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Manitobans worried about debt as affordability issues grow

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According to MNP’s recent Consumer Debt Index, 57 per cent of Manitoba and Saskatchewan residents regret the amount of debt they’ve taken on, jumping 19 points from the previous quarter and reaching a record high. As well, 50 per cent say they are concerned about their current level of debt, rising nine points from last quarter.

The MNP Consumer Debt Index is conducted quarterly by Ipsos to track Canadians’ attitudes about their debt situation and ability to make their monthly payment obligations.

“This massive spike in Saskatchewan and Manitoba residents’ attitudes towards their personal debt situation is a reflection of this past year’s persistent inflation and swift interest rate hikes,” said Pamela Meger, an MNP licensed insolvency trustee. “Many households are experiencing a double whammy. On one side, inflation is eroding their household budget, and on the other side, those who are financially vulnerable and overleveraged are being faced with soaring borrowing costs.” 

The combination of rising interest rates and inflation are being felt by prairie residents, making them feel worse about their personal financial situations. The Index has dropped to 77 points, down 15 points from the last quarter reaching an all-time low since it was created over five years ago.

Compared to the other provinces, Manitoba and Saskatchewan residents are the most likely to say they are already feeling the effects of interest rate increases, rising to 74 per cent—up 15 points from last quarter. 

Seven in ten said that as interest rates rise they are more concerned about their ability to pay their debts and three in five said that if interest rates go up much more, they will be in financial trouble—both rising significantly from the previous quarter. 

Inflation and overall rising costs are being felt by Manitoba and Saskatchewan residents more than the rest of Canada. The Index found that they are the most likely to report that feeding themselves and their family (65 per cent, up by 13 points), putting money aside for savings (64 per cent, up by 17 points), and transportation (66 per cent, up by 26 points) are less affordable. As well, 51 per cent reported that clothing or other household necessities are becoming less affordable, and 40 per cent reporting the same about housing (40 per cent, up nine points) are becoming less affordable. 

The Index found that overall, Manitoba and Saskatchewan saw the largest quarterly increases compared to any other province.

Manitoba and Saskatchewan residents are also already resorting to taking on more debt to make ends meet. Compared to December 2021, significantly more say they have paid only the minimum balance on their credit card (34 per cent), rising 10 points which was the largest increase amongst the provinces. One in 10 said they will use their credit card to pay their bills and two in five said they plan on reducing their consumer expenses to make ends meet, increasing four points since last quarter.

“More Saskatchewan and Manitoba residents are being pushed to make difficult financial decisions to try to keep up. Amassing more debt can have lasting financial impacts, though, and can push some into a debt spiral. Financial struggles like these can often bring on stress and anxiety which can significantly affect a person’s mental health,” said Meger.

Debt-relief options are available to those who need it, and can include making a deal with creditors through an informal debt settlement, consolidating all debts into one monthly payment, making a debt repayment plan through a consumer proposal, or declaring bankruptcy.

Meger says that individuals often miss the initial warning signs or feel shameful about seeking help, causing the debt to snowball, and in some cases leaving the individual with fewer options. 

“A good place to start is with a free, confidential review of your finances by a licensed insolvency trustee who will outline in detail all of the debt-relief options available to you. Each individual’s debt situation is different, so this review will help to determine the best option for that unique situation,” advised Meger. 

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