I have always enjoyed participating in different sports throughout my life.  Some sports were easier for me than others but one sport that I could never master was waterskiing.  I learned about waterskiing just after I met my then future wife.  During the first summer in which I met my future in-laws, it was common to go the lake and enjoy the day boating and waterskiing.  Mom and Dad had a little boat, named Speedy Klemn, that had a 55 horsepower Evinrude engine. This boat was perfect for pulling my wife and her 2 sisters.  They could start skiing on a slalom board in the shallow water at the beach and be hydroplaning within seconds.  On the other hand, my first skiing attempts were more akin to plowing.  The problem with my water skiing was either the small boat or my large heavy frame.  Regardless of why there was a struggle, I eventually learned how to ski behind their boat and became proficient on two skis.

How does hydroplaning, while waterskiing, connect with financial planning?  Hydroplaning occurs when your skis begin to skim the surface of the water while moving at a high speed.  If you do not have enough speed, you sink.  Uncontrolled debt is akin to having to having an anchor around your waist that keeps you from enjoying life due to its burden on you.

In the September 7, 2022, edition of the “Investment Executive”, the firm Equifax Canada stated that “total consumer debt hit $2.32 trillion in the 2nd Quarter of 2022”.  This is up 8.2% compared to the same quarter in 2021.  The article went on to say that “increases in new lending and higher spending linked to inflation helped boost non-mortgage debt to $591.4 billion, up 5.2% from a year ago”.   This article also went on to say that “credit card spending is reaching historically high levels”. 

The Bank of Canada has been raising its lending rates this year and is likely to increase its lending rates in the months to come. Banks, Credit Unions, credit card companies and other lenders will be passing those increased costs to us, the everyday consumer.  The upshot of this warning is that the cost of debt servicing is going up. 

Al’s Nuggets:

  1.  If you are drowning in debt, grab a life jacket.  Your financial advisor, banker, accountant can be terrific resources.
  2. Don’t be hard on yourself.  Use your energy for solutions, not blame.
  3. Quit digging! 
  4. Make it a family project!  Honesty, condor and a team approach can create clever solutions.  Children can be included.
  5. Hold on to things lightly.  Selling off things that you don’t use often can be a good start.
  6. Cancelling things like cable tv, and/or subscriptions are easy ways to find a few extra dollars to put onto the debt.
  7. Eat at home.
  8. Consider a side hustle or take more overtime if available.
  9. All or some of the above!