Paying Down Debt Is Becoming The Priority

Rising interest rates are making a lot of Canadians think about paying down their debts as a priority in 2019. Low rates previously made debt cheap to carry but people are worried that may change.

According to a CIBC poll, 29% of Canadians increased their debts in 2018.

Here was the split in these increases:

1. Buying cars 24%
2. Home renovations and repairs 20%
3. Miscellaneous items 34%

One quarter of people said that paying down their debt was their number one priority. This was followed by staying on top of bills and just keeping afloat, investing, saving for travel  and saving for retirement. (Interesting and scary that retirement was the last priority.)

What are the biggest debts that Canadians have from highest to lowest?

1. Credit Card is number one.
2. Mortgage
3. Car loans
4. Lines of credit
5. Personal loans

28% of Canadians say that they have no debt.

The majority of Canadians believe that paying down debt is more important than to save and invest. Is this true? It depends on what the debt is being used for. If it’s a mortgage, the rates are still at record lows so it is generally better to invest that money but only if the return on investment exceeds the mortgage rate.

The most important thing is to balance your debt and savings and not concentrate only on one or the other.

It should also be a top priority to pay down high interest debt like credit cards and personal loans. Some debt is good (like when you are investing renovations or repairs) and other debt is bad.

If you would like to discuss further, please call Robert Floris’s office, no obligation, easy to talk to, honest answers. We do more than just mortgages. We advise and educate on all aspects of your finances because they are intertwined.

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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Thanks for reading!