3 Simple Ways You Can Reduce Your Credit Card DebtNov 07, 2018
Gen Xers are Canada’s most indebted generation, with 80 per cent carrying some level of personal debt. In fact, this age group is most likely to have credit card debt, mortgage debt and “some” to “a lot” of personal debt. With debt relief being a priority for over half of Canadians, finding simple ways to reduce credit card debt is important.
Basic affordability continues to be a challenge for Gen Xers. They’re raising children, paying mortgages, establishing and growing their careers, and may even be caring for elderly parents — all while trying to keep up with rising costs.
Then there are those Gen Xers who are on more solid professional ground, and may have a handle on their mortgages, but they’re supporting adult children who are struggling with their own affordability issues.
Our BDO Canadian Affordability Index found that a whopping 82 per cent of Gen Xers see saving for retirement as a need rather than a want. Yet 70 per cent say that saving for retirement is a major challenge.
At the same time, only two-in-ten Canadians strongly agree that they have enough money to buy the things they need, even when factoring in all income from all family members. For 30 per cent of us, our debt load is growing even though we may prioritize paying it down.
Getting a handle on debt is more important than ever.
If you’re one of the nearly six-in-10 indebted Gen Xers dealing with credit card debt, there are three simple things you can do to start reducing those credit card balances so you can get some breathing room.
Get a clear picture of your financial status
Debt can be overwhelming, and it can be easy to become comfortable with just making your minimum payments. But you aren’t going to reduce your credit card debt unless you can pay more than the minimum.
Take some time to get a clear picture of your financial status. There are online tools you can use to determine where you stand when it comes to credit and debt. You can even explore consolidating debt without ruining your credit.
Once you have a clear picture of your financial status, you’ll be in a strong position to start making choices that will allow you to pay off your credit cards.
Ask yourself, is it want or is it a need?
Almost three-in-10 Gen Xers say they spend more than they should on wants, so there’s room for exploring the difference between wants and needs. One place to start is to question whether you can actually afford to pay for a purchase.
If you need to use a credit card as a borrowing tool to pay for something, you may have to acknowledge that you can’t afford it today — and question whether you need it.
Exploring simple living and reducing the amount of things your family purchases can help you free yourself of wants and allow you to focus on the needs. In turn, this will free up money that can be used to reduce and eventually eliminate your credit card debt.
Having a strategy for attacking debt is key to reducing it
The debt snowball and the debt avalanche are two ideas that can help you achieve your goals.
Try to get real satisfaction each time you pay down your credit card balance. It’s not a sacrifice if you’re achieving a goal. This is something you’re doing for you and your family so you can feel better about your financial future!
November is Financial Literacy Month(FLM), so check out the Financial Consumer Agency of Canada’s resources. There’s a great budgeting tool, or, think about using a money management app like Mint or YNAB.
Yes, it is entirely possible to get rid of debt. Check out Boomer & Echo to find out how one Gen Xer found financial freedom.
Reducing your credit card debt is a great step in helping you feel more secure today and in the future. While spending tends to level out as we age, we don’t know what tomorrow will bring. Taking action now is key to being able to handle what comes tomorrow.