According to a CIBC poll, 1 in 4 Canadians are focussing on paying down their debts in 2019 as interest rates rise.
Results of the survey found that 29% of respondents increased their amount of debt in 2018. This increase was due to the following:
Day-to-day Items – 34%
Purchasing a New Vehicle – 24%
Paying for a Home Repair or Renovation – 20%
More than 26% (1 in 4) said that paying down debt is their number one financial priority.
Keeping up with bills and getting by – 14%
Growing Wealth -12%
Saving for a Vacation -7%
Saving for Retirement – 6%
“Debt weighs heavily on Canadians, so it’s no surprise that Canadians continue to put debt concerns at the top of their list of priorities each year,” says Jamie Golombek, Managing Director, CIBC Financial Planning and Advice.
Top sources of Canadians’ debt are:
Credit Card – 45%
Mortgage – 31%
Car Loan – 23%
Line of Credit – 22%
Personal Loan – 11%
28% say they have no debt
“Canadians are conservative when it comes to debt and are adjusting for a tighter financial outlook in 2019. Most people remain cautious of overburdening themselves with debt and have the mindset that paying down their debt is a higher priority than padding their savings accounts.” — Leo Manchisi
Two-in-five Canadians worry that they’re sacrificing their savings by focusing too much on their debt, but the majority (84%) think that it is better to pay down debt than building up savings.
“There’s rarely enough money to do everything, so it’s critical to make the most of the money you earn by prioritizing both sides of your balance sheet – not debt or savings, but both,” adds Golombek. “It boils down to tradeoffs and balancing your priorities both now and down the road. The idea of being debt-free may help you sleep better at night now, but it may cost you more in the long run when you consider the missed savings and tax sheltered growth.”