One in three Canadians say they are insolvent at each month end, and nearly half arent’t sure they will be able to cover their family and living expenses without going further into debt this year, accroding to accounting firm MNP.
“Our findings may point to a shift among some Canadians from debt apathy to debt hopelessness,” Grant Bazian, President of MNP Ltd., said in a news release. “Feelings of hopelessness can make people feel like giving up on ever paying down their debt or, worse, ignoring the debt as it piles up higher.
“It is stressful for those who come to the alarming realization that there is no clear path to repay what they have borrowed, no matter the time horizon or interest rate.
“Continually financing a lifestyle on credit – particularly on the expectation of rising home prices – is a recipe for trouble,”
The latest MNP Consumer Debt Index, which measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, and absorb interest-rate fluctuations without approaching insolvency, has sunk to its lowest point ever recorded in March 2018.
The survey found:
- 29 per cent of Canadians say they are already insolvent, meaning that they cannot meet all their monthly financial obligations.
- This proportion rises to 50 per cent when also including those who say they are $200 or less away from being insolvent at month-end.
- 49 per cent aren’t confident they will be able to cover their family and living expenses without going into further debt this year.
- 27 per cent are confident in their ability to cope with a life-changing event such as a serious illness, the loss of employment or change in wage or seasonal work without increasing their debt load.
“Breaking the debt cycle means not only paying off your creditors, it also means changing your mindset and behaviours to avoid getting back into the same trouble in the future,” said Bazian.
Mario Toneguzzi is a business reporter in Calgary.
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