Albertans Increasingly Pessimistic About Their Consumer Debt In The New Year

Albertans’ net confidence in their financial futures a year down the road dropped 12 points since September.

Calgary, AB –January 20, 2020 – More Albertans see grey skies on the horizon heading into the new year and beyond as fewer expect their debt situation to improve, according to the latest MNP Consumer Debt Index conducted quarterly by Ipsos. Net confidence in their financial futures a year down the road dropped 12 points since September, the largest decrease compared to the other provinces. When comparing their current debt situation to five years in the future, net confidence also dropped — once again the largest decrease. 

View of Calgary skyline at sunset

“Albertans are increasingly pessimistic about their personal finances,” says Donna Carson, a Calgary-based Licensed Insolvency Trustee with MNP LTD. “A sense of debt hopelessness can set in — particularly for those who may have lost income — which can lead to individuals giving up on ever paying down their debt; or worse, ignoring the debt as it piles up higher. The good news is, the research shows growing optimism for the future.”

In light of economic uncertainty in the province, Albertans feel worse off now compared to the past. Net optimism for both one- and five-year timeframes have declined by two and five points respectively since September. Compared to other provinces, Albertans are the most likely (28%, +5%) to say their debt situation is worse than it was five years ago.

“The biggest mistake is allowing debt problems to snowball. It is very devastating when someone comes to the startling realization they are unable to pay back what is owed regardless of time or interest rates,” says Carson.

Nearly 3 in 10 (28%, -6%) Albertans say they are already insolvent, meaning they cannot meet all their monthly financial obligations. This proportion rises to 47 percent (-2%) when also including those who say they are $200 or less away from being insolvent at month end. Half (48%, unchanged) aren’t confident they will be able to cover their family and living expenses this year without going into further debt.

“We see people who are trying to make ends meet using credit — and that is a cause for concern,” Carson says. “If you are using any kind of credit to pay for basic living expenses, you should sit down with a licensed professional. They can review your finances, help create a budget and ensure you have a plan in case any unexpected expenses present themselves.”

Although many are still struggling to pay their bills each month, the index shows Albertans are less uneasy when it comes to being prepared for the unexpected. While only a third (36%) are confident in their ability to cope with a life-changing event such as a serious illness (+7%), loss of employment or change in wage or seasonal work (+9%) without increasing their debt load, those numbers are on the rise since September.

“Besides paying off creditors, changing your mindset and behaviours is key to breaking the debt cycle. That can include saving for rainy-day expenses to ensure you don’t fall back into financial trouble in the future,” says Carson.

While it seems more Albertans are starting to seek professional help with their debt, one of the biggest behavioural changes still required among those who are severely indebted is shucking the tendency to isolate rather than reach out for guidance. 

“Too often, by the time clients show up at our offices, they have been needlessly struggling with their debt for years without any help,” she explains. “There is no minimum amount of debt required to seek professional help. If you are feeling stress as a result of your debts — or your debts are impacting relationships — now is the time to get support.”

MNP Ltd. offers Free Confidential Consultations and their team of Licensed Insolvency Trustees are empowered to help those struggling financially to make the most informed choices to deal with their debt. Licensed Insolvency Trustees are the only federally regulated professionals who can provide regulated insolvency options, such as a Consumer Proposals and Bankruptcies.

About MNP LTD

MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working with individuals to help them recover from times of financial distress and regain control of their finances. With more than 230 offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do it Yourself (DIY) debt assessment tools.  

About the MNP Consumer Debt Index

The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay bills, endure unexpected expenses and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians. Visit MNPdebt.ca/CDI to learn more.

The latest data, representing the eleventh wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between December 4 and December 9, 2019. For this survey, a sample of 2,000 Canadians aged 18 years and over was interviewed. The precision of online polls is measured using a credibility interval. In this case, the results are accurate to within +2.5 percentage points, 19 times out of 20, of what the results would have been had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error — including, but not limited to, coverage error and measurement error.

A summary of the national data is available by request.