Record debt levels indicate that despite making this the top priority for six years running, Canadians are struggling to make headway
TORONTO, Dec. 30, 2015 /CNW/ - Paying down debt is the top financial goal for Canadians in 2016 according to a new CIBC (TSX:CM) (NYSE: CM CIBC) poll. While this marks the sixth consecutive year that paying off debt is the number one priority, record high household debt shows Canadians are struggling to meet this goal.
"Every year Canadians tell us they want to get out of the red, yet each following year debt reduction is still their top financial priority which indicates many are not making the headway they want," says Christina Kramer, Executive Vice President, CIBC.
Key poll highlights include:
- One in four (26 per cent) Canadians say paying down debt is their key financial goal for 2016 -- making it their top financial priority for six years in a row
- Paying down debt is the number one priority for Canadians across all regions regardless of household income
- The new poll findings come at a time when latest data from Statistics Canada puts credit-market debt, including mortgages, at a record 163.7 per cent of after-tax income, and debt loads are rising faster than disposable income
"It's not just first-time home buyers, younger Canadians, or those impacted by shifts in the economy such as a downturn in the oil patch who are focused on cutting down their debt," says Ms. Kramer. "Canadians across the country are telling us that reducing the burden of debt, along with keeping up with their bills, is what they are focused on."
Five steps to debt freedom
For those who struggle to make headway in paying down debt, Ms. Kramer offers some advice:
- Draw up a realistic budget: Track monthly income and expenses and base a budget on actual spending, not what you think you spend. And if paying down debt is a focus, make sure you budget for that as well. If you run a deficit, re-evaluate your spending habits and delay, reduce or eliminate expenses. Using Online or Mobile Banking to create spending limits and alerts can help you stay on track with budgeting.
- Assess your debt: Make a list of every outstanding balance with the interest rate and monthly payment amount. Debts may include a mortgage, personal or car loans, lines of credit or credit cards. Add up the individual debts to find your total balance.
- Set your priorities: Make at least the minimum payment due on each debt to avoid penalties and to keep your credit rating intact. Beyond the minimum, focus on the debts that cost you the most — those with the highest interest rate.
- Consolidate debt: Use lower-rate sources of credit, such as a debt consolidation loan or a home equity line of credit, to pay off the amount outstanding on higher-rate debts, like a department store card.
- Talk to an advisor: A financial advisor can help create a plan to tackle debt. They can suggest possible ways to structure outstanding payments and potentially lower interest costs. This can free up some income for other goals, such as building up an emergency fund.
KEY POLL FINDINGS:
Top financial goal for Canadians in 2016:
|Paying down/eliminating debt||26%|
|Keeping up with bills/getting by||18%|
|I don't have/am not making financial goals for 2016||11%|
|Saving for retirement||8%|
|Saving for a vacation/travel||8%|
|Building my investment portfolio||7%|
|Buying/saving for a house or renovating my current house||6%|
|Buying/saving for a car or another large purchase||4%|
|Establishing/building an emergency fund||4%|
|I don't know||3%|
|Saving for my/my children's education||2%|
From December 7th to 8th, 2015, an online survey was conducted among 1,508 randomly selected Canadian adults who are Angus Reid Forum panelists. The margin of error - which measures sampling variability - is +/- 2.08 per cent, 19 times out of 20. The results have been statistically weighted according to education, age, gender and region (and in Quebec language) Census data to ensure a sample representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.
Historic polling for the 2011 - 2015 outlook was conducted via Nielsen, to just over 1,000 Canadians through teleVox, the company's national telephone omnibus survey. A sample of that size has a margin of error of +/-3.1%, 19 times out of 20.
CIBC is a leading Canadian-based global financial institution with 11 million personal banking and business clients. Through our three major business units - Retail and Business Banking, Wealth Management and Capital Markets - CIBC offers a full range of products and services through its comprehensive electronic banking network, banking centres and offices across Canada with offices in the United States and around the world. You can find other news releases and information about CIBC in our Media Centre on our corporate website at www.cibc.com.
For further information:
Kevin Dove, Head of External Communications, 416-980-8835 or [email protected]