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4 Signs Your Relationship with Debt Needs Help

What counts as a red flag that can help you change your debt situation?

Heeding red flags is part of everyone’s dating process. Whatever your red flag is, knowing when it’s time to talk about it or get out of a situation can help keep stress low and your path forward solid.

It’s the same with your money. There are plenty of red flags about when debt might be getting overwhelming. Taking note of them early and addressing your debt will make life easier in the long-term.

This is especially true for the millennial generation, who are dealing with financial uncertainty in many ways. According to BDO’s Affordability Index from late 2018, 34 percent of millennial respondents said that their debt load is overwhelming and they don’t know what to do about it. Further, 52 percent of non-homeowners said they were not likely at all to be able to buy a home in the next five years.

So what kind of red flags should millennials look for? Here are four.

  1. Using one credit card or credit line to pay off another.According to Equifax, 89 percent of Canadian adults have at least one credit card. While this is fine if you’re paying off all your balances, using one credit card to pay off another is a sign you’re dealing with too much debt. It’s worth having a conversation with a Licensed Insolvency Trustee (LIT) about limiting that high-interest debt with a consolidation loan or seeking help with formal solutions like bankruptcy or a consumer proposal.

    Additionally, there are tactics you can use at home. Financial writer Jordann Brown talks here about having a “sustainable credit card routine” and finding balance without cutting plastic.

  2. No money left by payday.Living paycheque-to-paycheque is a reality for many millennials — overall, 47 percent of Canadians said they were facing that reality in a Canadian Payroll Association study from 2017. There are many factors that can go into this, but if accumulating debt is one, this is another red flag to seek solutions.
  3. Feeling stressed or anxious about your financial situation.
    A familiar feeling for many in debt; a recent Manulife survey found that 37 percent of Canadians say they are always stressed, anxious, or worried about their debt, with four in ten believing they’ll never be free of their debt. This negative cycle of thinking can lead to a feeling of helplessness, but there are paths out that can be discussed in a meeting with an LIT.
  4. Having your telephone, electricity, or other utilities cut off.
    Dealing with creditors can bring on more stress. This red flag is a little more obvious, as it affects your everyday. BDO Canada’s blog has more on how to stop dealing with debt collectors, with some pros and cons of solutions that can help.

If you’re seeing these types of warning signs about your relationship with debt, getting help and acting can give you better insight. You’re also better able to reduce your debt the sooner you recognize problems.

Seeing any of these warning signs about your relationship with debt? Join the conversation about solutions on social media by using the hashtags #DebtSolutions, #Millennials, and #LeaveDebtBehind.

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