The average British Columbian has $23,011 in non-mortgage debt, but most would not use any disposable income to pay it down, according to a Vancity poll released November 18.
Almost all British Columbians—96%—say they carry debt, but only 33% of those surveyed said that if they had an extra $1,000 a month after all expenses were covered, they would use this to service debt.
In a press release, Vancity said carrying large amounts of debt hurts cash flow, credit ratings and overall financial health, but the idea of paying down debt can be intimidating.
“It can be overhwhelming when you are in debt,” said Sophie Salcito, financial adviser at Vancity. “Most people don’t know where to start.”
Many of those surveyed—24%—said they would use that extra $1,000 to contribute to RRSPs and investments, while 17% said they would put it in high-interest savings accounts and 12% said they would leave it in their chequing accounts. Six per cent said they would use the money to do something fun.
Vancity said those carrying debt should use a cash flow calculator to help balance the books and get a better understanding of areas of overspending. Other recommendations include paying debt with the highest interest rate first.
“A credit card and a line of credit have different interest rates,” Vancity said. “When overdrawn on both, make a payment on each of them, but put more money towards the debt with the higher interest rate.”
