A recent study about individual debt has made me reflect on the question of whether people are too smug about their debt situations. The poll seem to suggest that even though our debt levels are at an all time high, most Canadians are quite comfortable with using debt as a financial strategy. 9 out of 10 respondents would consider borrowing money to cover an unexpected cost. In an awkward way, I am really glad to read that because my personal strategy has always been to use my line of credit for emergencies and unexpected expenses. It appears now that other Canadians are also replacing saving for a rainy day with accessing debt to deal with financial problems. Glad to see I’m not the only one.
The average person in Canada has about $1.50 of debt for every $1 of income they make per year. Despite this, 62% of those surveyed said they are comfortable with their financial situation. Are you comfortable with your financial situation? I sure am! But this kind of debt to income ratio is around where the US economy was right before the housing crisis and then the rest of the recession. So there is certainly the possibility that we are underestimating how much risk we’re really putting ourselves into.
“It’s frightening to see that Canadians have become totally blasé about debt – it’s becoming their new ‘normal’ and they’re numb to this dangerous trend,”
~Hoyes, Michalos & Associates Inc.
I wonder if people will be as “blasé” about debt if interest rates were 3-5% higher like normal economic times? 😀
The survey interviewed 1,010 Canadians between Aug. 15 and 23. The survey has a margin of error of plus or minus 3.1 per cent, 19 times out of 20.
Random Useless Fact: Over 86,000 Americans each year have to visit the emergency room because they trip over their own pet. (source: nytimes.com)