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It looks as though British Columbians are not handling debt well.
A consumer debt sentiment survey from MNP shows that more than half of British Columbians are less than very confident in their understand of the impact of interest payments on debt payments.
In addition, six in 10 people in B.C. indicated that they are less than very confident about their ability to set and follow a budget.
The same number said they’re less than very confident in their ability to create a rainy-day or emergency fund.
“Consumer debt levels are at record levels, home prices in the Okanagan are edging higher, and what’s alarming is that many lack the basic financial literacy skills to manage their debts,” says Kelowna-based Darrin Surminsky, Licensed Insolvency Trustee at MNP LTD.
According to the survey, four in 10 British Columbians are $200 or less per month away from not being able to meet their bills or debt obligations each month.
One in five say they already don’t make enough money to cover those financial responsibilities.
“With hardly any wiggle room, any sort of financial shock is going to push some closer to financial crisis,” said Suminsky. “With no savings and a lack of understanding of how interest rates impact payments, they end up taking on more debt and high-cost loans. Many in the Okanagan have pulled equity out of their homes to stay afloat, digging themselves even deeper into debt.”
In total, three in 10 British Columbians say they are concerned about their level of debt with four in ten saying they’d go back and do things differently if they could.
Here are some highlights of the MNP survey:
- Over half (52%) of Canadians are just $200 or less away from financial insolvency at the end of the month (down 4 points from September).
- Three in ten (31%) say they already don’t make enough money to cover their bills (down 2 points since September 2016, but up 3 points compared to February 2016).
- One in ten Canadians (10%) are left with just $100 or less at the end of the month (down 3 points from September).
- Nearly half (48%) agree they’re concerned about how much debt they currently have, down 4 points from September 2016. Those who aren’t confident about their understanding of financial concepts (like credit scores, the impact of interest rates on debt payments, bankruptcy or insolvency) are significantly more likely to be concerned about their current debt (61%).
- Half (49%) agree they regret how much debt they’ve taken on in their life (down 1 point), while nearly four in ten (37%) regret the debt they’ve taken on in the past year alone. Those with a less confident grasp of financial matters are particularly likely to regret the debts they’ve accrued over the past year (46%) compared to those who have a stronger understanding (35%).
- A majority of Canadians (58%) agree that when it comes to their personal debts, they’d go back and do things differently if they could. Canadians who aren’t particularly confident about their financial knowledge (67%) are more likely to want to go back and do things differently.
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