Today is supposed to be the most romantic day of the year; don’t kill the mood because of your poor money management skills!
A recent survey found that 71% of respondents have ended a relationship because of their partner’s lack of financial honesty; followed by poor money management and/or spending habits (48%). In addition, 33% said they have either ended or would end a relationship because of their partner’s debt.
Only 13% of those surveyed said they would end a relationship because of their partner’s income level.
Women are more likely than men to end a romantic relationship due to financial issues. Three quarters of women (76%) said they have either broken up; or wouldn’t have a problem breaking up with a partner over lack of financial honesty, compared to 65% of men. Similarly, over half of women (52%) said they have ended or would end a relationship due to poor money management, compared to 44% of men.
In addition to causing problems in their love lives, Canadians surveyed stated that debt is negatively impacting other areas of their lives, including losing sleep (34%), avoiding social events (32%) and having less motivation (19%). Furthermore, 13% of respondents said they are limiting friendships and other relationships because of their debt level.
Strategies to reduce your debt
Consolidate debt – It is not uncommon for people to have multiple sources of debt. By consolidating you may be able to secure a lower interest rate and pay down debt sooner. One particularly effective product for debt consolidation is the all-in-one account. This type of account allows you to combine your mortgage, personal lines of credit and any other debts you may have at one low competitive interest rate. By combining your debt and savings in a single account, your savings could reduce the overall debt balance and therefore reduce your interest payments.
Evaluate the price vs. cost of big-ticket items – A lot of people don’t truly understand how much debt costs. Credit card debt is typically the most expensive and could have an interest rate of 20% or more. It is important to understand how much extra in interest costs you wind up paying on top of the purchase price of big-ticket items. For example, the price of a new dining room set may be $3000, but if you put it on your credit card at 18% and take six months to pay if off; it will end up costing you $3,280.
Consider downsizing early – Do you feel house rich and cash poor? If your children have left home and you no longer need the extra space, you may want to consider moving to a smaller home. By downsizing early, you could save interest, property taxes, stress and upkeep, pay down debt and put more money away for retirement.
Work with a financial professional – Across all the age groups only one-third of Canadians seek professional advice when it comes to debt and cash flow management. However, research shows that nearly three in four people who get debt and cash flow advice from an advisor have a plan for becoming debt free.
Before your debt starts to negatively impact any of your relationships, give me a call, I am happy to help implement strategies to address these types of cash flow issues.
Happy Valentine’s Day!
Tracey
Source: Original article by Maddie Johnson posted on Investment Executive, 02-10-2020 and Solutions Fall edition 2012, Manulife Investments, MT 10-25-2012,2017,02-14-2020