How to Pay Down Debt Together by Exploring Debt OptionsMay 10, 2017
Do you and your partner know your debt options? Have you made a plan to reduce your debt this year but aren’t sure how to go about it?
High incomes, higher living costs
Millennials in Yellowknife earn a higher living wage than most places in Canada but they are also contending with higher costs of living. News coverage seems to focus on Toronto and Vancouver housing markets, yet Yellowknife residents are paying the highest rental fees in Canada at $1,600 for a 2-bedroom apartment. Some mobile homes have even sold for $700,000 and basic condos sell for $400,000. Add these prices to millennials’ student and consumer debt, and despite a higher-than-average-income, couples may still be feeling the squeeze.
How debt can affect your financial goals
Carrying debt while paying high prices for shelter and basic essentials can leave couples unable to meet common milestones. Buying a home, starting a family or travelling are common goals for young couples, but dealing with debt can put a damper on these events and push them further out of reach. Debt can also cause conflict in a relationship, causing worry, stress and financial disagreements — all of which can contribute to divorce if left unchecked. The good news is that dealing with financial matters together can have the opposite effect and actually improve your relationship.
Setting goals together
Couples who share common financial goals are less likely to experience conflict. Why not start by scheduling regular financial discussions? Choose a date when you both can set aside distractions and speak about your financial future. Some topics may include:
- How much debt you owe individually and as a couple. Bring bank statements and bills to go over each debt and the attached interest rate.
- What are your current financial obligations? Is there any way to lighten the load? Create a budget that details all your expenses and deduct them from your income. Which areas can be reduced?
- What are your individual financial goals? Do they overlap with your partner’s goals? Speak openly and honestly to find some common ground. Use a financial goal calculator to assist you.
- Discuss your financial personalities. Are you a spender or a saver? Do you find it difficult to stick to a budget? Is this in contrast with your partner? Make a list of your financial personality traits and see which areas could be improved.
- Discuss your financial roles. Do you pool your finances or keep your financial lives separate? Is this arrangement working or leading to arguments about spending? Here is one suggestion from money expert, Gail Vaz-Oxlade about dividing finances fairly.
Discussing your debt options with a professional can offer some perspective and possibly provide renewed motivation toward meeting your goals. Your options may include debt consolidation, which is a loan you apply for at a bank or lender. A credit counsellor may also offer a similar option by speaking to your creditors to reduce interest on your debts. Credit counsellors can assist you and your partner in re-working your budget. They also offer financial workshops on topics like better credit management. For more pressing debt concerns, a Licensed Insolvency Trustee will review all available debt solutions with you — from DIY debt repayment options to formal solutions. To learn more about these formal solutions, like the difference between consumer proposal and bankruptcy, visit the Office of the Superintendent of Bankruptcy website and view the video series.
How will you and your partner explore your debt options this year? Start by comparing your debt repayment options with an online calculator.
Learn about more debt reduction tips by joining the conversation on Twitter using the hashtags #LetsTalkDebt #BDODebtRelief