13.9 C
Ontario
Friday, October 22, 2021

Albertans increasingly concerned with covering next year’s expenses without going into debt: survey


A so-called return to normal in Alberta as provincial health restrictions are lifted is bringing the reality of debt back into focus.

The latest quarterly MNP Consumer Debt Index showed that nearly half of Albertans polled — 45 per cent — are not confident that they will be able to cover their next year’s worth of expenses without going further into debt.

At 54 per cent, Albertans were the most likely to be concerned about their ability to repay their debts — higher than responses from all other Canadian provinces.

“We are feeling a little bit more nervous about our debt levels here,” Donna Carson, Calgary-based licensed insolvency trustee with MNP, said Monday.

Read more:
30% of Canadians say they’re insolvent, MNP debt survey shows

Story continues below advertisement

“I think probably based on what we’re hearing from people we talk to, this debt situation that we have personally was there before the pandemic started, and now that some of the restrictions are starting to relax a bit, I think we’re starting to feel a little bit like, ‘Oh, I still have all this debt that I had before. What am I going to do with it?’”

But a quarter of Albertans reported being unable to pay all their monthly bills and debt obligations, also known as insolvency — a six per cent drop from March 2021. A third of respondents in Alberta said they plan to spend more than normal as the province reopens.

Read more:
It’s not just inflation, the COVID-19 pandemic is also feeding ‘shrinkflation’

That apparent contradiction shows a “K-shaped” economic recovery, with people in different income levels seeing different rates of bounce back.

Carson said temporary closures of courts and fewer active collections, as well as federal supports like CERB and CRB, helped keep Canadians out of insolvency proceedings during the pandemic.

“That’s where we do see one of the larger good note stories, if you will: insolvencies did drop when the pandemic hit,” Carson said.

“What concerns me is that the number of insolvencies before the pandemic in this province, in particular, were at almost record numbers, and I don’t think that that debt has disappeared.”

Story continues below advertisement


Click to play video: 'Nearly half of Canadians can’t cover living costs this year without going into debt: Survey'







Nearly half of Canadians can’t cover living costs this year without going into debt: Survey


Nearly half of Canadians can’t cover living costs this year without going into debt: Survey

Just more than a third of those surveyed said they feel their debt situation is better now than when the pandemic started. That compares with nearly half of Canadians feeling good about how much they owe.

More than half of Albertans have taken advantage of low interest rates, with 55 per cent of respondents saying they’ve made a pandemic purchase that wouldn’t normally fit in their budget.

But an increase in interest rates is a concern, with 45 per cent of respondents saying they could be in financial trouble and 35 per cent concerned bankruptcy could be around the corner if interest rates go up.

Read more:
Stocks sink on fears COVID-19 Delta variant will stunt economic recovery

“Higher interest rates mean it costs a lot more to carry debt,” Mark Kalinowski, a financial educator with the Credit Counseling Society, said.

Story continues below advertisement

“People that are taking big mortgages right now, have a large credit card debt, large bank debts are likely to see their payments go up over the future.”

The effects of increased interest rates are likely to be even worse with nearly a third of those surveyed saying they’re “house poor” — not having much left over after paying bills related to their home.

Read more:
Alberta woman feels let down by credit card company after $3,500 in unknown charges

“People will really struggle with cash flow,” Kalinowski added. “As interest rates go up, their houses will become even less affordable than they are now.”

Carson said the statistics of Albertans making larger-than-usual purchases and Albertans concerned with the influence of interest rates are similar to national numbers. But the local situation is a little different.

“Because of the double whammy of the oil economy and then COVID-19 here in this province, the cash flow to sustain that isn’t maybe there, and we’re seeing that quite a bit,” she said.

Forty-three per cent of Alberta families feel like the pandemic has worsened or created a larger debt burden, compared to just 35 per cent of families nationwide.

When compared to the March index survey, Alberta households say they have an average of $810 left over in a month after paying their bills — a $190 increase.

Story continues below advertisement


Click to play video: 'Why Canadians are racking up record amounts of debt'







Why Canadians are racking up record amounts of debt


Why Canadians are racking up record amounts of debt – Jun 10, 2021

The previous consumer debt index, released in April, suggested that just more than half of Albertans are $200 away from insolvency. In December 2020, the number was 42 per cent. That’s a problem that can be addressed, Kalinowski said.

“Maybe we can change that by changing the way we spend,” he said. “People have to go back to their actual income coming in and change the way they spend money.”

Read more:
New mortgage stress test rules will make it harder for first-time homebuyers: experts

“When people first sit down, we tell them there is a solution, we’ll help you find it,” Kalinowski said. “There’s always a solution.

“It’s money. It’s not rocket science.”

The latest round of polling for the consumer debt index was done by Ipsos for MNP from June 14-17. A sample of 2,002 Canadians 18 and over were interviewed and responses were weighted to reflect census data. The Canada-wide poll is accurate to within 2.5 percentage points, 19 times out of 20.




© 2021 Global News, a division of Corus Entertainment Inc.





Source link

Latest news

India among 11 ‘countries of concern’ on climate change for US spy agencies

Afghanistan, India and Pakistan were among 11 countries singled out by US intelligence agencies on Thursday as being “highly vulnerable” in terms...

💕😭 SAD HEART TOUCHING SONGS 2021❤️ SAD SONGS 💕 | BEST SONGS COLLECTION ❤️| BOLLYWOOD ROMANTIC SONGS

Feel the music it just make your heart to forget all the pain❣☺❤️❤️✔Celebrate this LOVE SEASON with your LOVED one's by dedicating this Beautiful...

Gwyneth Paltrow’s new Netflix show latest to try to help couples solve sex problems

Gwyneth Paltrow is starring in a new Netflix show — but it's not what you think. The actor-turned wellness guru is behind...

SC Adjourns Hearing on West Bengal’s Suit Against CBI Probe in Post-poll Violence Cases

The Supreme Court on Friday adjourned till November 16 the hearing on the lawsuit filed by the West Bengal government which alleged that...
Related news

India among 11 ‘countries of concern’ on climate change for US spy agencies

Afghanistan, India and Pakistan were among 11 countries singled out by US intelligence agencies on Thursday as being “highly vulnerable” in terms...

💕😭 SAD HEART TOUCHING SONGS 2021❤️ SAD SONGS 💕 | BEST SONGS COLLECTION ❤️| BOLLYWOOD ROMANTIC SONGS

Feel the music it just make your heart to forget all the pain❣☺❤️❤️✔Celebrate this LOVE SEASON with your LOVED one's by dedicating this Beautiful...

Gwyneth Paltrow’s new Netflix show latest to try to help couples solve sex problems

Gwyneth Paltrow is starring in a new Netflix show — but it's not what you think. The actor-turned wellness guru is behind...

SC Adjourns Hearing on West Bengal’s Suit Against CBI Probe in Post-poll Violence Cases

The Supreme Court on Friday adjourned till November 16 the hearing on the lawsuit filed by the West Bengal government which alleged that...