For those living in the United States, while we’d like to think at time the world should revolve around us and we should be the center of everything, when it comes to mastering consumer debt, that’s not true.
Consumer debt problems exist in every single nook and cranny of the earth.
The early warning signs are appearing in Canada. Even as the country tries to avoid a slip and fall accident into an economic downturn, rising consumer debt is becoming more of a concern.
“It’s one of the most common things we see. When you have little or no savings — almost half of Canadians are living paycheque to paycheque — and you lose your job, or take a reduction in income, that can be devastating to any household budget,” said Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada.
It’s also the kind of scenario that has had Bank of Canada governor Mark Carney sounding the alarm for more than a year, including fresh warnings this week, about rising household debt levels.
Canadians’ average household debt-to-income ratio, a key measure of their ability to carry their loans, hit a record high last June, according to Statistics Canada. The average Canadian household owes $1.63 for every $1 earned, a level last seen in the U.S. and U.K. just before their housing bubbles burst, economists warn.
Carney has called household debt the greatest domestic threat to Canada’s future economic growth.
Yet Canadians continue to pile it on.
The article in The Waterloo Region Record went on to say:
Canadians owe a staggering $1.6 trillion, the latest data from Statistics Canada show. That amounts to more than $103,000 per household, according to a study for the Vanier Institute of the Family, an Ottawa-based think tank published in March 2012.
An estimated 1 million Canadians are spending more than 40 per cent of their income on debt repayment, Roger Sauvé, author of the Vanier-sponsored annual review of family finances, said in an interview. Excessive debt “is a problem for a whole bunch of people,” Sauvé said.
More than half of all household debt is in mortgages, while the rest is made up of other kinds of loans, including lines of credit, auto loans and credit card debt.