DEBT= Don’t Ever Buy Things On Credit
Debt for most Canadians is still a reality and likely will be for a long time unless something changes but not necessarily from a political aspect but a personal one.
Is the Canadian government to blame for all of our debt problems or should we start taking responsibility for the way we are spending and saving money?
The past few days I’ve spent what little free time I have in between working 7 days a week, family responsibility and blogging to catch up with what’s happening in the world of Canadian Finance.
With the internet flooded with resent for the Wynne Liberal government who are under fire right now especially with the increase in hydro costs that are creating energy poverty for Canadians who simply can’t afford to pay these price hikes. Our hydro has more than doubled in the past year and our habits have not changed which means we continue to be conscious of utility usage.
What’s even worse is there are plans in the works to phase out natural gas, homes will need an energy audit when put up for sale and renovations based on energy efficiency. This is all part of the Climate Change Action Plan or CCAP scheme. Carbon pricing is just the beginning of what is going to be some big changes for our country.
Ontario has passed legislation creating a cap-and-trade system to fight climate change, which is expected to add $5 a month to home heating bills and about 4.3 cents to the price of a litre of gasoline. – Source
It also seems that Canadians who are not paying their debt back is on the rise which means mortgages aren’t getting paid for months and interest is mounting digging the hole deeper. Last month according to Stats Canada, Alberta lost more jobs than any other province down 20,000 jobs.
Goods-producing work across Canada fell by 37,100 positions, led by a drop of 16,500 manufacturing jobs. The economy added 35,000 services jobs.- Source
Stats Canada reported that employment in Ontario was unchanged in April however the number of people searching for a job increased the unemployment rate up by 0.2 percentage points to 7.0%.
Compared with April 2015, employment gains for the province totalled 96,000 (+1.4%).
With the wildfires still out of control in Alberta near Fort McMurray many Canadians are blinded about what to do next. It’s gone from bad to even worse now.
More than 80,000 people have left Fort McMurray in the heart of Canada’s oil sands, where the fire has torched 1,600 homes and other buildings. Gas has been turned off, the power grid is damaged and water is not drinkable.- Source
According to an article I read on Yahoo TransUnion states that the oil patch issues in Alberta are causing a chunk of the non-mortgage debt repayment problem as people continue to struggle to make ends meet since they rely on oil prices.
The drop in oil prices has caused many industries in the energy sector to downsize, cut expenses and limit overtime. Is this considered a recession for Alberta? Some economists say yes and with the current state of situation things are about to get worse.
ATB says the drop in oil is the “single reason” for the economic challenges, as prices have fallen to about US$45 a barrel at present from more than US$100 in the summer of 2014- ATB Financial – Source
The loan default rates mainly come from what is called the oil sector provinces compared to the rest of Canada. The downturn in oil prices has caused Alberta rate increase of delinquent accounts to rise from 2.5% to 2.8% in just one year. Rates in Saskatchewan followed suit according to TransUnion.
The increase in the national delinquency figures came as the average Canadian’s non-mortgage debt level grew to $21,348 compared with $20,785 a year ago.- Jason Wang- TransUnion Director of Research and Analysis Canada
Technology exposes us to spend now pay later
What does all of this have to do with blaming the government for our personal debt?
A bit of politics but much more about self-control when it comes to your wallet. We can’t continue to blame-shift all of our financial woes on the government. News Flash…if it’s not the Liberals it will be another government political party that will cause an uproar for Canadians.
This is just the tip of the iceberg and it’s only going to get worse. Baby Boomers were raised by parents who were strongly influenced by the great depression and for the most part, continued that level of fiscal responsibility. Millennials and Gen X’s are generations that believe themselves to be “Entitled” and have to have the best name brands, latest toys etc. with very little concern about debt. Governments are amplifying the problem 10 fold by running massive budget deficits to satisfy the hunger of the masses and setting a disgusting example. They’re even trying to preach deficits are a “Good Thing”!! What this article doesn’t show is how many Gen X’s & Millennials are being bailed out by their Boomer parents or grandparents on a regular basis. If those numbers were available they’d be shocking. Governments need to lead by example but they’re too busy gorging at the hog trough fuelled by massive debt !!!- Ronald Yahoo Article Comment (see link above)
Although Ronald brings up some good points every generation has financial problems when it comes to debt that need to be addressed. Education for the masses is critical even if the spend less than you earn motto seems to be common sense to those who have their finances under control.
Just recently I blogged about a government worker we know who is slated to be downsized which could have a huge financial impact for her family. You should never expect to retire early especially if you have debt that is not paid off by the time the golden years arrive.
The need for an emergency savings fund has become not a want but a need for just about everyone. I’m pretty sure residents affected by the wildfires in Alberta never expected to be evacuated some with limited belongings an no home to return to. I don’t care if you’re 15 or 85 it’s important to have money set aside just in case something were to happen. This is part of the rely on yourself first program that we should all adopt.
Not all parents have spare cash to fund their kids activities or bail them out every time they need financial help so if they work in any capacity they should be motivated to save a portion of their money. It’s not only a financial lesson for now it will carry it into the future.
The number of Canadians not making debt payments surely comes with many reasons but one of the biggest causes is simply not budgeting and spending more than we earn.
If there is not enough money to go around then this is the time you need to figure out where you must make changes to improve your life. If you think things with the government are going to solve all of your financial problems, think again. The political fundamentals of the government system will always look for change of some sort which will likely include increased taxes and the overall money we pay for essential services in Canada.
Government won’t fix your debt problem
Apart from what the Canadian government plans it is our responsibility to take control of what we can fix because we all know that voting can be a crap shoot. You win some you lose some but in the end no one is ever happy and becomes a bashing of the political parties.
If you aren’t already doing any of the below make it a practice to incorporate your own changes instead of relying on the government to save us.
- Stop making excuses for your debt and spending habits
- For the love all things finance- Use a Budget!
- Stop buying Stuff you don’t need and stay away from stores if you can’t afford to pay cash
- Cancel services you don’t need
- Use the Food Bank if you need to or other community services
- Buy Second-hand or get free stuff online from other generous people
- Move to a smaller place or town where costs are lower
- Take the bus
- Finally…. find more work or earn extra income.
If you can help out donate where you can whether it be clothing, food, or other items to help our fellow family, neighbours and friends. We do this with items we no longer need. Instead of selling everything for profit we donate it to those who need it more than we do. It’s all part of the pay it forward system.
Instead of trying to fight the government about why your credit card debt is so high and why you can’t pay it back focus on what you can do to stop creating debt you don’t need. Sometimes in life we have to do things we don’t want to do but we need to do but using credit to survive should never be an option.
We had to do it and continue to do it
The wife and I rented a tiny room for 2 years when I moved to Canada 8 years ago just so we could save money and send both of us back to school. My prospects of employment in Canada meant that I was securing minimum wage jobs which I knew wouldn’t fulfill our present and future financial goals especially if we wanted to buy a house and start a family. I refused to settle and although not everyone has this option it’s imperative that you revisit your plan and find a way to make it work. Sometimes we spend more energy explaining why something is not working instead of trying to find the source of the problem and fixing it.
If I wasn’t able to go back to school I would have taken any job I could even if it were making $10-$13 an hour. It also meant that we would have had to adjust our goals and be realistic about our savings plan. I was not able to rely on the government for any social assistance as my wife was responsible for me financially for 3 years as she sponsored me as a permanent resident of Canada. If we separated/divorced in this time she would have had to keep me going financially until the three years was up.
Times were dark in our financial corner even though we both had savings when we married. Gee, even a million dollars these days doesn’t go far so what we had in the banks surely was a saviour but not going to save us for good.
We weren’t in our 20’s either. It was tough seeing others our age successful, owning a home and fancy vehicles but we didn’t let jealousy get in the way. I took the bus every day with other University kids and it was very rewarding.
My experience in Canada thus far has rewarded me greatly although it wasn’t handed to me on a silver platter. It has certainly been an eye-opener to the ups and downs of politics which only fuelled our decision to pay off our mortgage in 5 years. This was all part of our master plan so we had zero debt.
We had to start somewhere and just like our friends who seemed to have it all looking in from the outside the starting point begins with you. No government is going to help you budget although they are doing a great job of forcing everyone to take a good hard look at their financial health. If you don’t you’re just setting yourself up for disaster.
Don’t blame the banks, credit card companies, family, friends or your boss for any of your debt problems. YOU always have the option to say NO. You always have to option to LOOK for new employment. You always have the option to Network. You always have the option to Educate yourself on financial related topics. You have the wheel unless you give up that control.
Money is lush and even if the government sticks it to us with increased utility rates and maybe our boss doesn’t give us a raise or we lose our jobs we need to be ready and have a budget that works. That means stop spending and start saving so you are prepared for the worst. You have an extra buck? No, forget your coffee, smokes, booze, cell-phone etc… and do the right thing.
I’m not saying there is an easy fix for those who aren’t able to pay back their debt on time every time but we can complain as much and as loud as we want but at the end of the day your life, is your own. Do as you wish but no one is going to come knocking on your door to hand you a suitcase stuffed with money nor is the government going to surprise us all with a country free from change.
What have you done to make sure you have money set aside and to pay off your debts? Have you ever suffered a financial low in your life and how did you get past it?
Share your comments below.
Thanks for reading.
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