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How to Free Yourself from Overwhelming Personal Debt

Carrying overwhelming personal debt is more common than you might think for Canadians — and certain demographics may be struggling more than others. Generation X is a good example.

Our BDO Affordability Index found that 57 per cent of Gen Xers (35-54 year olds) are dealing with heavier debt. To make the situation even more challenging, they’re also struggling with affordability, with 29 per cent saying they’re having a hard time simply feeding their families.

More than half (56 per cent) of Gen Xers are living paycheque-to-paycheque, leaving them ill-prepared for unexpected expenses. It’s not surprising with everything they have going on: raising children, paying off student loans and possibly mortgages, dealing with aging parents and their financial needs, and often juggling credit card debt or lines of credit with high and/or variable interest rates.

Experts agree that this is the period of life in which getting personal debt help is critical. The vast majority (82 per cent) of Gen Xers view saving for retirement as a need rather than a want, but 70 per cent of them are challenged to do so — in part because of the amount of debt they’re servicing.

Carrying debt is stressful. When you’re busy with work and family obligations, the added stress of overwhelming debt can take a toll on both your health and happiness.

If you and your partner or family are struggling with where to begin, check out the topics from the Financial Consumer Agency of Canada. November is Financial Literacy Month (FLM), so use it to break the ice about breaking down your debt.

Resources like NerdWallet can also be very helpful in getting yourself back on track.

Take these steps to reduce your debt

Taking a step-by-step approach to tackling your personal debt allows you to break the process down so it doesn’t feel so overwhelming.

The first step is to find out where you actually stand. Your debt situation may not be as bad as you think.

Many people think you should only speak to a professional Licensed Insolvency Trustee (LIT) if your situation is dire. Nothing could be further from the truth.

An LIT will learn more about your personal situation and help you understand your options. They understand the challenges your generation faces and they’ll help you explore all avenues, from simple debt solutions like reworking your budget or balancing saving and debt repayment to formal solutions.

If you’re really worried, and wondering things like “What debts can I eliminate by filing for bankruptcy?” you’ll feel calmer after finding out the answers. Your LIT will explain the process of filing for bankruptcy, but you’ll also learn about other options that might be better for your situation (bankruptcy is always a last solution). A consumer proposal is also a formal (legal) solution, but it allows you to repay a portion of your debt and keep your assets.

The second step is to sit down and find ways to reduce your spending and increase your income. This can be exciting if everybody gets on board, with the ultimate goals of being debt-free and having savings for the future.

Of course, getting kids on board isn’t always easy. But it can be done! Check out this article from SixDollarFamily to learn how to talk to your children about wants versus needs.

With a plan in place to handle your day-to-day expenses, less money going out and a little more coming in, you’ll feel less stressed and begin to reduce that overwhelming personal debt. As a member of Gen X, you’ll still have a lot going on but you’ll have less anxiety about your ability to handle what comes next.

 How are you tackling your personal debt? Tell us on Twitter. #LeaveDebtBehind #FLM2018 #GenX

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