Personal debt anxiety is up, debt literacy lags and financial preparedness is fragile.
It's not a good look for British Columbians, many of whom have backed themselves into a personal debt corner.
A survey conducted by Ipsos for MNP accountants, consultants and licensed insolvency trustees shows that 48% of British Columbians are concerned about their current level of debt and 49% regret the amount of debt they have taken on over their lifetime.
49% of British Columbians believe they will be carrying debt with them into retirement -- the time when they are supposed to be financially free and secure.
.jpg)
There's good debt and bad debt.
Good debt is generally considered an amount you can handle and that enhances your life and financial goals.
For instance, a mortgage with a reasonable interest rate is good debt because it pays for your shelter and will eventually lead to complete home ownership one day.
Bad debt is the high interest rate credit card you used to rack up impulse purchases and now can hardly handle the minimum monthly payments.
The survey really does show how debt is a cumulative problem of sudden and repeated financial shocks and not completely understanding how interest on debt creates a monster.
First, the financial shocks.
A whole array of life crises forces people into debt, ranging from job loss, the death of an immediate family member, or illness preventing work for at least three months to unexpected auto repairs, vehicle purchases, increased education costs, or divorce or separation.
.jpg)
"Financial strain can escalate quickly when circumstances change suddenly, particularly for households already relying on credit to manage regular expenses," explained Linda Paul, a licensed insolvency trustee with MNP in British Columbia.
"We frequently see relationship breakdowns and disruptions to income, including job loss, as key contributors to debt situations becoming overwhelming."
In a pitch for her profession and to help people, Paul recommends those who find themselves in trouble reach out early to a licensed insolvency trustee for clarity and guidance.
"Make informed decisions before the pressure intensifies," she said.
Now, the sneaky interest demon.
British Columbians often misunderstand so-called 'debt blind spots' and interest piling up, which can lead to devastating results.
"Tracking (debt) balances alone does not tell the full story," said Paul.
"Understanding how interest accumulates over time, how rate changes affect household budgets and how to prepare for financial disruption is especially important in periods of economic uncertainty. Interest builds over time, often in ways that are not immediately obvious. Balances may grow faster than expected, minimum payments can stretch repayment over many years and people may delay seeking debt help until their situation becomes more challenging. Because compounding continues in the background, debt can remain for many years and, in some cases, decades, costing far more than initially anticipated."
Paul has a nine-point plan that can help people avoid, manage and get out of debt.
1. Calculate the true cost of your debt, not just the balance
2. Stop relying on minimum payments as a strategy
3. Build a financial buffer of one month of essential expenses
4. Review your repayment timelines, interest rate types and exposure
5. Use free assessment tools to understand your situatino
6. Assess the need, risk and reality before you take on any debt
7. Create a 'what if' list of what you'll do in case of job loss, illness or major unexpected expense
8. Seek help from a licensed insolvency trustee
9. Do not wait until the situation feels urgent to access a free consultation with MNP
