The level of personal debt in Canada has been an alarming trend in recent years.
A survey released on Wednesday says one-in-five Canadians with debt say they will need to liquidate assets – such as cash in their RRSPs, get a second mortgage, sell a vehicle – to help pay off or pay down their debt this year.
The 2019 Household Debt Survey, a Leger poll of 1,515 Canadians, was conducted for non-profit organizations Financial Planning Standards Council (FPSC) and Credit Canada. It also found that the need to liquidate is reported as significantly higher among males (24 per cent) versus females (14 per cent) and those with children under 18 (23 per cent) versus without children (16 per cent).
“Many Canadians lack awareness of their spending habits and patterns,” said Kelley Keehn, author, educator and consumer advocate for FPSC. “There are several ways to create awareness, such as paying only with cash for a month, which accesses a different part of the brain that is associated with loss aversion.”
The survey also found that 62 per cent of Canadians with debt anticipate taking on new forms of debt in 2019. Within this group, those under 55 years of age are significantly more likely to anticipate new forms of debt this year (67 per cent) compared to those who are 55 and older (50 per cent).
Anticipated new forms of debt include:
- new/increased credit card balance (23 per cent);
- new/increased line of credit (15 per cent);
- new/increased vehicle loan or lease (13 per cent);
- new/increased mortgage (12 per cent).
Federal Finance Minister Bill Morneau is set to release the federal budget on March 19. Canada’s national debt hovers above $691 billion – that’s nearly $18,700 per Canadian according to Canada’s national debt clock.
Much like all levels of government, Canadian households are also awash in debt. In fact, almost half of Canadians are within $200 of not being able to pay their bills, said FPSC and Credit Canada.
“Budgeting and debt are inexorably linked,” said Laurie Campbell, Credit Canada CEO. “There’s no better time than ‘budget month’ for people to take a step back and holistically review their finances, housing costs and expenses – essentially, how much money is coming in versus how much is going out.”
Mario Toneguzzi is a Troy Media business reporter based in Calgary. He writes for Calgary’s Business.