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On December 13, 2012, Statistics Canada released new data that shows that the ratio of debt to household income in this country rose to almost 165%. This means for every dollar the average Canadian earns, they now owe $1.65. The bottom line is that our debt ratios are now in the same range that the U.S. experienced prior to the huge recession of 2008. These runaway debt levels continue to be a concern for the Canadian government.

Bank of Canada Governor Mark Carney has indicated that the continued spike in consumer debt levels is one of the biggest threats to the Canadian economy. Because of the Bank’s concerns about this growing consumer debt, Finance Minister Jim Flaherty has made a number of changes to the mortgage rules in an effort to slow the growth of the mortgage market. But those changes may not be enough to turn the tide on the increased consumer debt.

Canadians that are carrying large amounts of debt are extremely vulnerable. Any negative changes in someone’s life (such as a significant decline in house value, a reduction in household income level, a chronic illness, or even the cost of major car repairs), could easily push many people over the financial edge. Failure to address debt levels soon may put home ownership at risk for many Canadians.

As we reach a fever pitch in our holiday shopping (Visa estimates the week before Christmas is their busiest time of the year), we all need to take a firm step back and think about our debt levels and the amounts we can afford to spend. In other words, unless you pay off your credit card balance each month, buying gifts on credit (and therefore carrying a large balance on your cards) is not in your best long-term interest.

So, for your first New Years Resolution make dealing with your debt a priority. Work on paying down the debt with the highest interest first (these are typically our credit cards). And if you find you are still struggling to manage your debt after taking steps on your own to control it, I recommend that you speak with a financial professional from our firm, A. Farber & Partners, Inc.

As part of what we call “The R-Plan”, we offer you a free initial consultation where we will listen to your concerns. We will sit down and conduct a complete review of your debts and assets. By doing so, we help you develop the right debt relief plan; one that fits your needs and substantially reduces your debt (or eliminates it completely!).

The ultimate goal is to provide you with relief from your financial stress and help you to rebuild your finances, for a more-positive, debt-free financial future.

Happy Holidays & a Joyous New Year from all of us at A. Farber & Partners!

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