The media has been swirling lately with reports and polls from various banks that show Canadians are continuing to overspend, and many are comfortable with their debt level.
The Bank of Montreal surveyed Canadians and found that spending money makes us feel better. A majority of Canadians surveyed by the Bank of Montreal say they shop to cheer themselves up and mood-lifting impulse purchases cost Canadians $3,720 annually.
The Bank of Montreal poll found that 59 per cent of those surveyed did impulse shopping and bought items like clothes and shoes and also treated themselves to eating out.
On average, that amounts to $310 a month being spent on items that are wanted but not needed, according to the survey released on Tuesday.
Those surveyed believed they could save two-thirds of that amount if they made an effort to limit impulse spending, the bank said.
CIBC said late last week that most Canadian Baby Boomers (57% of 50- to 59-year-olds surveyed) are willing to working longer if it means they can live better in their retirement years. They don’t want to down grade their living conditions in order to live on their retirement fund without going into debt.
The poll also suggested that 24% of Canadian respondents in their 50s plan to carry debt into retirement. A previous CIBC poll suggested Canadians in the same demographic have fallen short of retirement goals, with nearly half having saved less than $100,000 for retirement.
Another survey, conducted by a Bankruptcy Trustee firm, suggested Canadians are comfortable with their high debt level.
Nine out of 10 respondents in their survey would borrow money to cover an unexpected cost; only 55% said they would be easily able to raise $2,000 if a sudden need arose.
There are so many sources for borrowing money these days, it make it easy for Canadians to acquire funds to purchase anything from big ticket items like cars and vacations, but also to cover day-to-day living expenses. This has become the norm and a dangerous one at that. More and more Canadians are becoming comfortable with being in debt and paying the minimum payment each month just to “get by”. If you ask around, I’m sure you’ll find 3 out of 5 people who are acceptable with living with some kind of unsecured debt.
This familiarity and acceptance of living with debt is alarming to the federal government and has just launched a “Financial Toolkit” in response. It was developed to educate Canadians about responsible money decision making. It is available online and in printed form. There are many budget planners online and in print that will help Canadians learn to manage money properly. Search for one that best suits your family’s needs.
In keeping with educating Canadian consumers about money, here are some explanations of common debt terminologies.
If your debt repayments amount to more than these percentages, you have a debt ratio that is higher than recommended by most experts. This might indicate that your debt load is becoming unmanageable, and, with your current income, you will not be able to meet the payments as they come due. This debt load might also discourage lenders from loaning you any more money.
Definitions
- Consumer debt: Money owed on items other than mortgage debt, including unpaid credit balances, auto loans, etc., normally not including regular expenses that are paid monthly, such as phone bills, utility bills, etc.
- Total debt: Consumer debt plus any mortgage loans
- Debt load: The total amount of money you owe
- Debt ratio: The amount of monthly debt payments you have relative to your monthly income.
Debtor
A debtor is a person who receives a loan or an advance of goods and services in exchange for a promise to pay at a later date.
Creditor
A creditor is a person, institution or business to whom you owe money. Secured creditors are creditors that have taken certain measures to protect themselves and hold a mortgage, pledge, lien or similar instrument on, or against, your assets. If secured creditors are not repaid, they can enforce their claims by recovering the assets on which they hold security.
Unsecured creditors are creditors that do not have any security for the debt owing to them.
If you have any questions about budgeting or debt management, don’t hesitate to call OCCA Consumer Debt Relief toll free 1-855-873-6222 or visit www.occa.ca..
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