of disposable income they earn. It used to be that carrying a high debt load came from living a luxurious lifestyle – eating out regularly, taking expensive vacations, and just generally living beyond ones means. Today, even just covering the basics is a struggle for many Canadians.

Overspending on Credit Cards

Overspending is often made easier with access to credit cards. This can happen because:

• Credit cards sometimes feel like “free money,” so people buy more than they would if using cash.
• Credit card companies often tempt people with rewards to use new cards.
• It becomes difficult to pay off the full balance each month.
• Interest charges make it harder to repay.
• Once people are unable to pay one month, the expectation of doing so goes away, and the balance can snowball over time.

To avoid credit card debt, it’s best to pay off the whole balance each month if possible. Some people find it helpful to use credit cards only for emergencies. Many financial planners suggest “paying yourself first.” What they are really getting at is the recommendation that people save a portion of their income every month. A good rule of thumb to follow is to work to save 10% of your earnings to build a safety net. Right now, saving even a small amount and avoiding credit seems like an impossibility for many. If you are struggling with the cost of living, feeling overwhelmed by your financial situation, and finding it difficult to deal with your debt – there is help available.

If you are having trouble making ends meet each month, finding the right debt solution can help. Visit the BDO Debt Solutions website for more information, or call 1 855 BDO DEBT to book a free, no obligation consultation.

Jasmin Brown is a Senior Vice President overseeing the insolvency practice in Saskatchewan. She is committed to providing creative and practical debt solutions with empathy, understanding and professionalism to help people overcome their financial difficulties.