When it comes to debt, the struggle is real for Canadians.
In a new survey of more than 1,500 people, one-in-five revealed they will have to liquidate assets in order to pay off (or down) their debt this year. This includes things like selling a car, digging into retirement savings, taking out a second mortgage, or selling stocks.
The 2019 Household Debt Survey was conducted by non-profit organizations Financial Planning Standards Council (FPSC) and Credit Canada. The goal was to shine a light on budgeting and debt in Canada ahead of the March 19 federal budget.
“Much like all levels of government, Canadian households are also awash in debt,” the study noted.
It’s no secret that Canadians have financial struggles. In fact, a 2018 study reported that Canadians have the most debt in the world, and a separate poll found that nearly half of respondents were $200 or less away from making ends meet.
Canada's national debt is currently over $691 billion. That translates to roughly $18,700 per Canadian, according to Canada’s national debt clock.
In the Household Debt Survey, men (24 per cent) were far more likely than women (14 per cent) to turn to liquidation to relieve their debt burden. Similarly, those with children under 18 (23 per cent) were more likely to do so than those without (16 per cent).
Despite having to take drastic actions to pay off debt, the poll found nearly two-thirds of Canadians with debt (62 per cent) also expected to accumulate more outstanding payments this year. Increased credit card bills (23 per cent) and line of credit (15 per cent) were the top culprits.
While Canadian household debt has slowed down considerably — partly due to rising interest rates and the mortgage stress test — the new survey proves Canadians still have financial woes.
Author and educator Kelley Keehn, who is also a Consumer Advocate for FPSC, believes this is because “many Canadians lack awareness of their spending habits and patterns.”
"There are several ways to create awareness, such as paying only with cash for a month which accesses a different part of the brain that is associated with loss aversion,” she said in a press release.
Keehn also suggests writing down every penny spent within a 30-day period to paint a realistic picture of how money is being spent, and what costs could be cut.