WHY HAVE PERSONAL DEBT LEVELS RISEN SO HIGH IN CANADA?
There has been a perfect storm brewing in Canada for the past several years. This storm is “perfect” for the banks and the lenders because it is keeping everyday Canadians stuck in the debt cycle. This debt cycle is what makes the lenders so profitable. Unfortunately, soon this storm will hit it’s peak and will cause unimaginable harm to Canadians who do not heed the warnings.
Let’s take a look at the factors that are making this “perfect” storm materialize.
Historically low interest rates. When you compare today’s rates to the historic average, you can see that Canadians are paying far less for the money they borrow than in the past. When these interest rates start to rise, even slightly, then it will make it that much more difficult for Canadians to maintain their debt payments.
- Higher cost of living vs wage increases. There have been many good paying jobs lost over the past several years, especially in the K-W region. These are generally being replaced with less secure, lower paying jobs. Food costs keep rising, as do other essential costs such as fuel, heat, and hydro. There is no money left over at the end of the month for savings or for anything else.
- Higher property values across the country. Those who do get into the real estate market today are paying for it. Due to the high cost of the real estate, more and more of your disposable income is going towards paying the mortgage, even with historically low rates, leaving less money to pay for other essential items for living, and to pay down debt.
- Society and advertising. The pressure to keep up with your friends or neighbors? Is this a real issue? I believe it is. That is why so many companies have shifted their focus to a buy now, pay later philosophy. Look at the vehicle industry. They now have 7 year car loans, which was unheard of just a few years ago, and the vehicle industry is selling record amounts of vehicles with this strategy. This is costing the consumer more in the long run, but as long as they can have what they WANT now, it does not matter. Is there a sense of entitlement in society today? Everyone WANTS to have the newest car, biggest house, designer clothes, big TV’s. There needs to be a shift in thinking between wants vs needs.
- Faltering economies around the world that either affect Canada directly or indirectly.
- The amount of Canadians with poor or tarnished credit, which is keeping them in the “debt cycle”, and making their financial situation even worse as now they only have access to high interest lenders like payday loans, high interest car loans, etc..
So what can be done to stay out of this vicious debt cycle or to make sure that you are better prepared for any economic shifts such as a rise in interest rates?
First of all, you need someone who is working on your behalf that can put together a comprehensive plan to get you out of debt, increase your monthly cash flow, rebuild your credit, and take away your stress so that the financial decisions being made are more likely to help you to reach your long term goals and not hinder them.
These are all issues that your local 4 Pillars Debt Relief Specialist can help you with accomplishing. We have helped thousands of Canadians, just like you, get back on the path to financial freedom.
Would a few hours of your time be worth changing your life?
In the Kitchener/Waterloo area, contact your local 4 Pillars Debt Relief Specialist
Scott Patton
675 Queen Street South, Suite #244
Kitchener, Ontario, N2M 1A1
519-502-9227
scottp@4pillars.ca
