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Albertans lead country in debt worries

More than half of Albertans are worried about how much debt they have

Albertans are more concerned than any other province about how much they owe, says the MNP Consumer Index.

Fifty-two per cent of Albertans — up 12 points from the previous quarter — say they are concerned about their debt level, according to the quarterly survey of 2,000 Canadians 18 and older conducted by Ipsos last month for MNP and released this week.

Nation-wide, 47 per cent of Canadians said they were worried about their debt, up seven points from the July-September quarter.

Overall, the index plummeted to 77 points — a drop of 15 points and an all-time low since the index was started more than five years ago.

While the index shows all Canadians worries about their debt loads are growing, Albertans appear to be particularly uneasy.

The percentage of Albertans most likely to say they regret the amount of debt they have taken leads the nation at 58 per cent. Two in three Albertans —67 per cent — say that if interest rates go higher they will be in financial trouble. That is up four points and again is the highest among the provinces.

“The significant change we are seeing in Albertans’ attitudes towards their debt situation is a reflection of the past year’s rapidly rising interest rates and stubborn inflation. In many ways, they are feeling the squeeze more than the other provinces,” said Donna Carson, a licensed insolvency trustee with MNP Ltd. who oversees Calgary and central Alberta.

“As inflation erodes household budgets and borrowing costs rise sharply, many financially fragile and over-leveraged Albertans are being hit by this double whammy.”

Albertans are most likely to say that clothing and household necessities are becoming less affordable, with a nation-leading 61 per cent feeling that, up five per cent from the previous quarter. Just under half — 49 per cent — feel that way about housing and 63 per cent say saving money is less affordable.

There was a slight improvement in attitudes towards transportation and food costs. Fifty-three per cent — down from 56 per cent — said transportation was less affordable and 55 per cent said that about feeding their family — down three points.

“Households that are already spending nearly all their income each month have very little wiggle room to accommodate an increase in expenses and debt carrying costs,” said Carson. “Albertans who are in this position and are struggling to maintain their standard of living often resort to taking on more debt to get by.”

To make ends meet , it appears Albertans are taking on more debt. Thirty-five per cent — up eight points from previous quarter — have paid only the minimum balance on their credit cards. One in four — 25 per cent — borrowed money they cannot pay back quickly, which is up nine points. Just under one in five — 19 per cent — plan to borrow from friends or family, also up nine per cent.

Twenty-four per cent will use savings to pay their bills and 14 per cent will use their credit cards. Four in 10 Albertans plan to buy less to make ends meet, which is actually down two per cent from the previous quarter.

“To try to stay afloat, more individuals are being forced to make difficult financial decisions and take on more debt. Those decisions can unfortunately have lasting financial impacts and push some into a debt spiral,” said Carson.

“These types of financial challenges often trigger stress and anxiety which can have a significant impact on the mental health of an individual.”

Two in five Albertans — 42 per cent — said they are $200 away from not being able to meet all of their debt obligations. Nearly three in 10 — 29 per cent — said they already don’t make enough money to cover their bills.

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