With interest rates rising, many Canadians are prioritizing paying down their debts in 2019 according to a CIBC poll.
The survey found that 29% of respondents increased their debt load in 2018. This increase was due to day-to-day items (for 34%), purchasing a new vehicle (24%) and paying for a home repair or renovation (20%).
More than 1 in 4 (26%) said that that paying down debt is their number one financial priority, followed by keeping up with bills and getting by (14%), growing wealth (12%), saving for a vacation (7%), and saving for retirement (6%).
"Debt weighs heavily on Canadians, so it's no surprise that Canadians continue to put debt concerns at the top of their list of priorities each year," says Jamie Golombek, Managing Director, CIBC Financial Planning and Advice.
Top sources of Canadians’ debt are: credit card (45%), mortgage (31%), car loan (23%), line of credit (22%), and personal loan (11%). 28% say they have no debt.
Better to pay down debt than save
sTwo-in-five Canadians worry that they're forsaking their savings by focusing too much on their debt, but the vast majority (84%) still believe that it's better to pay down debt than build savings.
"There's rarely enough money to do everything, so it's critical to make the most of the money you earn by prioritizing both sides of your balance sheet – not debt or savings, but both," adds Golombek. "It boils down to tradeoffs and balancing your priorities both now and down the road. The idea of being debt-free may help you sleep better at night now, but it may cost you more in the long run when you consider the missed savings and tax sheltered growth."