Nearly half of Albertans doubtful they can cover living expenses this year without going into further debt, highest level in three years

• Albertans are the most likely (35%) to say the pandemic has worsened their debt or created a larger burden for either themselves or their family (43%).
• A third (32%) of Alberta homeowners report being house poor.
• A quarter (25%) of Albertans report being insolvent, down six points since March.

CALGARY, AB –July 19, 2021 – The latest MNP Consumer Debt Index finds the number of Albertans who are concerned they can’t make ends meet without going further into debt has reached the highest level in three years. The quarterly poll conducted by Ipsos on behalf of MNP LTD finds almost half (45%, +5pts since March) are not confident they’ll be able to cover all living and family expenses in the next 12 months without spending on credit. In fact, Albertans are the most likely (54%, +4pts) among all provinces to say they are more concerned about their ability to repay their debts than they used to be.

Despite the concern, fewer Albertans (25%, -6pts) report being insolvent or unable to pay their monthly bills and debt obligations, and a third (33%) say they plan to spend more than they normal on things such as travel, dining, and entertainment as they re-engage with the economy.

“Many Albertans appear eager to return to shopping, restaurants and travelling as a way to celebrate the pandemic wind down,” says Donna Carson, a Licensed Insolvency Trustee with Alberta-based MNP LTD. “For others, the pandemic brought about financial damage that will likely linger for years — even as income returns — as they try to cope with new debts they’ve accumulated.”

She points to survey results showing Albertans are the most likely (35%) to feel the pandemic worsened their debt or created a larger debt burden for either themselves or their family (43%) compared to the other provinces. Part of the reason may be that more than half (55%, -9pts) say they’ve taken advantage of low interest rates during the pandemic to make purchases that wouldn’t normally fit within their budget.

While the majority (59%) report they reduced their spending during the pandemic, Albertans were the least likely to say they had done so compared to the other provinces. Carson also points out that of those who reduced their spending, its yet unclear how much was by choice and how much was by necessity.

As consumer spending flows back into previously closed sectors of the economy, Albertans are finding themselves with more money at month-end after paying their bills. Households report having more money left over than they did in March ($810, +$190), and four in 10 (42%, -1pts) say they’re more relaxed about carrying debt than usual. Yet, Albertans are by far the least likely (34%) to feel their debt situation is better now than it was before the pandemic started.

“Even those who didn’t lose a job due to COVID may have made cautionary adjustments to their household budgets or changed their spending habits. Still, there is evidence many have taken on debt as a result of the pandemic, or will need to in the months ahead” she says. “It is understandable many are seeking post-pandemic indulgences, but those who went into lockdown already deeply indebted and then experienced prolonged financial disruption are vulnerable right now. They should not rush to return to pre-pandemic spending habits,” says Carson.

With lingering pandemic-related uncertainty and the potential for interest rate increases in the future, four in 10 (45%, -2pts) are concerned they will be in financial trouble if interest rates go up much more. A third (35%, -5pts) would even go so far as to say they are concerned rising interest rates could drive them towards Bankruptcy.

“Those feeling overwhelmed by debt in the aftermath of the pandemic should seek professional advice as the first step to getting their finances back on track. As life slowly gets back to normal, some money management behaviours influenced during the pandemic can help Albertans positively reshape their financial futures. Spend less, save more, and make emergency funds a priority,” advises Carson. 

Homeowners with an outstanding mortgage may be at particular risk. A third (32%) of Albertans who own a home say they are house poor, meaning they don’t have much left over after paying bills related to their home. All told, approximately 750,000 Albertan homeowners are susceptible to financial disruptions such as an interest rate increase or change to their job situation. Perhaps it is therefore not surprising a quarter (26%) of Albertan homeowners say they regret the amount of debt they took on to buy their home.

“Everyone’s situation is different, which is why it is important to get customized, unbiased advice from a Licensed Insolvency Trustee. We are the only federally regulated debt professionals who can offer the full range of relief options, including Consumer Proposals and Bankruptcy,” adds Carson.

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 240 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. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3 Minute Debt Break Podcast.

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, 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.

Now in its seventeenth wave, the Index currently stands at 97 points, up one point compared to the last wave conducted in March 2021. Visit MNPdebt.ca/CDI to learn more.

The latest data, representing the seventeenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between June 14-17, 2021. For this survey, a sample of 2,002 Canadians aged 18 years and over was interviewed. Weighting was then employed to balance demographics to ensure that the sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, 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.