Is Canada That Much Different Than US When it Comes to Debt?

Is Canada That Much Different Than US When it Comes to Debt?

The US is known for taking on more and more debt. An individual homeowners and citizens are no different. We follow the lead of our government and continue to spend more than we earn but does Canada have any better hold on their finances than we do?

According to a study in the Realty Times.com 43% of Canadian homeowners say they are happy with the way they’ve manage their debt and day-to-day finances. Although that is less than 50%, the good news is that Canadians have a culture of repaying debt promptly.

Canadians and American’s alike have been racking up debt while rates have been low but two distinct studies from the residential mortgage market of Canada shows that Canadian borrowers are aware that the low rates won’t last forever and most are doing their best to reduce their debt as soon as possible. More Canadians are likely to take steps to shorten their amortization periods, increase their payments and make a lump sum’s when possible. (Many Americans use windfalls and bonuses to purchase additional items rather than pay off the debt they already have incurred).

About one in six Canadian mortgage holders voluntarily increase their regular mortgage payment to the past year. About 17% of mortgage holders made lump sum payments and 8% increase the frequency of their payments. In total that means 38% of mortgage holders or about 2.1 million out of an estimated 5.5 8 million mortgage holders in Canada, took one or more measures to accelerate their repayment.

According to the steady at about three quarters of homeowners say that free is one of their top financial priorities. Unlike a lot of Americans, Canadians used that as a tool to improve their standard of living and purchase assets over the long-term. Managing that is a strategy that all homeowners should embrace.

So what’s the lesson to be learned for us Americans?

• Determine what your financial priorities are and put a plan in place to focus on those goals.
• Begin with the end in mind. Start with a goal, and see yourself making steps to achieve that goal.
• Try to pay off credit card balances in full each month or make extra payments throughout the month to get debt down.
• Make an additional mortgage payment each year either by making a lump sum payment, splitting your payments up into every two weeks, or adding a percentage on to each monthly mortgage payment.

We can certainly learn a lesson from our neighbors to the north on managing our finances a little bit better this next year.