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Gen X Debt: How to Spot the Warning Signs and Avoid Trouble

Having trouble balancing the expenses of raising a family, paying down debt and saving for retirement?

It’s no wonder Gen Xers are feeling the squeeze. In the grand scheme of things, there’s not a lot of time between the time you start a family and the time you are supposed to retire. However, there are a whole lot of expenses in those in-between years, making it tougher and tougher to meet all the demands.

The good news? There are ways you can set yourself up for financial success now that will give you the best shot at meeting your goals.

Is debt impacting your affordability?

Daily money demands and household responsibilities can make you feel overwhelmed and sometimes, defeated. And, as a new survey revealed, debt can play a major factor in contributing to financial stressors.

Take a look at the stats from BDO Canada’s Affordability Index:

  • 74 per cent of Canadians carry at least some debt. However, the majority of Gen Xers have more non-mortgage debt than the national average of $20,000. Homeowners (and those likely to buy soon) owe almost $25,000.
  • Eight-in-10 Gen Xers say they NEED to save for retirement, but three-quarters find it challenging to do so, and 33 per cent have no retirement savings at all.
  • 74 per cent of Gen X respondents said they find it hard to save for a major purchase and nearly 30 per cent struggle to feed their families.

Affordability is a major concern for Canadians across the board. But more specifically, women, millennials and Gen Xers seem to find it toughest to get ahead. Unsurprisingly, these same groups happen to have the highest debt balances across Canada.

3 financial warning signs and what to do about them

Feel like you’re putting a lot of money toward those debt balances each month but they don’t seem to budge? You might be floundering because you don’t have a solid debt repayment plan.

Here are some ways to spot when you’re headed for trouble, and how to turn things around:

  1. You’re making minimum payments. If you’re only paying the minimum on your debt balances, you’re only covering the interest on those bills. Continuing to pay only the minimum will keep you paying the same debts for years, making almost no progress.
    : Use the debt avalanche method to squash those interest charges. This involves putting as much extra money as you can each month toward your highest interest debt balance, while maintaining minimum payments on the others. Once it’s paid off, move on to the next.
  1. You’re living paycheque to paycheque. Do you already have your next paycheque spent before it arrives? According to our survey, more than half of Canadians have very little left after their bills are paid.
    : Track your money using a budget so you can see all your monthly expenses laid out. From there, begin looking at ways to reduce your expenses to free up cash each month. If debt repayment is tying up all your cash, look into your debt relief options using this calculator or talk with a Licensed Insolvency Trustee to explore options to reduce debt.
  1. You’re skipping bills or missing deadlines – Missing payments or paying bills after they’re due will accrue interest and make it harder to pay those balances.
    Solution: Consider automating your bill payments so you won’t forget when they’re due. If your money isn’t stretching far enough to cover all your bills, consider taking on extra work, selling off items or eliminating further expenses.

Has your debt become a financial roadblock, keeping you from meeting your goals? Check out financial blog Boomer and Echo for some solid money advice or join our Twitter conversation by searching the hashtags #FamilyFinances #LeaveDebtBehind #GenX

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