There was an article in the news today that stated that Canadians are once again turning into a nation of savers and have curbed back their spending. According to this report, Canadians were finding new comfort in ensuring that their pocketbook remained full and are leaning toward saving rather than spending. What do I think?
Well at Credit Canada, we always see the sad stories of way too much debt and no savings at all, so it is hard for me to be pragmatic about this. I do think perhaps the tide is turning slightly but we have a long way to go. For example the Vanier Institute reported that our savings rate went from 13% in 1990 to 3% in 2008. On top of this, we are really one of the worst country of savers (except for the Americans, their savings rate is 1%). Consider this: France has a savings rate of 12%, Russia and Germany 11%, Italy 10% and Belgium 8%. So when I read reports that state that we are suddenly magnificent savers ,I am truly sceptical.
We have been great savers in the past and we can be great savers again but as it stands today we have a long way to go. Sure I know we are all wary about the economy and that tends to make people hone in and spend less, but hopefully people will make saving money a habit that does not go out of style. Remember, Grandma was right….save for a rainy day.
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Congratulations for doing such an amazing job of paying down your debt. No doubt you must be very pleased. Although you do have very little debt left from where you started, staying the course is a great plan. Yes you could invest in a tax free savings account or other investment vehicles and it is wise to do so, but you are correct in that the interest rate would be much lower than you are currently paying on your debt. So getting rid of that debt should still be your number one goal. It seems that you will very soon be debt free and then can look at some great savings strategies such as paying yourself first, investing in retirement and putting money in an emergency fund. While you are paying out that last remaining debt, review all your options, and begin reading on savings strategies so you will know exactly what you need to do once you are debt free.
Again congratulations and the best to you in your future ‘savings’.
Laurie Campbell
Executive Director
Credit Canada
416-228-2526
Dear Laurie,
Last September, I had 15,500 debt, now it is 1,860 and possibly 1440 by the end of May, on a part time job (sign of the times). My question is that I am receiving advice that I should start shifting my priorities and both save and pay down THE DEBT. My thinking is that now savings account-even the new one that is being advertised pays more interest when compared to the interest on the line of credit of 7%. What would you advise?
Ray
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