More Canadians are starting to feel the pressure of debt obligations such as mortgage payments.
The latest MNP Consumer Debt Index revealed that over half (54%) of Canadians said that they are more concerned about their ability to repay their debts than they used to be – which isn’t very surprising given that the average Canadian, after paying bills and debt obligations, is left with only $557 at the end of each month.
What’s more, three in 10 (29%) have said that they already don’t make enough money to cover all their bills and debt obligations each month. And seven in 10 said that they are not confident in their ability to cope with life-changing events – such as a divorce, unexpected auto repairs, loss of employment or the death of a family member – without increasing their debt.
Read more: Nearly two million Canadian families are overspending on housing
Grant Bazian, president of MNP LTD, said that the data indicates increasingly less wiggle room in household budgets.
“Many Canadians don’t have enough to cover all their expenses let alone put anything away for rainy day savings,” said Bazian. “The reason this is alarming is because it is often unexpected expenses that force people to take on more debt they can’t afford and that begins a cycle of increasing servicing costs, and eventual default.”
Bazian advised consumers to have at least three to six months of expenses saved in case of emergencies. He also said that a professional help may be needed to draw up a debt payment plan.
“Whether you're saddled with credit card debt, line of credit, a mortgage, a car loan, or all of the above, now is the time to be paying it down,” said Bazian. “If you feel like your debt is out of control, get professional help to help design a debt relief strategy. Beyond taking on more debt to deal with debt, the single biggest mistake people make is waiting too long to seek help.”