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Canadians say paying down debt is their top financial priority in 2019


A new CIBC poll finds paying down debt is the No. 1 financial priority for Canadians heading into 2019, the ninth consecutive year debt repayment has topped the annual survey. Further, almost a third (29 per cent) say they’ve taken on more debt in the past 12 months citing day-to-day expenses as the top reason for piling up debt. 

“Debt weighs heavily on Canadians, so it’s no surprise that Canadians continue to put debt concerns at the top of their list of priorities each year. Debt can be a useful tool for achieving long term goals such as home ownership or funding education, but if you’re turning to debt to make ends meet, it may be time for cash-flow planning instead,” says Jamie Golombek, Managing Director, CIBC Financial Planning and Advice who shares tips in a new video. “Reviewing your income and expenses with an expert can uncover ways to cut back, lower interest payments and reveal tax efficiencies to stretch your money further so you can reach your goals.”

Key poll findings:

  • Paying down debt (26 per cent) is Canadians’ top financial priority in 2019, followed by keeping up with bills and getting by (14 per cent), growing wealth (12 per cent), saving for a vacation (7 per cent), and saving for retirement (6 percent)
  • Among the 29 per cent of Canadians who have taken on more debt in the past 12 months, top reasons cited are to cover day-to-day items (34 per cent), purchase a new vehicle (24 per cent) and pay for a home repair or renovation (20 per cent)
  • Little changed from last year, Canadians say their top sources of debt are: credit card (45 per cent), mortgage (31 per cent), car loan (23 per cent), line of credit (22 per cent), personal loan (11 per cent)
  • 28 per cent say they have no debt
  • Top concerns for Canadians in 2019 are the rising cost of goods/inflation (64 per cent), low Canadian dollar (34 per cent), and rising interest rates (31 per cent)
  • 63 per cent worry that the extended period of higher returns in the stock market are coming to an end

While two-in-five (39 per cent) Canadians worry that they’re forsaking their savings by focusing too much on their debt, the vast majority still (84 per cent) believe that it’s better to pay down debt than build savings. This poll finding comes as Statistics Canada recently reported that the average Canadian household owes $1.78 for every dollar of disposable income, even as the pace of borrowing continues to slow. Not surprisingly, with many (63 per cent) fearing that the stock market has already reached a peak, Canadians may be tempted to pull back on savings to buckle down on their debt – a decision motivated by emotions, not fact, finds an earlier CIBC report.

“There’s rarely enough money to do everything, so it’s critical to make the most of the money you earn by prioritizing both sides of your balance sheet – not debt or savings, but both,” says Mr. Golombek. “It boils down to tradeoffs, and balancing your priorities both now and down the road. The idea of being debt-free may help you sleep better at night now, but it may cost you more in the long run when you consider the missed savings and tax sheltered growth.”  

Downturns are often temporary, and nothing new, says Mr. Golombek. The real risk for investors is that they’ll make knee-jerk reactions that they’re likely to regret when the market rallies up again and they’ve missed out on those gains.

“Ups and downs can be distracting, but it’s important to stay invested and not let short-term market noise knock you off course,” says Mr. Golombek. “This is where having a trusted advisor can help.”

“Remember, your portfolio is built to achieve your long-term goals and takes into account any volatility over that time. The key is to have a financial plan in place with a balance of investments that can both weather any downturns and benefit from them as well,” he adds.

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