For many of us, 2024 was a rough year financially and now it’s time to deal with holiday debt.
A disturbing new survey reveals about one in five Canadians anticipate taking on more debt this year as they struggle to pay their bills. On January 8th, 2025, TransUnion Canada released its Consumer Pulse study, which found 82 per cent of those asked worry about inflation and 44 per cent expect their finances to be worse in the year ahead. The study surveyed 1,000 Canadian adults between Sept. 25 and Oct. 6, 2024.
TransUnion’s survey also found one in four people said they might not be able to pay all their bills in 2025, one in five Canadians plan to take on more debt in 2025, with 43 per cent saying they plan to apply for a new credit card.
The survey notes political uncertainly could also affect finances in the year ahead, as U.S. President-elect Donald Trump vows a 25 per cent tariff on Canadian imports.
705BLACKFLY.COM reached out to Edward Jones Canada, a financial services firm that provides investment advice, retirement planning, and other financial solutions. Financial Advisor Laura Brailsford, DFSA™ from Edward Jones Barrie provided some advice for paying down your debt in an uncertain economy.
Combating Credit Card Debt
Incurring debt is personal and is best approached with tailored financial advice. Although it would be nice to pay off a credit card in full, we know this is not always possible. Understand your card’s terms, including interest rates, fees, and rewards programs. Knowing these details can help you make informed decisions about when and how to use your card.
If you have debt, there are three primary ways to tackling it:
Snowball method: Start by paying off your smallest debt. Once that is paid off, use that money to tackle the next smallest. Remember, stay motivated!
Avalanche method: Pay off the debt with the highest interest rate first. This strategy saves you money in the long run.
Debt Consolidation: Combine all your debts into one loan that carries a lower interest rate. This can allow you to focus on one larger debt instead of many smaller debts.
Under the snowball and avalanche method, you must remember to always make the minimum payments on each of your credit cards before allocating additional funds.
I recommend keeping a close eye on your spending to ensure you stay within your budget and help avoid financial strain.
How To Save Money & Plan For The Future In Spite Of The High Cost Of Living
While there are no shortcuts to achieving your long-term saving and investing goals, there are strategies to help make the process more efficient and effective.
Try creating different “buckets” for your money, it can help you stick to strong money habits. This involves setting up separate accounts for specific purposes, such as savings, investments, and emergency funds. By regularly transferring money into these accounts, you make it out of sight and out of mind.
To create a discipline for this habit, consider automating your transfers. To do this, set up regular automatic deposits from your main account to your designated “buckets”.
This ensures consistency and helps you build your savings and investments without having to think about it each time and prevents the likelihood of forgetting to do it manually on an ongoing basis.
Having an accountability system in place can also be very effective. This might involve working with a financial advisor who can help you stay on track and provide regular check-ins to review your progress.
What Can We Look Forward To In 2025 As It Pertains To Interest Rates & How Will The Looming Elections Impact The Economy?
Fluctuating interest rates, market volatility and even new governments are certainties when it comes to the world of investing.
Don’t let headlines derail your optimism or tempt you to change your long-term plans based on short-term events. A diversified portfolio with quality investments paired with a focus on your long-term goals is a smart approach. Most successful individual investors make their money over time, not overnight.
Remember, keep that long-term perspective, and remind yourself what you’re working toward and work with a financial advisor for guidance.
Edward Jones has created four free online financial education modules on debt management, taxes, buying a home and having money conversations with family.
It is real world advice to help build and maintain financial fitness at all stages of your life. Financial Fitness | Edward Jones
