Personal Debts Interfere with Canadians’ Retirement Plans

Recently-released data indicates that the average Canadian’s debt load has increased dramatically of late. According to Moody’s, the credit rating firm, debt balances have grown by an annualized rate of nearly 6 percent over the past two years. This trend jeopardizes the retirement plans of countless middle-class Canadians and threatens to weaken the country’s economy even further.

In the past, robust wage growth tended to offset the negative effects of debt. In other words, most indebted Canadians could count on receiving regular pay increases that enabled them to stay current on their credit card, mortgage and personal loan payments.

The new fiscal reality has fundamentally altered this arrangement. While the country’s economic boom continues in places like oil-rich northern Alberta and the financial hub of metropolitan Toronto, many other parts of the country seem to suffer from a permanent malaise. In these places, wage growth may be stagnant or even negative relative to inflation.

With increasingly bleak prospects, young Canadians who get into debt at an early age often have trouble keeping up with their mounting balances. This is especially true for university students and graduates for whom higher education would not be possible without leverage. Many of these folks expect the added earning power of their degrees to offset their hefty student debt loads.

Unfortunately, Canadian student debt is growing at an alarming rate. According to the Canadian Federation of Students, the average student graduates with about $27,000 in debt. While that’s a bit lower than the U.S. average, the cost of Canadian higher education continues to rise at a fearsome rate.

To ensure that they remain current on their obligations, underemployed recent graduates may need to put uncomfortable amounts of their take-home pay towards paying down their student loan balances. This may mean that they have little disposable income left over for basic necessities like food, fuel and clothing.

In many cases, young Canadians must pay for these essential items with high-interest credit cards. While financial experts often frame debt management in terms of personal responsibility and impulse control, it’s more often the case that struggling borrowers’ debt problems are created by fiscal necessity.

The outlook for borrowers trapped by stagnant incomes, mounting credit card balances and rising interest rates often appears to be bleak. Most Canadian financial experts recommend that their clients save enough money over the course of their careers to generate an annual stipend equivalent to 70 percent of their pre-retirement income.

For someone who earned an average of $50,000 per year, an acceptable replacement income would be $35,000. To fund a 20-year retirement, this would require savings of $700,000.

For folks dealing with serious debt problems, it is impossible to sock away such large amounts of money. As such, borrowers who wish to retire comfortably must first seek help to retire their debts.

Among the many available debt relief options, debt settlement often offers the clearest, lowest-cost path to debt-free living. Maple Leaf Debt Helpers, one of Canada’s premier debt relief firms, specializes in debt settlement.

Its professional staff negotiates directly with credit card companies and other lenders to reduce the principal balances on its clients’ outstanding debts. Thanks to their efforts, the firm’s customers may find themselves free of their debts in as few as 12 months.

They may also save thousands of dollars in the process. Every case is different, but past debt settlement clients have seen their total debt burdens reduced by as much as 60 percent.

To learn more about its exciting debt relief process, call Maple Leaf Debt Helpers today or fill out their online quote request form.


Low Interest Rates Create an Economic Mirage

Despite louder and louder warnings from some of the country’s top financial experts, Canadian households continue to leverage themselves at an alarming rate. According to Moody’s, the debt burden of the average Canadian household has grown by about 1.5 percent per quarter over the past two years. That translates to an annualized growth rate of 6 percent.

Moody’s argues that historically low interest rates are the primary culprit for the recent increase in household leverage. In a recent report, the respected credit-rating firm expressed skepticism that Canadian households would change their borrowing habits until rates rose significantly.

Many of Canada’s top financial experts believe that such a rise will come too late to prevent an economic catastrophe. Mark Carney, the current head of the Bank of Canada, recently went public with a passionate plea for fiscal restraint.

His concerns may be prescient. During the past decade, the average Canadian household’s debt load increased by 154 percent. By comparison, average household income increased by just 54 percent during the same time frame.

At the moment, elevated levels of household debt may actually be good for Canada’s economy. 70 percent of the country’s aggregate consumer debt is mortgage-related and supports a still-thriving housing market in many major Canadian cities.

As a result, rising home values have spurred breakneck growth in the value of the nation’s home equity loans. The value of outstanding Canadian home equity loans has quadrupled since 2000, and these credit facilities now represent a major source of income for many of the nation’s homeowners. In fact, the average Canadian now derives nearly 10 percent of their total disposable income from home equity lines of credit.

The United States experienced a similar period of easy credit during the mid-2000s. It created tremendous wealth and millions of jobs while it lasted, fueling a construction boom that saw the development of entirely new suburban communities as well as major urban mixed-use projects that remain popular today.

Of course, the euphoria came to an abrupt end in 2007 as the country plunged into a deep recession. The collapse of the U.S. housing market and the subsequent rash of consumer defaults nearly took down the global economy. As it is, the world still has yet to fully recover from the carnage.

Finance Minister Jim Flaherty worries that the same sequence of events may yet derail the Canadian economy. If interest rates rise or banks decide to tighten their lending standards, millions of borrowers across Canada may be thrown into default. The ensuing collapse of the job market would only compound the problem.

For many Canadian households struggling under severe burdens of debt, this grim future has already arrived. In many parts of the country, stagnant wage growth has forced millions of middle-class homeowners to use credit cards and other unsecured credit facilities to purchase basic necessities.

While their home equity lines of credit may be keeping them afloat for now, these folks are just one interest-rate spike or pink slip away from insolvency. An economic downturn would likely force them into bankruptcy. In fact, thousands of Canadians have already given up on servicing their debts and consigned themselves to a long, hard slog through the bankruptcy process.

Unfortunately, many Canadians know little about the debt relief alternative known as debt settlement. Compared to bankruptcy, this process often saves consumers thousands of dollars and years of crippled credit.

Debt settlement programs often conclude in just 12 months and may reduce their participants’ total debt burdens by 40 to 60 percent. Unlike popular but expensive debt consolidation loans, debt settlement involves direct negotiations with creditors and attacks the principal balances on outstanding debts.

Maple Leaf Debt Helpers, one of Canada’s premier debt settlement agencies, offers its services at surprisingly affordable rates. To learn more about the power of debt settlement, call toll-free or fill out the no-obligation online form today.


Canadian Debt Relief

Canadian lenders may have taken fewer risks than their American counterparts during the years leading up to the recent recession, but it wasn’t enough to insulate the country completely from the toxic effects of the global financial crisis. If you’re like most Canadians, you probably feel a great deal less secure in your finances than you did just a few years ago. You may even be worrying where your next paycheck is going to come from.

Worse, you may have accumulated unseemly amounts of debt in the easy-credit days preceding the recession. Until recently, banks were practically giving away credit cards, personal loans, business lines of credit and other unsecured credit products, seducing millions of Canadians with the promise of cheap cash and a leisurely repayment schedule.

If you fell for the hype, don’t be too hard on yourself. Instead, resolve to dig yourself out of your predicament with the help of a certified Canadian debt relief company.

There are almost as many ways to get out of debt as there are to become ensnared by it in the first place. You’ve no doubt seen slick TV spots or online banner ads hawking debt consolidation loans, and you probably understand the concept of personal bankruptcy as well. You may even have noticed billboards or bus-stop ads touting the advantages of not-for-profit credit counseling agencies that promise to reduce your debts for next to nothing.

Every debt problem is different, and there’s no one-size-fits-all approach to getting out of debt. Choosing the appropriate debt relief option can be a complicated process that turns on the value of your outstanding debts, your relationship with your creditors, the size of your savings cushion, your employment status, and countless other factors.

It’s a big choice, so don’t allow anyone to rush you into making a decision. Instead, take some time to consider your options and make a determination that you can live with.

With aggressive advertising support and easy-to-understand terms, debt consolidation loans may be the most popular Canadian debt relief option. From British Columbia to Nova Scotia, thousands of desperate Canadians enroll in these programs each year.

As their name implies, debt consolidation loans are credit products designed to reduce the aggregate interest rate on your outstanding unsecured debts. The idea is simple: Debt consolidation loans allow you to pay off all of your existing debts at once, effectively trading multiple monthly payments for a single obligation.

Even if your credit is less than perfect, you’ll probably be able to secure a debt consolidation loan large enough to cover your outstanding debts in one fell swoop. Since you’re trading one basket of debt for another, however, it’s important to shop around for the lowest possible interest rate before you pull the trigger on a debt consolidation loan.

As anyone who needs a debt consolidation loan is an inherent credit risk, you’re guaranteed to pay a premium for it. As such, you’ll need to calculate just how much your new debt consolidation loan will save you relative to your old collection of debts. For instance, taking out a $10,000 loan with a 15 percent interest rate to replace a credit card bill with an average interest rate of 20 percent will save you $500 per year.

Rates may be more favorable in certain parts of the country. If you live in oil-rich Alberta, where credit is still quite easy to come by, your lender may knock several percentage points off of your annual charge. On the other hand, you may pay a hefty premium over the national average in hard-luck Newfoundland.

No matter where you live, debt consolidation loans carry significant risks. Your lender will likely give you less rope than your former creditors, who were only too happy to let you run a balance on your credit card. Don’t be surprised if a single missed payment sends you into credit-destroying default on your loan.

Credit counseling is another apparently cheap option that carries some steep hidden costs. Using a credit counseling service to seek Canada debt relief will seriously affect your credit score, making you unattractive to lenders and employers alike. Worse, the credit counseling process can be interminable with complex cases taking up to six years. Indeed, the only real upside to these services is their ability to put an immediate end to phone harassment from your creditors.

Although it’s not perfect for every predicament, debt consolidation through settlement offers plenty of advantages over other debt relief options. Unlike debt consolidation loans or credit counseling services, debt settlement can meaningfully reduce the total amount that you owe your creditors. Depending on the number and size of your debts, the process typically takes between 12 and 48 months.

While every case is different, many creditors may be willing to settle for as little as 40 percent of what you owe. In other words, debt settlement can save you up to 60 percent on your outstanding unsecured debt load. Although your credit may suffer temporarily the negative effects of your decision to settle, your debts won’t last as long as the devastating consequences of bankruptcy.

Stop worrying about how you’ll make your next credit card payment and resolve to get yourself out of debt for good with a debt settlement program. Whether you live in Saskatchewan, Ontario or anywhere else in this great country, this uniquely Canadian debt relief solution will save you thousands in ruinous interest payments and probably hundreds more on treatments for stress-related white hairs.