Canadians paying off their debt the good old-fashioned way - spending less: RBC poll
Financial Fitness regime is the key to healthy spending
TORONTO, Oct. 29, 2013 /CNW/ - Debt levels are on the rise across Canada, the number of Canadians who report being debt-free has decreased. Fewer than one-quarter (24 per cent) of Canadians are now debt free, down from 26 per cent in 2012, according to the 3rd annual RBC Debt Poll. Canadians are focusing on financial fitness with a year-round emphasis on spending less and saving more.
As the number of people carrying debt has increased, the average personal debt (non-mortgage) reached $15,920 in 2013 (up from $13,141 in 2012). Anxiety around debt is still a reality for many, as nearly four-in-ten (38 per cent) Canadians are very anxious about their debt levels, up from 34 per cent in 2012, but the same number of Canadians (38 per cent) are comfortable with their debt. According to the poll, in an effort to practice financial fitness and reduce personal debt, Canadians have gone back to basics - reigning in spending by putting off big ticket items including vacations and vehicles.
"Despite the rising debt figure, there is a noticeable trend to responsible debt behaviour over the past year," said Kim Taylor, director, Personal Lending, RBC. "We are also seeing that others need to take a step back to better manage the debt they are carrying. Before you start on any new routine, it is always best to set goals and have a plan in place. Marathon training often begins with a 5k race, and a financial plan with a path to debt repayment is key to your financial fitness success."
The RBC Debt Poll found that there was a great divide between Western and Eastern Canada, with debt levels increasing a staggering 35 per cent* in the West compared to 20 per cent in the East since 2012. Alberta, faced with regional floods earlier this year, showed a significant increase in debt load, rising 63 per cent from 2012. Despite the higher percentage of debt in the West, residents of Eastern Canada (41 per cent) are more anxious than their Western neighbours (34 per cent) about their debt levels.
*Does not include Alberta data, which was collected after the Alberta floods.
"Regardless of where you live, it remains clear that Canadians on the whole can benefit from understanding the true cost of debt and responsible borrowing practices," said Taylor. "If you're uncertain about debt, talk to a professional and build a roadmap on how to get to where you need to be. Knowledge is power, and a planner can help provide you with the tools you need to move forward."
Taylor offers the following tips on getting financially fit:
- Get to know your debt: credit cards, loans, lines of credit - how much do you owe?
- Online calculators such as the Debt Reduction Plan are available for you to get a better picture of your exact debt figure.
- Schedule an appointment to speak with an Account Manager.
- An Account Manager is your best tool to help provide unique solutions for you to work on your financial fitness.
- Look at your options: what do you think makes the most sense for you to manage debt?
- Ask yourself: What are you most comfortable with and what is the best way for you to pay off your debt? A consolidation calculator can help you determine what's best for you.
- Make a plan to reduce your debt and stick to it.
- Like any fitness plan, this is no different: you need to stick to it to see results.
About the 3rd Annual RBC Debt Poll
The RBC Debt Poll was conducted by Ipsos Reid. Data was collected from August 22 to 27, 2013. The online survey is based on a randomly selected representative sample of 2,108 adult Canadians that was statistically weighted by region, age and gender composition according to the Census data. The results are based on a sample where quota sampling and weighting are employed to balance demographics and ensure that the sample's composition reflects that of the actual Canadian population according to Census data. Quota samples with weighting from the Ipsos online panel provide results that are intended to approximate a probability sample. An unweighted probability sample of 2,108, with 100 per cent response rate, would have an estimated margin of error of ±2 per cent, 19 times out of 20. The margin of error within subgroups of the sample will be higher.
About RBC and financial advice, tools and resources
All Canadians can visit the RBC Advice Centre rbcadvicecentre.com for guidance on how to handle their debt. Interactive tools and calculators, such as the Debt Reduction Plan and Debt Consolidation Calculator, provide customized information covering all facets of saving and using credit. For RBC personal banking clients, an online financial management tool, myFinanceTracker, is available at no cost to create a set budget and track their spending habits.