December 11, 2017

Millennial Money Meetup #4: Paying Down Debt & Using Credit Responsibly

I’m Jessica and I’m a money expert, speaker, Accredited Financial Counsellor Canada®, host of the More Money Podcast, and am currently writing my first book with HarperCollins Canada (2025).
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It was a big goal of mine to host another of my Millennial Money Meetups in Toronto during Financial Literacy Month this year (which is in November in case you’re wondering), so I was over the moon when Manulife Bank came knocking and offered to sponsor it.

You see, they just came out with a survey that revealed some very interesting stats about Canadians and debt. And to me, this was just the perfect fit because I really wanted to do an event that focused on debt management and responsible credit use. This is a big issue, especially for millennials with their incredible student debt burdens. Plus, it also seemed like really good timing since the holidays are now in full swing.

This also seemed like a great opportunity to collaborate with a friend of mine, Lisa Zamparo, who is a financial strategist and CPA. I’ve known her for just over a year now, having met at FinCon last year. We’ve hung out a few times and I’ve always felt like her positivity and just optimistic outlook on personal wealth were infectious. So, when it came down to choosing my special guest for the event, she was just the perfect fit.

Key Stats from Manulife Bank’s 2017 Fall Survey

As I mentioned, Manulife Bank recently surveyed Canadians about debt, and what they found was that there is a major gap between what they know and how they behave. Here are some of the stats from their survey that I found pretty shocking:

  • Less than a third of debtholders have achieved their debt reduction goals in the past year
  • Canadians who work with financial advisors are 60% more likely to be satisfied with their overall financial health
  • Nearly a third of debtholders are embarrassed or don’t know who to talk to about debt management
  • 55% said they seldom discuss their debt situation with friends or family
  • 71% would like to be more confident about financial decisions
  • Only 10% say creating a financial plan is a priority in the next 5 years
  • 62% of Canadians are not satisfied with their overall financial health or access to money for emergencies
  • Canadians (53%) believe financial challenges take a toll on mental or emotional health, and a third (34%) on physical health
  • Canadians lack confidence in their bank’s willingness and ability to help with debt. While more than seven in ten (71%) would like to be more confident about financial decisions and most look for guidance from their banks to help pay down debt, only a small number actually believe their bank helps them reduce debt (16%) and makes their interests a priority (17%). However, 46% of respondents said they simply do not know how their bank could help.

Audience Q&A

I and Lisa talked a lot about the different aspects of debt and credit in our talk, which you can watch the live recording video above or listen to on SoundCloud or iTunes.

We also did a Q&A session with the audience at the end, below are some of the questions (and answers) we discussed.

What do you think about payment plans for furniture?

Since furniture is a depreciating asset, it’s never really a good idea to pay interest on something like that as it will start to lose value as soon as you get it. The best thing to do is either wait and save up to buy it in full or go the frugal route by shopping at IKEA or second-hand through sites like Kijiji and Craigslist.

What do you find is the biggest mistake millennials are making with their money?

Carrying balances on credit cards is a big mistake millennials are making. The interest rate on credit cards is so high, so carrying a balance is costing young people more than they realize.

Beyond that, not asking questions or not talking about money. Or even further, feel like they don’t have enough money to ask someone for advice or hire a professional to help them with their financial plan. The worst thing you can do is wait, and you don’t have to be a high-net-worth individual to be able to afford help.

What are your thoughts on managing debt and saving for retirement at the same time?

You don’t have to do one or the other. You can do both at the same time. But it also has to do with your goals and how you feel. If that debt is giving you anxiety, then focus on crushing that debt, but don’t forget to save and put some money into investments for your future goals. If you’re more interested in earning money than paying down your debt, make sure you don’t invest more money than you can afford, and also have a solid plan for paying down your debt which should include your debt-payoff due date and the amount you are going to put towards it every month.

Can you talk a bit more about credit scores?

There’s a lot to know about credit scores, but let’s break things down a bit first. Credit scores are offered by Canada’s two credit bureaus, Equifax and Transunion. Those scores basically show lenders how much of a responsible borrower you are. You want to have a high credit score so lenders will not only be more willing to lend you money but will also offer you a low-interest rate because they trust that you will be responsible with that loan and pay it back on time.

For instance, if you’re thinking of getting a car loan or a mortgage, it’s important to have a high credit score. And what you need to do to have a high credit score is be responsible for your credit. That means never having a balance on your credit card but paying it off in full every month. It means keeping your oldest credit card that has your longest credit history attached to it. And it means not using more than 30% of your available credit, since using more than that will signal to lenders that you may have overextended yourself.

Another important factor is checking your credit reports from Equifax and Transunion regularly (once per year is a good idea). You want to make sure the info in your credit reports is accurate, and if it isn’t, you must take steps to correct those errors.

Watch the Full Video Panel Discussion

Now, if you couldn’t attend my Millennial Money Meetup, or missed the live stream on Facebook, never fear! I got you covered! I’m including the full video of the panel discussion above for your viewing pleasure, but you can also watch it on my YouTube channel.

Listen on SoundCloud

If you’d rather listen than watch the entire panel discussion, you can listen to the SoundCloud player below, or subscribe to the More Money Podcast on iTunes, Spotify, or Stitcher.

Check Out Photos from the Event

Want to see all the photos taken at the event? Check out the full photo library on Facebook.

Got a Money Question?

As a fun activity at all my meetups, I include a money question box for attendees to write into. This helps me gauge what people want to learn more about for future events and in general. If you have a money question you’d like me to know about it, leave it in the comments below!

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