Three-Quarters of Canadians Still Drowning in Debt
Another survey was released by the RBC this week that showed just how Canadians are still drowning in debt. And while much of the media that picked the story up sold it under headlines such as “A quarter of Canadians are Debt-Free!” we can see beyond the headline to see the really bad news. And that’s that three-quarters of us are still very much in debt.
As you can see from the chart above, 24 per cent of Canadians this year have said that they eliminated their non-mortgage debt in 2013. That’s down a bit from last year, but up marginally from 2011. But what might be a bit encouraging about these stats is that while we’re still taking on debt, we’re also paying it down.
Those who still have personal debt have seen their average debt load jump to $15,920. That’s a jump of $2,779 from last year, and just $83 more than what we had in 2011.
Jeffrey Schwarts, executive director at Consolidated Credit Counseling Services of Canada, says that Canadians aren’t just starting to pay down their debt before they see those interest rates rise, they’re also moving their debt to better, cheaper places to hold it.
“They are shifting their unsecured debt to secured debt,” he says. “So from one perspective they are doing some positive money management, by paying lower rates on their debt.”
But that’s not enough, he says. Consumers must still watch their spending habits very closely, to ensure that they’re not spending too much and piling on too much debt.
“The big key here is to alter their spending habits,” he says. “Over time, people get into bad habits, like buying a car or too much house. All of a sudden their employment situation changes and their income drops or they are not working as many hours.
“The debt that they have built up while they were not working, or while they were in a higher income bracket, that has not changed. So now they have to figure out what they need to do.”