By Jasmin Brown - Licensed Insolvency Trustee

BDO First Call Debt Solutions

How parents can overcome debt and affordability challenges

Oct 31, 2019 | 8:47 AM

Raising children can be expensive, so it may not be surprising that a growing number of parents are in debt. According to recently released results from the BDO Canada Affordability Index, Canadian households with children are much more likely (compared to last year’s Index results) to have a mortgage (up 9 per cent), car loan (up 14 per cent) and home equity line of credit (up 6 per cent).

The question is, what happens when that growing debt affects parents’ ability to make ends meet and prepare for their financial future?

Is your family feeling overwhelmed by expenses? More and more Canadian parents are feeling stressed by affordability and debt challenges:

· Parents with kids in the household are more likely than Canadians with no children to struggle to afford basic needs like housing and transportation costs, and extras like family activities and vacations.

· Nearly 4-in-10 have delayed paying off credit card debt in the past two years because they could not afford it — higher than the Canadian average of 3-in-10.

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· 64 per cent admit they are not ready for retirement, vs 54 per cent of Canadians with no children at home.

Debt repayment can take a big bite out of your monthly budget. This is especially true for people in our province. On average, Saskatchewanians carry more non-mortgage debt than Canadians in any other province. Over half (56 per cent) of Saskatchewan residents carry more than $20,000 of non-mortgage debt.

Unfortunately, as everyday expenses rise and debt obligations grow, it’s tempting to turn to credit to fill in the gaps, making it harder to save and get ahead. If high costs and heavy debt have made it difficult to make ends meet, there are steps you can take to alleviate the stress.

Reduce your expenses if you can. There will always be fixed costs that you can’t change so try to focus on what you can change. For example, there are strategies that can help you save on groceries, like buying in bulk and using coupon apps. Or, look for free or low-cost options for family entertainment and kids’ extracurricular activities.

Rework your budget and plan ahead. Fall is a good time to review your financial goals and establish a budget routine if you don’t already have one. A money management app or budget worksheet can help with this. Try to make room in your budget to plan ahead for discretionary expenses. Take note of spending events like back-to-school, holidays, birthdays and vacations, and set money aside from each paycheque to cover these recurring costs.

Pay off your debt. Using a credit card or line of credit to extend your income will inevitably add to your debt stress and add to affordability challenges. Use our debt calculator to determine how much you owe and put a plan in place to pay it off. Debt relief is especially important for parents. Whether you’re accumulating additional debt or simply “maintaining” debt balances by making minimum monthly payments, you’re affecting your ability to save for future financial goals, like your child’s post-secondary education and your own retirement.

Dealing with debt before it becomes a problem will allow you to utilize more solutions and get back on track faster. If you’re struggling, speak to a Licensed Insolvency Trustee to compare all available debt solutions. The initial consultation is free of cost and obligation.