{"id":1018,"date":"2023-03-21T14:07:00","date_gmt":"2023-03-21T14:07:00","guid":{"rendered":"https:\/\/www.bellvest.ca\/family-wealth-windsor\/resources\/how-to-pay-off-debts-faster\/"},"modified":"2025-09-05T15:03:27","modified_gmt":"2025-09-05T19:03:27","slug":"how-to-pay-off-debts-faster","status":"publish","type":"resources","link":"https:\/\/www.bellvest.ca\/family-wealth-windsor\/resources\/how-to-pay-off-debts-faster\/","title":{"rendered":"Debt Reduction Strategies: How to Pay Off Debts Faster"},"content":{"rendered":"
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\u201cMany delight more in giving of presents than in paying their debts<\/em>\u201d<\/p>\n

<\/p>\n

\u2013 Sir Philip Sydney<\/p>\n<\/blockquote>\n

Even so long after the fact, the 16th<\/sup>-century poet\u2019s quote still stands tall in the world of personal finance. Ironically, his words may have fallen on deaf ears for his father-in-law, who almost went bankrupt due to his reckless spending on the elaborate funeral procession for the late Sydney.<\/p>\n

In memory of one of the Elizabethan age\u2019s most prominent figures, let\u2019s unpack the knowledge he left for us: is debt as much of an unsung issue as he suggests, and what are some effective methods to pay down debts more efficiently?<\/p>\n

Are Canadians Taking on too Much Debt?<\/span><\/h3>\n

Early in December of 2022, Statistics Canada released its third quarter report<\/a> on the National Balance Sheet Accounts (NSBA) and the Financial Flow Accounts (FFA). The NSBA are composed of balance sheets across all sectors and subsectors in the country to assess all national non-financial assets as well as all outstanding financial asset-liability claims. On the other end, the FFA express how capital is being lent or borrowed by measuring transactions across the nation. The consolidated report provides valuable insight into Canada\u2019s overall economic health.<\/p>\n

The data shows that on a \u201cseasonally adjusted basis, household credit market debt as a proportion of household disposable income increased to 183.3% in the third quarter\u201d of 2022. In simpler terms, for every dollar of after-tax income across Canadian households, there is a credit market debt of $1.83. This can largely be attributed to several factors, but mortgages account for a few extra stars in the constellation: mortgage debt surpassed the $2 trillion mark, while non-mortgage debt weighed in at over $722 billion.<\/p>\n

The Bank of Canada (BoC) may have been correct in pointing out elevated levels of household indebtedness and housing prices as the first two key vulnerabilities in the Financial System Review\u20132022<\/em><\/a> <\/em>(FSR) publication. <\/em>Coupled with the increasing amount of variable rate mortgages with longer amortization periods being taken out, the trigger rate (which you can read more on here<\/a>) may negatively impact Canadians who aren\u2019t properly prepared.<\/p>\n

That being said, the BoC admits that in \u201cnearly every\u201d annual issue of the FSR they \u201cwarn about the high debt that many [Canadians] are carrying, and [they] warn about elevated house prices.\u201d Thankfully, data from the National Balance and Financial Flow Accounts fourth quarter report <\/a>shows that household net worth rose by 1.2%. The caveat to this is that the value of household residential real estate suffered and declined by 1.4%. Combined with interest rate pressures, this petering off led demand for mortgages to lows that haven\u2019t been seen since the start of 2019. In other words, Canadians now have a credit market debt of $1.81 for every dollar of after-tax income, compared to the previous quarter. Hopefully, this number continues to fall, giving the BoC less reason to issue warnings about housing prices and heightened debt levels.<\/p>\n

Understand Your Habits, Make a Budget<\/span><\/h3>\n

It\u2019s spoken ad nauseam for a reason: making a budget is one of the most effective ways to get your finances under control. A Bellwether Family Wealth Advisor<\/a> can help you create a comprehensive financial plan that can include (re)evaluating your short- and long-term goals, differentiating between compulsory (food, housing, and other essentials) and non-compulsory (streaming services, leisure activities, and the like) expenses, and identifying your sources of income in light of your outflows.<\/p>\n

Not everyone is so lucky to have an expert on their side to create a resilient and adaptive plan, but that doesn\u2019t mean you can\u2019t make some progress yourself. Take stock of where exactly your money is going. After a month or so, you\u2019ll have a better understanding of your spending habits, which should give you an idea of where you can improve and be more responsible. You may find certain areas that are \u201cnice-to-haves\u201d and not \u201cabsolute-necessities,\u201d which can show you where you can shave down spending and redirect that towards paying down your existing debt. An example may help:<\/p>\n

\"An<\/p>\n

How Can I Pay Off My Mortgage Faster?<\/span><\/h3>\n

In the above example, the expenses that went down were transportation, food, and leisure. Restaurants were visited less, public transit was opted for, and spending more time at home instead of going out all contributed to increasing the amount of money put towards debt repayment. In this scenario, plenty went towards altering mortgage payments, which can be done by:<\/p>\n