Pattie Lovett-Reid

Chief Financial Commentator, CTV

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This is one of the scariest financial disconnects I've witnessed lately. 

The pandemic has had a grave impact on the lives of Canadians. According to the latest MNP Consumer Debt Index released Monday, pandemic-related economic pain and wage loss continues and the stressors that impacted so many in 2020 will likely continue into 2021.

Canadians are clearly worried about their debt situation and their ability to meet their monthly payment obligations. The index hit a record – in fact the lowest level registered going back to 2017 --- all fuelled by Canadians’ perceptions of their personal finances and their concerns about weathering unexpected financial setbacks without taking on more debt. 

Here are the numbers:

• The latest MNP Consumer Debt Index – which measures attitudes about debt and Canadians’ ability to pay their bills – dropped five points to 89 points from September
• Four in 10 poll respondents said they are not confident they can cover living expenses this year without going into further debt.
• Four in 10 are worried about their current debt levels
• 29 per cent are confident in their ability to weather unexpected expenses without taking on more debt

The poll of 2,000 Canadians aged 18 years and over was compiled by Ipsos on behalf of insolvency firm MNP Ltd. between Dec. 1 to 3 last month.

During the past year, debt levels have continued to mount and job losses related to the pandemic have forced some to live beyond their means. For many who were living close to the margin this unexpected crisis has crushed them financially. It is a snowball effect. You are already in debt and have to take on more debt to try and stay afloat. 

Sadly, it rarely ends well. 

I feel sick for those who have always tried to do the right thing and have struggled to get by, and now have been slammed financially. In many cases they have strong work ethics and have tried to build a business. I know because I've met them, chatted with them and tried to help them get on the right track financially.  The first lockdown was hard, the second has been devastating. 

But here is the disconnect that astounds me.​ 

With interest rates low, MNP’s survey also found that six in 10 respondents feel now is a good time to buy things that they otherwise might not be able to afford. Nearly half (47 per cent) said that with current interest rates so low, they're more relaxed about carrying debt than they usually are. 

This is outrageous. For some, low interest rates are actually providing a comfort that isn't warranted. 

You can't help someone who doesn't even recognize they need the help. I hope there is a financial awakening for these Canadians before it is too late. 

Financial preparedness isn't a luxury. It is an essential – an essential far more important then spending money on things you can't afford. 

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