A new study conducted by Ipsos for personal insolvency practice MNP LTD revealed the extent of Canadian households’ reliance on debt, with 58% of those with consumer debt stating that they would need an increase of at least 37% in their household incomes to live debt-free.
The problem is exacerbated among lower-income and insolvent households, which stated that they would need to make 49% more income.
Albertans in debt stated that they are more likely (69%) to need significant increases (21% or higher) in their household incomes in order to live without any consumer debt. Other provinces whose residents are raring for higher household incomes amid the debt-heavy climate are Atlantic Canada (62%), Saskatchewan and Manitoba (59%), Ontario (55%), Quebec (51%), and British Columbia (50%).
Read more: Indebted Canadians feeling greater pressure from higher rates – study
“It used to be that people would save for big purchases and have some money tucked away for emergencies. Now Canadians look straight to HELOCs or credit cards or other forms of debt when it comes to paying for unexpected car repairs, home maintenance, and even basic household expenses,” MNP LTD president Grant Bazian said.
“When debt becomes a financial survival tool it makes people particularly vulnerable to exploitative and high-cost lending. They have to spend more to service their debts – particularly as interest rates rise – so they have less money to make ends meet. And so begins the vicious cycle of debt,” Bazian added.