4.6.4 Video: Tips for managing debt



Borrowing money can help us reach some of our personal (and pricey!) ambitions, whether it is to get additional education or training, buy a house, start a business or just help cover some daily expenses.

And while some debt can help us realize our goals, managing debt unwisely can cause financial problems and unwanted stress.

Segment 2: Problem identification

(street interviews)

Questions: Do you have debt? What kind of debt? Do you think debt is a problem?


Here are some interesting facts about debt in Canada:

Canadian households owed $1.47 for every dollar they earned in 2010, up from $1.16 in 2005.

The average Canadian has several credit cards and loans such as car loans, furniture loans, student loans and mortgages.

And perhaps most importantly, one in three credit card users don’t pay their balance off in full each month.

Clearly, many Canadians have problems with debt.

Segment 3: Understanding borrowing

So, what is the best way to handle debt? Let’s start with the basics.


When you borrow money, you must repay the principal – the amount you borrowed - plus interest. You may also be charged service costs or fees for late or extra payments.

The type of loan you receive, the rate of interest and the way the interest is compounded will all affect the total amount you have to repay.

The annual percentage rate (APR) is the actual rate of interest charged on a loan each year, including all service costs and fees. Use the APR to compare rates from one loan to another.

Segment 4: Keeping costs down

Here are some ideas to keep your costs down so that you can keep your debts under control.

  • Try not to borrow more than you need
  • Shop around to get the best terms for your loan
  • Research the complete costs of the loan (including all fees, interest charges and penalties) so that you can choose a lender with the best terms
  • Make your payments in full and on time to avoid late fees
  • Pay down your debt quickly. And pay as much as possible against the loans with the highest interest rates first.

Segment 5: Recognizing debt problems

Sometimes, in spite of your best efforts to control your borrowing, your debt gets out of control. How do you know if you have a debt problem? Here are some symptoms:

  • You borrow to pay for your daily living expenses.
  • You miss payments or due dates.
  • You’re near the credit limit on most of your loans
  • You use one loan to pay another.
  • You borrow when you know you can’t afford the payments.

Segment 6: If you have problems

If you run into serious debt problems, don’t panic! You still have options. Start by seeking help as soon as you recognize the problem.

Contact your creditors. If you show them that you intend to repay the debt, they will sometimes work out a modified payment plan that will make it easier for you to pay it off. You may be able to consolidate loans and credit cards into 1 manageable monthly payment at a relatively low interest rate.

You can also talk to trusted financial professionals such as credit counselors. They can help you plan the best strategy for paying off your debt. There are credit counselors that are not-for-profit and will provide advice at no cost.


Managing your debt wisely is the best way to ensure that you pay reasonable borrowing costs and that money you borrow helps you achieve your goals.

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