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Sandra, 35, is an independent worker in the graphic arts industry. She makes a good living thanks to her regular customers. Last summer, her old convertible in 2002 caused her to spend $ 2,000 on her credit card.

Just before, during a trip to Charlevoix, she fell in love with a painting that she bought for $ 1,000. This impulse purchase, combined with other expenses such as unexpected renovations in his bathroom, pushed his credit cards to more than $ 7,000. A big amount for those who are used to paying their cards with an amount of less than $ 1,000.

Her friend, Cassy, 28, has accumulated $ 19,000 in credit card debt due to trips to Western Canada, buying clothes, going out to restaurants, and so on.

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For three or four months, it may be that we only make the minimum amount on the credit card because it is expected to correct his situation. If this is not the case after six months, for example, you have to make the right decisions.

Minimum balance


Each month, the two young women can only pay the minimum amount of their balances. Meanwhile, interest accumulates. Director at Good FInance, Levi speaks of a trap in which many consumers fall.

Mr. Gab gives a telling example: your credit card balance is $ 10,000, and the interest rate is 20%. If you only pay the minimum balance, it will take more than 25 years to settle the debt. “It’s not $ 10,000 that you paid back, but $ 22,240! “Illustrates Mr. Gab.

Exit the credit


Around us, people buy a car, clothes, a boat. The problem is that more than half of them spend too much compared to their disposable income. From there, the debt.

“The first step is to stop using your credit cards for everyday expenses,” says Levi. Some will put them in the freezer, the time to straighten his finances.

Cap on the budget


Many do not know where their financial problems come from. “We have to make a habit of compiling our monthly expenses. It gives a good picture of our situation, “he adds.

Self-employed people like Dan always have a table measuring earnings for each week or even month. Since her financial troubles, she has become accustomed to collecting all her expenses.

For his part, Levi suggests preparing silver envelopes for rent, transportation, food. “These envelopes are sacred and we do not touch them. ”

We reserve an envelope for restaurants, clothes. If there is a financial surplus, it is injected into an automatic savings account. “This amount can represent 5 to 15% of our income and we only touch it in case of unforeseen events. ”

Quietly, over the weeks, this cushion increases. “Ideally, you need a month’s salary. If you do not receive income for a few weeks, it saves you from using credit. ”

No more spiral!


Once the credit cards were paid, Sandra found a kind of inner peace. She started putting aside money for her next trip. “The danger,” adds Jonathan, “is to spend again. ”

Above all, we must not use our home equity line of credit to buy a vehicle, motorhome or renovate. Today, around us, we see many boomers who are unable to retire because their home is not fully paid.

Consolidation loan

In the options, if you do not have a residence, there is the consolidation loan. However, the interest rate is between 8 and 12%.

Consumer proposal

If you can no longer pay your credit cards and other creditors like your car, Hydro-Qu├ębec, Videotron and you dread that we can seize your salary and worse, declare bankruptcy? We must move quickly to action. “There is an interesting solution like the consumer proposal that deserves to be better known,” says Levi.

Result? Cassy favored this option. From now on, she pays only $ 166 a month for five years. She feels immensely liberated and can devote herself to her career. “It should be noted that when it wants to borrow, the proposal appears in your credit report. ”

As for Sandra, she decided to opt for a loan to the bank that is apart from its mortgage margin. It’s called a line of credit that can be paid back every month. The minimum is $ 50. The interest rate is 4%. Sandra hopes to repay the loan within two years.

Montreal’s average debt stands at $ 17,602

According to Good Finance, the average debt that does not include the mortgage has grown by 3% in the last year, increasing to $ 23,271 per person.

Consumers aged between 46 and 55 are the most heavily indebted (see table attached). And Montrealers arrive in 4th position on their level of debt reached $ 17,602.

To monitor

“Three key factors come into play,” said Green, vice president of data at Good Finance Canada. “Consumers will see their cash flow tighten as interest rates continue to rise, which can cause people to not pay their credit card in full every month. ”

After a period of sustained economic growth, we return to a slow and steady pace. Finally, the volume of the new mortgage loan has been negative over the past three quarters. If we add these elements, we should begin to see an upward movement of failures. ”

Rates of default or delinquency declined for each age group until last quarter, when seniors (aged 65 and over) went from a 7.3% drop a year ago current rate of 4 percent. From a regional perspective, these rates remain the highest in Saskatchewan and Newfoundland, at 8.6% and 8.2%, respectively.

The default or delinquency rate is related to our ability to meet our credit obligations. People who are unable to pay the minimum balance of their credit card each month are registered. At the time of a loan or a loan, the consumer risks to bear the consequences by obtaining a loan higher.