Poll Finds Almost Half of Canadians are $200 Away from Insolvency

January 21st was Blue Monday. In case you’re not familiar with the term, Blue Monday is a name given to the supposed most depressing day of the year. If the sun setting before 5pm and the cold weather outside doesn’t dampen your spirits, getting your holiday credit card statement in the mail might just do it.

To coincide with Blue Monday, insolvency firm MNP released its latest poll with some eye-opening findings.

A Third of Canadians Don’t Make Enough to Cover Bills and Debt Repayment

MNP’s poll found that 46 percent of Canadians are $200 or less away from financial insolvency. That’s up from 40 percent the last quarter. Furthermore, 31 percent of respondents feel that they don’t earn enough to pay the bills and meet debt obligations. That’s up seven percent from last quarter.

With the Bank of Canada raising interest rates five times since mid-2017, Canadians are feeling the pinch. No more so than those living on the financial edge. The poll found that 51 percent of Canadians are feeling financially pinched by higher interest rates. That’s up from 45 percent the previous quarter.

These are some quite startling findings. It shows that Canadians aren’t saving enough for a rainy day. Any unanticipated increase in the cost of living or interest rates could push them over the financial edge.

Canadians Going into Debt to Pay the Bills

Canadians are a resilient bunch. Instead of filing for bankruptcy or a consumer proposal, they’ll use every tool at their proposal to pay for day to day living expenses. One of those tools is going into debt. The poll found that 45 percent of Canadians said they would need to go into debt to pay living and family expenses.

Higher living expenses aren’t the only concerns of Canadians. Further interest rate increases are a worry, too. Half of Canadians say that they would find themselves in financial trouble if interest rates keep rising. That’s up five percent from last quarter.

Higher living costs coupled with higher interest rates could put some Canadians in a real financial bind. The cost of living will most certainly keep rising. The only question is when will interest rates rise. If it ends up being sooner rather than later, it could impose a lot of financial pain on some Canadians.

Protecting Yourself from Higher Interest Rates

If you  have consumer debt, it’s important to come up with a plan of attack. As I mentioned in an earlier article, the debt avalanche and debt snowball methods can both be effective for paying down your debt. Likewise, you might want to look into getting a consolidated loan at a lower overall interest rate. Once you have your debts under control, your next focus should be building an emergency fund. Financial experts recommend saving three to six months’ living expenses in a savings account. Coming up with that much money at once can be tough, so start saving $200 per month or whatever you can afford and you’ll have a full funded emergency fund before you know it.

About the Author

Sean Cooper

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedIn, Twitter, Facebook and Instagram.

How to Travel This Winter and Not Break the Bank

Winter is the coolest time of year and perhaps the most polarizing of all the seasons. Some people love winter time, while others (aka snowbirds) can’t wait to plan a getaway to a warmer place. It should then come as no surprise that airline tickets tend to be the priciest during wintertime, since many of us can’t wait to escape the colder weather.

So, how can  you travel this winter without breaking the bank and derailing your financial goals? Let’s take a look at some simple ways to save on travel during the cooler months.

Visit Less Touristy Places

When you think of winter travel, warm places like Miami, L.A. and Jamaica are probably first to come to mind. But you’re not the only one who wants to go there. These are among the most popular tourist destinations. That means spending megabucks on airline travel. There’s nothing stopping you from visiting a warm place without breaking the bank.

So, you want to go to Miami? How about going to Gulf Coast of Florida? The airline tickets will most likely be a lot cheaper and you won’t have to deal with the large crowds of Miami. Want to go to L.A.? Try San Diego instead. Want to go somewhere in the Caribbean? Instead of Jamaica, try Puerto Rico or the Dominican Republic. Both are affordable alternatives.

Travelling Within Canada

Not too fond of laying on a sandy beach? Would you rather be hitting the slopes? Whistler is a popular destination for skiers, but did you know there’s a more affordable alternative? Banff is worth a visit during winter. Winter is considered busy season at Whistler, while it’s slow season at Banff. You’ll be able to get access to the best ski hills in Banff and pay a fraction of the cost you’d pay in Whistler.

Be on the Lookout for Deals

Don’t wait until the last minute to book your trip. Start planning well in advance. You’ll be more likely to get the best deals on airline tickets. You can use a tool like Google Flights to monitor the prices and find the cheapest flights. Sign up for travel newsletters and keep an eye out for deals.

Consider planning an all-inclusive vacation. Not only will you be able to save time planning your trip, you may save money, too.

March and spring breaks are peak times for travel. Try to avoid booking a trip during this time. Ditto for flying out on weekends (especially Family Day long weekend). Flying out on a weekday or taking a redeye flight can help you save on your airline ticket.

By planning in advance you can save yourself big bucks on winter your trip. Don’t wait until there’s a foot of snow outside to plan you trip. Start planning in the summer or fall for the best deals on winter travel and keep more of your hard earned money in your pockets where it belongs.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedIn, Twitter, Facebook and Instagram.