FLM 2017: How to Change Your Family’s Outlook on DebtNov 07, 2017
How can families rethink how they pay off debt?
Families in Canada are carrying quite a bit of debt these days. In Ontario, the average person has over $22,000 in consumer debt, according to a 2017 Equifax study.
Consumer debt is considered non-mortgage debt. For a family, that might mean a vehicle loan, credit card debt, an unsecured line-of-credit, or all of the above plus more. Rather than just throwing money at the problem or continuing to make minimum payments, though, it’s important for a family to rethink their debt payments — get together, share ideas and make a plan.
Set your targets together
November is Financial Literacy Month, the perfect time to set a target for how you want to deal with existing debt in 2018. If you have multiple forms of debt, start by looking for a not-for-profit credit counselling agency or Licensed Insolvency Trustee (LIT) in Brockville.
Learn more about credit counselling on our debt relief options page.
This short video explains how an LIT can help you with debt problems.
Meet regularly with your spouse or partner
From there, debt relief can be a family affair. Meet with your spouse regularly to discuss spending, money, and make it easy to communicate about finances. A lot of people tiptoe around this subject, so the more comfortable you are the better.
You can even get your kids involved. Money lessons don’t need to wait, as personal finance educator Kelley Keehn writes on Golden Girl Finance. Those five-and-under can have a piggy bank, older kids can have a savings account — all with the idea of learning how to responsibly handle money.
Communication leads to change, and if you aren’t meeting your debt repayment goals, consider rethinking your strategy.
To help with this, Nerdwallet has a “debt-free” calculator, which gets super specific about what cutbacks can help the most in reducing debt.
Say you have $30,000 in family debt. How would giving up Spotify help you in the long run? What about giving up coffees? (I know.) Nerdwallet takes into account your income, debt payments and spending needs, asks what you’re willing to give up, and then provides options for tracking your new goal over time.
Small changes add up in big ways. By making a plan, communicating regularly, and rethinking how you pay off debt, your family is lined up for a better financial 2018.