Consumers focus on paying down debt

The holiday bills have already started coming in and many consumers are vowing not to overspend again. They are scrutinizing their finances and have made resolutions to pay down debt this year.  A new survey from Equifax Canada indicates that 85% of those polled say they plan to make significant financial changes this year. Paying down debt – 38% – and saving more money – 37%- are at the top of the list, according to the report. Other priorities include investing in RRSPs, TSFAs or RESPs – 24%- and spending more on needs than wants – 23%…The results of the survey, reported in the Globe and Mail, also found that 62% of respondents are concerned about growing debt levels.  Here are some other findings — where do you fit in?

Despite growing concern Canadians are taking on too much household debt, an equal proportion of survey respondents said they consider themselves to be financially fit and follow a monthly household budget. Women are more apt to say they stick to a monthly household budget and Canadians aged 55 and over are the most likely to consider themselves financially fit.

Forty-five per cent of respondents said they knew their credit score. Of those surveyed, however, 25 per cent were less likely to check their credit score annually.

The media headlines in 2013 have warned of rising consumer debt loads. The average debt-to-income ratio hit a high of 163.4 % at the end of 2013. However, the national credit trends report from Equifax found an improvement in consumer delinquencies, or non-payments and bankruptcies.  Clearly, consumers have been listening to the warnings coming from the Minister of Finance.If you’re concerned about your household debt load you might consider refinancing your current mortgage. In a refinance, the current mortgage is replaced with a new one with a higher balance in order to take advantage of the increased equity in the home.  Since we are still experiencing historically low interest rates, a refinance to consolidate high interest loans and credit card debt may make sense.


Debt consolidation by refinancing your mortgage is quite common. Taking advantage of low interest rates can save a homeowner thousands of dollars in interest and can improve cash flow. All your creditors are paid off leaving you only with a mortgage payment.

If this is an idea you’d like to explore, then it’s a good time for us to talk and go over your financial plans for 2014.


Setback Thermostats

Thermostats control heating and cooling appliances in houses. A setback thermostat gives the user the option of changing the temperature setting automatically at night and also during the work day when the occupants have left the house. A setback thermostat can help reduce overall household energy consumption.

A conventional thermostat simply regulates house heating at one temperature. For instance, in the winter, if you set the thermostat to 20°C (68°F), it will activate the heating system when the house temperature drops below 20°C and will shut the system off when the house air warms up past 20°C.

A setback thermostat contains an electronic clock. It can automatically turn down the temperature setting at night, when you are asleep, or during the day, when you are at work. It can also return the temperature to a more comfortable level before you wake up or arrive home from work. That way, you can have the energy savings of a lowered thermostat setting without the discomfort of having to wait for the house to heat up again.

The setback thermostat can also be used as a set-forward thermostat for an air-conditioning system. It can allow the house to heat up when it is unoccupied and return it to a comfortable temperature before occupants return from daytime activities.

Although this article deals with setback thermostats and forced-air heating systems generally, you can apply some of the advice to electric baseboards or to summer usage.

You can use a standard thermostat to set your house temperature lower during times when the house is unoccupied. This will lead to similar energy savings as with a setback thermostat but without the convenience.

What Is a Normal House Temperature?

CMHC randomly surveyed Canadian houses. Thermostat settings in the winter tend to be quite closely grouped around 20°C – 21°C (68°F – 70°F). Summer temperatures range much more widely, depending upon whether the house has air conditioning.

To What Temperature Should I Set Back the Thermostat?

The more you reduce the thermostat setting, the greater the possibility for savings. Generally, a drop of 2°C (3.6°F) will lead to some savings and little risk. Some householders reduce temperatures 4°C – 6°C (7°F – 11°F). However, temperature differences this large create potential comfort and moisture problems.

Does Setting Back the Temperature Save Energy?

Yes. Research from the Canadian Centre for Housing Technology shows that winter setbacks for the houses tested would result in heating cost savings of five to fifteen per cent. The highest savings came with a setback of 6°C (11°F). See CMHC’s Research Highlight: Effects of Thermostat Setting on Energy Consumption.

Savings for the summer were about the same, although simply raising the thermostat set point in the summer from 22°C (71°F) to 24°C (75°F) led to more significant savings than the set-forward strategy and also offered better indoor humidity control. Note that these savings are for two airtight, well-insulated, unoccupied houses. The savings in your home may vary but are likely to be in the same range.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta).