Amount of money Albertans have left after monthly expenses reaches new low: survey

MNP survey says one-third of Albertans cannot cover monthly bills and debt payments

Alberta’s economic troubles played no favourites.

Insolvency trustee Donna Carson said the economic downturn did not spare any particular industry, income, age or wage bracket.

“I don’t think in Alberta it’s any one particular thing,” said Carson, an MNP Ltd. senior vice-president based in Calgary. “It’s just hitting everything and anything.”

For insolvency trustees, that means they are seeing more people looking for ways to dig themselves out of financial holes.

Some have turned to declaring bankruptcy.

“In Alberta, it’s higher than last year,” said Carson. “And last year was high.”

In the 12 months ending June 30, there were 5,415 consumer bankruptcies, up 7.9 per cent compared with the 12 months ending June 30, 2018.

The number of financial proposals from debtors climbed 14.3 per cent to 10,525 over the same period, according to statistics from the Office of the Superintendent of Bankruptcy Canada.

Other telling statistics come in the form of MNP’s most recent Consumer Debt Index survey, which was released Monday.

After paying all of their current bills and debt obligations, Albertans say that on average, they are left with $459 at the end of the month, a drop of $209 since June and the lowest level since tracking began in February 2016.

One-third say they don’t make enough money to cover bills and debt, and are getting deeper into the red.

Carson said being short of cash leaves people without any money to sock away for an emergency.

“It is often unexpected expenses that force people to take on more debt they can’t afford, and that begins a cycle of increasing servicing costs, and eventual default.”

Just under half — 48 per cent — of Albertans don’t think they will be able to cover all of their expenses for the next 12 months without going further into debt.

Seven in 10 Albertans said they are living so close to the financial edge, they are not confident they could cope with life-changing events, such as divorce, major car repairs, job loss or a death in the family.

Carson said the single biggest mistake people fretting about debt make is to take on more debt — often at increasingly higher interest rates as their credit ratings sink — to make ends meet.

Her advice: don’t reach for Band-Aid solutions, but look at finding ways to address one’s entire financial picture. Insolvency trustees make a living helping people develop a debt repayment strategy outside of bankruptcy which, in most cases, should be seen as a last resort.

While it’s been a tough few years for many Albertans, there are some bright spots. Consumer Debt Index numbers have been stabilizing for the last couple of quarters, said Carson.

And Albertans seem to be generally more positive about the future. One-quarter said their debt situation was better than a year ago, and four in 10 expect it to be better a year from now.

Carson said many of those who lost work are now finding new jobs, although often at lower pay or with fewer expenses covered by the employer. But at least they’re working.

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