Sep 8, 2016
Pattie Lovett-Reid: How to get out of debt if your salary doesn't budge
As the economy continues to face uncertainty, cost-reduction initiatives are forcing Canadian organizations to be even more cautious about budgeting for salary increases in the coming year, according to a new report by Mercer Canada.
Mercer projects wage increases of 2.6 per cent across all employee groups. But when anticipated salary freezes by some organizations are taken into account, overall salary increases in 2017 are expected to be even lower, at 2.3 per cent.
Mercer’s 2016/2017 Canada Compensation Planning Survey also found that, while there are few regional differences among employers, Alberta firms are projecting salary increases below the national average, partly because 40 per cent of energy organizations say they intend to freeze salaries in 2017.
“These are some of the lowest overall salary increase projections we’ve seen since our survey began more than 20 years ago, reflecting ongoing concerns among employers about the health of the economy,” said Gordon Frost, market business leader for Mercer’s Canada Talent business.
This is also the first time their survey found the energy sector projecting salary increases below the other sectors.
Taking into account the effects of salary freezes, increases for non-union energy workers are projected to increase by just 1.3 per cent in the coming year, compared with 2.3 per cent for non-union employees overall. Excluding salary freezes, increases in the energy sector are projected to be 2.4 per cent, still below the 2.6-per-cent national average.
So if your salary isn't likely to head higher, how do you even attempt to get out of near financial ruin? You do so one step at a time. The reality is people would love to pay off their debt and in some cases they just might not be sure how to go about doing so.
With incomes stagnating, expenses growing and debt rising here are just a few ideas on how to take control of your financial situation when so many elements seem beyond your control. Remember, you didn’t get into debt overnight and you aren’t likely to get out of it overnight either. It takes patience, persistence and perspective.
Create a spending plan – not a budget. Budget sounds restrictive and talks about all the things you can’t do. Instead, focus in on what you can do and stick to the plan. Aim to spend a little less then you allow yourself too. When it comes to rewards, you need to rethink what is going to excite you because there is no better feeling than financial freedom.
Pay more than the minimum. You might think $10 here and $20 there doesn’t matter but it adds up. If you were to restrict mindless spending and pay a little more on your outstanding debt, you will be surprised how quickly small amounts make a huge impact on your balance sheet.
Pay off the most expensive debt first. Not only will you save on interest costs you will have the satisfaction of chipping away at a big drag on finances.
Look for ways to save. Cut back on groceries, ditch the car if you can or if you need a car buy used over new. Look for every discretionary cost you can eliminate and redirect the savings immediately toward debt. A discretionary expense is usually associated with a “want” over a “need” and typically doesn’t have a contract or financial obligation attached to it.
Consolidate your debt. You may even consider financing your mortgage or a explore a consolidation loan.
Consider speaking with a credit counsellor. There are programs and options available to assist you through a challenging financial situation. But the most important step is the first one: acknowledging you might be in over your head and you can’t do it alone. No shame in that – it takes courage and strength to right the financial ship.
Finally, consider holding off on buying the latest iPhone if you don't want to deepen your debt troubles.
As the Chief Financial Commentator for CTV News, Pattie Lovett-Reid gives viewers an informed opinion of the Canadian financial climate. Follow her on Twitter @PattieCTV
