Personal finances continue to be a major source of stress for British Columbians and half anticipate that the situation will continue to deteriorate, according to the latest MNP Consumer Debt Index conducted quarterly by Ipsos.
When asked about the impact of the current economic conditions in Canada on their personal finances, half (50%) of British Columbians say they believe that the worst is yet to come, while one-third (32%) feel that we are currently experiencing the worst part of the economic cycle. Fewer are optimistic about the future with only 19 percent stating that the worst is behind us.
“Faced with not only inflation but also higher interest rates on their debt loads, heavily indebted British Columbians may justifiably believe that the worst is still yet to come,” said Linda Paul, a Licensed Insolvency Trustee with MNP LTD, in a news release. “The limited financial wiggle-room in many households highlights the effect of higher interest rates, particularly on those who are not financially equipped to manage it.”
One-third (34%) of British Columbians feel that the economic conditions over the last six months were worse than they expected. Two in five (44%, unchanged) report that they are $200 away or less from not being able to meet all of their financial obligations, including one-third (33%, +2pts) who say they already don’t make enough to cover their bills and debt payments. Compared to the other provinces, British Columbians are the most likely to say they already don’t make enough to cover their financial obligations. While the number of insolvent British Columbians edges upwards, the average amount of money households have left over at the end of the month has increased slightly to $876, up $89 from the previous quarter. Yet three in five (61%) British Columbians say that if interest rates go up much more they will be in financial trouble, increasing six points since last quarter. The same proportion (61%, +1pt) agree they are concerned about the impact of rising interest rates on their financial situation.
Despite interest rates stabilizing after last year’s successive increases, Paul notes that British Columbians are not feeling a reprieve yet. Fewer than last quarter say they are confident with their ability to cover all living / family expenses in the next year without going further into debt (52%, -7pts), and about half are concerned about their current level of debt (47%), up four points from last quarter. Fewer British Columbians are concerned about their ability to pay their debts as interest rates rise, although more than half (57%, -5pts) are still concerned. The majority of British Columbians continue to be more careful with how they spend their money (83%, -2pts).
“The findings show that even as interest rates have steadied, many British Columbians don’t have a positive financial outlook, which indicates there are still lingering concerns surrounding inflation and interest rates. Unfortunately, for many lower-income British Columbians, they may simply not be able to find a financial comfort zone whatsoever,” Paul said. “Managing your debt proactively is critical, whether you anticipate the worst or hope for the best,” advises Paul. “It’s important to monitor your budget closely and have an emergency fund to cover any unforeseen expenses such as a car repair or a sudden increase to your debt servicing costs. Additionally, if you receive a tax return this tax season, it’s wise to save it for a rainy day or put it towards paying off any outstanding debt.”
Paul says that British Columbians struggling to pay their bills are advised to seek professional help right away to avoid a cycle of increasing debt and interest payments, which often lead to longer-term financial hardship.
“Individuals often hesitate to seek assistance with their debt because of the social stigma surrounding bankruptcy. This can cause the financial pressure to build and may result in more severe issues, such as wage garnishment and harassing calls from collection agencies,” she says.
Licensed Insolvency Trustees are the only debt-relief professionals who can offer unbiased, customized advice about all of the debt-relief options, including informal debt settlement, consumer proposals and bankruptcy. They can stop or prevent collection calls and wage garnishments, as well as offer legal protection from creditor actions. MNP offers free consultations with Licensed Insolvency Trustees across Canada.