For the past few years, credit has been easy to come by for most Canadians. However, for every individual who manages their credit well, there are horror stories of monster loans and mountains of debt. According to an annual report by credit agency TransUnion, individual debt among Canadians is increasing. A typical individual is currently carrying $21,686 in debt, not including their mortgage – an increase of 2.3% from the same time in 2015.

Our increase in debt is led by more instalment loans (short-term loans with high interest rates) being granted, as well as higher credit card use. Once we factor in mortgages, our financial profile closely fits what's happening on the global scale. International financial company Finaccord released a report this Fall showing that, in the countries researched, more than two thirds of individuals aged 39+ are paying at least one loan – usually a mortgage. The variety of credit use is highest among millennials, with almost one in five 31-year-olds servicing three or more loans: a combination of student loans, vehicle financing, and other products.

Why are we living on credit?

Historically low interest rates in Canada have made it affordable for many people to obtain credit products (credit cards, lines of credit, and loans). As recently as September, analysts forecast rates to remain near rock bottom. However, that may be changing with the results of the US presidential election and subsequent market activity. A separate report from TransUnion shows that almost 1 million Canadians couldn't pay their debts if interest rates were to rise by 1%. Although seemingly living in a time of abundance, in reality we are treading a fine line with our finances.

We also have an increasing disconnect from our money. "Tap to pay" services, for both debit and credit, have been widely accepted by Canadians. Again, millennials lead the way with over 67% of consumers in that age bracket embracing contactless payment; 56% of individuals aged 35-44 are using the technology, while 48% of those aged 55+ tap their cards at checkout. People are most likely to cite convenience and speed for choosing this payment method, while security concerns seem to be in the past. Other ways technology is removing the cash from our transactions include services such as Apple Pay and Google Wallet, as well as the many store-specific apps that allow you to pay directly from your smartphone.

Is your debt keeping you up at night?

In this environment, less-than-perfect credit is a reality for many people. If you're worried about your level of debt, there are a few things you can do to take control of your finances:

• Make a budget and track it. Knowing where your money is going will help you to see where you're going further into debt; you'll also see potential areas for savings so that you can repay more of what you owe.
• Know your credit report. You're entitled to a free copy of your credit file once a year from either Equifax or TransUnion. We recently posted about the changes involved with the new Beacon 9 credit score standard.
• Sit down with your financial advisor. It's important to have regular meetings about your finances with a professional you trust. They can help you to create a plan to deal with your debt and make sure your goals are on track.

If buying a home is in your plans, our team can help make sure your credit is ready to buy when you are. Contact Auxilium Mortgage today for a free consultation with one of our brokers: call Toll-Free 1-855-590-6520 or visit us at 307 Goldstream Avenue during regular business hours, Monday through Friday 8:30 a.m. – 5:00 p.m. We can also arrange an appointment evenings or weekends to work with you.

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Auxilium Mortgage Corporation is based in Victoria, BC and works with clients locally and across Canada. The Auxilium team has over 100 years of combined financial experience and access to dozens of lenders to help you meet your goals.