May 20, 2014

By Margaret H. Johnson

Many people seem to have the impression these days that debt is a necessary part of life, and is in fact okay. Doomsday speak of rising interest rates doesn’t have us too worried, and we believe that the big banks and government will step in to do whatever it takes to prevent a debt catastrophe. That may be a possibility, but putting aside the potential for interest rate spikes, there are other reasons to be concerned about our levels of debt.

Many people who suddenly come into trouble with their debt are those who have been laid off work or had their hours cut back unexpectedly. When you have debt, you are vulnerable. A decrease in your income coupled with a debt high load could be financially devastating.

“Last week’s unemployment report highlights the lack of job security in today’s economy. A total of 28,900 jobs were lost in April and, longer term, there’s been more growth in part-time work than full-time positions” Reports Rob Carrick of the Globe and Mail (May 14, 2014).

Think about what would happen if you lost your job today… do you have an emergency savings? How quickly would you be able to find more work? Would employment income cover your expenses and debt payments? How would you choose between paying your household bills and your debt? Many people who end up in bankruptcy are those who have lost their job and not able to return to the same level of income before they are overwhelmed with their previous and newly acquired debts. If you own your own home, you may not be able to claim bankruptcy without losing your home and other assets.

Are your debt payments consuming all of your disposable income? Even if your employment remains secure, and even if interest rates remain steady, your debt is hurting you. Spending a good portion of your income on debt every month prevents you from saving enough for your retirement.

So many of us these days carry big mortgages with the assumption that paying it off over our working years will leave us with plenty of equity for our retirement. But how much? Do you know what your property will be worth at the time of your retirement? No one knows for sure, so if you’re banking your retirement on an unknown value, that is scary. And if that is your main source of wealth for retirement, you’d better be prepared to sell and downsize significantly.

And another thing, how much money in interest will your mortgage cost you over its lifetime? That certainly takes away from the profit you are making on selling your home. Property investment is a gamble, one that should pay off over the long term, but your retirement plan would benefit from a solid savings and investment plan with a known end value. Thus a large mortgage which costs you big time in interest and prevents you from saving for retirement is more crippling than you may realize.

If your debt load is more due to consumer debt than a mortgage though, your retirement could be in serious jeopardy.

Are you ready to shake off your excess debt now? Call Solutions Credit Counselling for help 1-877-588-9491 today!

Remember, if you are experiencing financial difficulties do not wait. Call Solutions Credit Counselling at 1(877)588-9491 or fill out our Debt Consolidation Questionnaire and get your Free Credit Counselling Advice today.

For more information visit Debt Canada - your Canadian credit education centre.

If you are a woman in debt, speak with Women and Money first. We specialize in helping women with their personal and business financeMoney management advice you can count on!

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