Many Atlantic Canadians say they would need to make a lot more money to live debt free, according to a new survey.
The survey conducted by Ipsos highlights just how debt-reliant residents of P.E.I. and other parts of the region have become.
Six in 10 Atlantic Canadians with consumer debt believe they would need a significant increase in their household income in order to live debt free. On average, they feel they would need the highest per cent increase in household income (40 per cent), compared to the other provinces.
“It used to be that people would save for big purchases and have some money tucked away for emergencies,’’ says Grant Bazian, president at MNP LTD, Canada’s largest insolvency practice.
“Now Canadians look straight to (home lines of credit) or credit cards or other forms of debt when it comes to paying for unexpected car repairs, home maintenance, and even basic household expenses.’’
Brazian says that the lack of personal savings and reliance on debt is a huge and growing problem among Atlantic Canadians.
The survey asked Atlantic Canadians who they blame for the amount of consumer (non-mortgage) debt that they currently have. Nearly half (47 per cent) blame themselves. However, two in 10 (22 per cent) say others are to blame, pointing the finger at government taxation (13 per cent), their spouse (12 per cent) and the Bank of Canada interest rates (seven per cent), among others.
“People who blame themselves often feel like they have to deal with the debt alone,’’ says Brazian. “The shame and guilt prevents them from taking action or asking for the help that they might desperately need. Confronting debt can be a depressing reality at first, but with the numerous options available to Canadians, debt relief is possible.’’
The survey results are particularly troublesome for Canadians already struggling financially. Across Canada, lower income households and those who are technically insolvent said they would need to make 49 per cent more income in order to live debt free.
“When debt becomes a financial survival tool it makes people particularly vulnerable to exploitative and high-cost lending. They have to spend more to service their debts – particularly as interest rates rise – so they have less money to make ends meet. And so begins the vicious cycle of debt,” says Bazian.
He points out that sometimes people mistakenly think that getting approved for a loan means that they are in good enough financial position to repay it.