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Generation Debt: Who Struggles the Most with Personal Debt?

Age may be just a number, but our new Affordability Index reveals that some age groups in Canada are struggling more than others — especially when it comes to affording basic necessities. And it’s pretty clear that personal debt plays a big role in their struggles.

With all the news stories around the increased cost of education, rising grocery prices, and the difficulty of affording a home, you might be able guess at one of the generations who is struggling the most. Millennials.

The truth is, any person regardless of age can be dealing with stress from personal debt. With the average non-mortgage debt for millennials sitting at $17,105, which is below the Canadian average of about $20,000, you would think that millennials may be struggling less than average. That’s not the case.

Millennials are more likely to struggle than other generations to struggle to afford groceries and housing costs. Almost one-in-five (18%) have delayed having children due to affordability issues.

When it comes to being prepared for significant life events, millennials told us they’re “poorly” or “terribly prepared” for:

  • Purchasing a home (64 per cent)
  • Dealing with unexpected costs (54 per cent)
  • Having children (57 per cent)
  • Retirement (67 per cent)

What can millennials do to relieve pressure from debt and make life more affordable?

Debt is stressful and it impacts life beyond your purse or wallet. Unfortunately the price of most basic necessities like groceries and utilities are beyond our control.

What you can control is your efforts to pay down debt. Doing so increases the amount of money that stays in your pocket — the less debt you carry, the less you’ll pay in interest charges.

Look at your current financial situation. How much of your income is spent on bills debt payments each month? Bills for utilities won’t disappear, but the monthly debt payments sure can!

More money in your pocket means more flexibility in your monthly budget for saving for those significant life events, but can make affording the daily necessities a little bit easier too.

How do you start decreasing your monthly debt payments?

There’s no magic trick to make it happen overnight, but you do have options at your disposal. Go into it knowing that it will be process requiring patience and determination. The results will be worth it.

Here are a few tips to get you started on making your monthly debt payments smaller:

  1. Call the credit card company and negotiate a lower rate

You won’t always be successful, but credit card companies want to get paid. If that means giving you a break once-in-awhile they will do it. The longer you’ve been a cardholder the more leverage you may have in the negotiation. Even if they offer you a temporary no-interest or reduced interest payment take advantage of the opportunity. Use that time to make extra payments whenever possible to pay off more of the principle amount owing.

Personal finance writer Kerry J. Taylor has advice on how to negotiate with your credit card company. Check it out on her website, Squawkfox.

  1. Consolidate debt

If you’re carrying multiple debts, head to a bank and talk to them about a debt consolidation loan. Turning a number of monthly debt payments into a single one can make it less stressful to manage and let you pay off more of the principle owing faster.

  1. Throw every extra cent you have at your debt

Cover your basic necessities first, but after that buckle down and put every extra nickel, quarter, dime, loonie, or toonie that you find towards paying down a debt. It may seem insignificant, but over the span of a year those extra payments can really add up!

Millennials may face bigger struggles with affordability in day-to-day life, but regardless of what generation you are a part of, if personal debt is causing you stress there is help. If you’ve done all your research and you’re not sure how to go about it, seek the advice of a debt help professional.

Have you ever tried to negotiate a lower interest rate with your credit card company? Tell us about your experience. #Millennials #PaychequeToPaycheque or #LeaveDebtBehind

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