Only one-third of Canadians with non-mortgage personal debt have detailed repayment plans, according to the results of a BMO survey released July 29.
The survey found that while 81% of Canadians have debt repayment plans, only 36% have detailed plans that include fixed payments and specific timelines.
“Managing debt is a simple concept; however, establishing a detailed plan and putting it into practice can be a challenge for some,” said Janet Peddigrew, BMO Bank of Montreal vice-president.
Peddigrew said it is important to differentiate between good debt and bad debt, which will help prioritize which gets paid off first.
“Good debt is debt incurred to buy things that increase in value or add to your overall earning power, such as real estate, investments or education,” said Peddigrew. “Avoid debt that depreciates in value and does not contribute to your net worth.
“When building a plan, it’s prudent to focus on these areas first to pay them down more aggressively.”
The survey also found that younger Canadians, between 18 and 34 years old, are the most likely to have a detailed plan, with 42% saying they had specific steps in place. Canadians between the ages of 45 and 54 are the least likely to have a plan in place (29%).
