Reduce Personal Debt Before Rates Increase
With RRSP season upon us, it seems that this year many people are simply trying to stay afloat, let alone able to contribute to their savings.
The word on the street this week is about Canadians’ average debt-to-income level that has reached an all-time high of 145% (although still considerably less than the 175% our U.S. counterparts are carrying).
Obviously, the size of your mortgage plays a big part, but how can you reduce your own personal debt-to-income level to ensure that you can still afford your house and have some money to put into your RRSPs next year?
Take a look at your revolving debt (lines of credit, credit cards, store cards) and what the interest rate is for each. Pay down the higher interest accounts first and then go from there. Avoid purchasing consumer goods on payment plans that you can’t afford to pay for now. Create a budget and stick to it – even small changes can make a big difference over time.
While these tips seem simplistic, they can be effective if you’re serious about taking control of your personal finances. Interest rates are going to rise soon and it’s a good idea to prepare for that eventuality now.
