Estimated reading time: 10 minutes
Explore the impact of government policies on Canadian debt. Should we hold the government responsible or take personal accountability for our spending habits?
Everyone Has Or Will Have Debt
Debt for most Canadians is still a reality and likely will be for a long time unless something changes, not necessarily from a political aspect but a personal one.
Is the Canadian government to blame for our debt problems, or should we start taking responsibility for how we spend and save money?
The past few days, I’ve spent what little free time I have between working seven days a week, family responsibility, and blogging to catch up with what’s happening in Canadian Finance.
Canadian Government Blamed For Debt
The internet is flooded with resentment for the Wynne Liberal government, who are under fire right now, with the increase in hydro costs 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, so we continue to be conscious of utility usage.
Even worse is that there are plans to phase out natural gas, and 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 some big changes in 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 are rising.
Mortgages aren’t getting paid for months, and interest is mounting, digging a deeper hole.
Last month, according to Stats Canada, Alberta lost more jobs than any other province, down 20,000.
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 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.
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
OIl Prices Causing Financial Chaos
According to a Yahoo article, TransUnion, the oil patch issues in Alberta are causing a chunk of the non-mortgage debt repayment problem. Why?
Well, people 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 the 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 the oil sector provinces compared to the rest of Canada.
The downturn in oil prices has caused Alberta’s 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 Canadians To Spend Now Pay Later
What does all of this have to do with blaming the government for personal debt?
It’s a bit of politics but much more about self-control regarding 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)
Financial Issues Don’t Skip Generations
Ronald brings up some good points, but every generation has financial problems regarding debt that must 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.
Retirement Expectations With Debt
I recently blogged about a government worker we know who is slated to be downsized, which could have a substantial financial impact on her family.
You should never expect to retire early, especially if the debt 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 everyone.
Residents affected by the wildfires in Alberta never expected to be evacuated, some with limited belongings and no home to return to.
Whether you’re 15 or 85, having money set aside is essential just in case something happens.
This is part of the rely on yourself first program we should all adopt.
Not all parents have cash for kid’s activities or to financially help them.
Parents should always motivate their children from a young age to save money.
It’s not only an economic lesson for now but will carry it into the future.
Related: How much emergency savings should I have?
Stop Living For The Next Pay Cheque
The number of Canadians not making debt payments comes with many reasons, but one of the biggest causes is simply not budgeting and spending more than we earn.
When 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 will solve your financial problems, think again.
The political fundamentals of the government system will always look for change.
These changes might 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 and lose some, but in the end, no one is ever happy and becomes a bashing of the political parties.
Change The Way You View Finance
If you aren’t already doing any of the following, make it a practice to incorporate your changes instead of relying on the government to save us.
- Stop making excuses for your debt and spending habits.
- For the love of all things finance- Use a Budget!
- Stop buying stuff you don’t need.
- Cancel services you don’t need.
- Utilize the Food Bank or other community services when needed.
- 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, walk, ride a bike, or use a scooter.
- Find more work or earn extra income.
Canadians Helping Canadians During Hard TImes
If you can help out, donate where you can, whether it be clothing, food, or other items to help our fellow family, neighbors, 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 fighting 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. However, using credit to survive should never be an option.
Renting A Room To Save Money
Mrs. CBB and I rented a tiny room for 2 years when I moved to Canada 8 years ago to save money and send us back to school.
My employment prospects 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, you must 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 couldn’t return 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.
Canadian Government Doesn’t Help All Immigrants
I was unabke to rely on the government for any social assistance as my wife was responsible for me financially for three years.
She sponsored me as a permanent resident of Canada and that was part of the protocol.
If we separated/divorced at this time, she would have had to keep me going financially until the three years were up.
Times were dark in our financial corner even though we both had savings when we married.
Gee, even a million dollars these days don’t go far, so what we had in the banks surely was a savior but not going to save us for good.
We weren’t in our 20s either.
Meeting Goals At Different Times In Our Lives
Seeing others our age successful and owning a home and fancy vehicles was tough, but we didn’t let jealousy get in the way.
I took the bus daily with other University kids, which 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 will help you budget, although they are forcing everyone to take a good, hard look at their financial health.
If you don’t, you’re setting yourself up for disaster.
Take Responsibility For Your Livelihood
Don’t blame your debt problems on the banks, credit card companies, family, friends, or boss.
- You always have the option to say NO.
- You always have the option to LOOK for new employment.
- You always have the option to Network.
- You always have the option to educate yourself on topics related to finances.
- 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.
Canadians must be ready and have a budget that works because the government is not paying your bills.
Stop spending and start saving so you are prepared for the worst.
I’m not saying there is an easy fix for those who can’t repay their debt.
We can complain as much and as loud as we want, but at the end of the day, your life is your own.
No one will come knocking on your door to hand you a suitcase stuffed with money, nor will the government surprise us all with a country free from change.
It’s inevitable.
Discussion: What have you done to ensure you have money to pay off your debts?
Share your comments below.
Thanks for reading.
Mr.CBB
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I’ll admit that my emergency fund isn’t that plentiful yet but I’ve been focus on getting rid of the debt over the past couple of years. I have a date where I’ll be consumer debt-free but that date is based on my current job staying. I know that I won’t be retiring early, no matter how I wish I could. Once I can get the consumer debt gone, then I’m definitely going have to look at the budget and determine how to divide up the discretionary income to cover all the bases and how I can reduce the number of account categories.
Hi Dee,
It sounds like you’ve got a solid handle on your financial plan which is what so many people need to start doing. Keep at it you’re success is around the corner.
WOW just wow great thoughts & practical .Well Done