Manitoba Residents Show Optimism Despite Persistent Debt Struggles

A recent Ipsos poll conducted by MNP LTD. finds Manitoba residents are finding it difficult to make ends meet – especially when compared to other provinces. One third (33%) of Manitoba debt holders say they have absolutely no wiggle room at the end of the month. And nearly half (48%) admit they’re $200 or less from financial insolvency. Even with a four point drop over the previous quarter, Manitoba residents are among the most likely in Canada to be near bankruptcy.

Paradoxically, they’ve also become slightly more favourable about their ability to tolerate a potential interest rate hike. When asked whether they could afford increased monthly debt costs of either 1% or $100, a quarter of Manitoba residents say they’re in a favourable position (24%) – a 2% increase. The number who worry an interest rate increase could push them toward bankruptcy has also dropped by 10 percent to slightly more than one in four (27%). And three percent fewer worry subsequent increases might place them in financial jeopardy (39%).

The figures appear to tell two different stories, perhaps best summed by the following juxtaposition: One percent more Manitoba residents believe they can afford all living and family expenses over the next year without relying on debt (51%). Yet three percent fewer people (17%) say their debt is better now than it was a year ago.

A Stats Canada report released in June noted the household debt ratio experienced the largest drop on record in the first four months of 2018. However, many suggest new mortgage rules and higher interest rates should take the credit. So, what’s driving the optimism at the consumer level?

Ultimately, it seems there’s a disconnect between the steps people are taking to reduce their debt and the results those initiatives are producing.

The survey reveals Manitoba residents are taking meaningful steps to get out of debt. Two in five (61%) have reduced variable expenses (e.g. entertainment, dining out, etc.). More than two in five (44%) have committed to a regular budget and a quarter (26%) have cut back on fixed expenses such as housing costs and car payments. Nearly one in three (30%) have sold items while 13% have taken on additional employment.

However, only 7% have reached out for professional help. That people are making necessary changes to their spending habits is encouraging. But incremental changes may not be enough to help those who are struggling the most. The sooner these people speak with someone, the sooner they can have peace of mind and the sooner they can get the financial fresh start they need.

Other poll highlights include:

• Four in ten Canadians (41%) rate their debt situation as excellent, up 5 points since March.
• Regionally, British Columbians (47%) are most likely to rate their personal debt situation as excellent, followed by Atlantic Canada (46%), Quebec (44%), Ontario (41%), Alberta (36%), and Saskatchewan and Manitoba (30%). There is also a generational divide, as Boomers (49%) are more likely to rate their debt situation as excellent compared to 37% of Millennials and Gen X’ers.
• Fewer Canadians say they are already beginning to feel the effects of interest rate increases (38%, down 5 points), while more now say they have a solid understanding of how interest rate increases impact their financial situation (78%, up 4 points). Less than half of Canadians (47%, up 1 point) express concern toward the impacts rising interest rates could have on their financial situation.
• While concern over interest rates have softened, a majority (77%) continue to brace themselves for the possibility of an increase and agree that they will be more careful with how they spend their money.
• Overall concern about rising interest rates have decreased since March, with fewer Canadians concerned about moving towards bankruptcy (28%, down 5 points), repaying their debts (49%, down 2 points), and being put into financial trouble (42%, down 2 points) if interest rates rise.
• Overall, Canadians are gaining confidence in their ability to cope with unexpected life changes without taking on more debt. That includes: being able to cope with an unexpected auto repair or purchase (35%, up 7 points), a change in relationship status (36%, up 4 points), and paying for their own or someone else’s education (28%, up 4 points).
• Looking to the future, Canadians are far more optimistic: one year from now, 38 per cent of Canadians expect their debt situation to be better, while nine per cent expect it to be worse, giving a net 29 per cent score, the highest since tracking began. Five years from now, half (50%) of Canadians think their personal debt situation will be better and only eight per cent think it will be worse. The net score has increased 5 points since March (37% to 42%) and 4 points since December (38% to 42%), also the highest since tracking began.
• Though things may be looking up for some, half (50%) of Canadians are not confident that they will not have any debt in retirement.

About MNP Debt

MNP LTD, a division of MNP LLP, is the largest personal 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 Canadian offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit www.MNPdebt.ca to contact a Licensed Insolvency Trustee or get a free checkup for your debt health using the MNP Debt Scale.

About the MNP Consumer Debt Index

The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, follow a budget, 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 www.MNPdebt.ca/CDI to learn more. The latest Index data was compiled by Ipsos on behalf of MNP LTD between June 15 and June 19, 2018. For this survey, a sample of 2,001 Canadians from the Ipsos I-Say panel was interviewed online. 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. Credibility intervals are wider among subsets of the population. This represents the fifth wave of the MNP Consumer Debt Index.