We Ain’t Afraid of no Debt!

A new study conducted for the Royal Bank of Canada shows that Canadians are no longer afraid of the word ‘debt.’ Is this because, on average per person, we’re starting to lower our debt? Unfortunately, it’s nothing quite that optimistic. And it’s not because as a country we’re starting to become more determined about paying off our debt, either. The fact that we’re no longer afraid of the word simply means that we’re getting used to it. But, is that such a good thing?
The study showed that of the people surveyed, 58% of them said that their current debt situation did not concern them at all. And in fact, that they were perfectly happy with it. Emily Reid, a financial counsellor based out of Montreal, said that the reason is not because the majority of people have worked, or are working, their way out of debt; but because people today think that debt is the norm. Unlike decades ago, when being in debt meant that you had absolutely nothing, it has a different meaning today. Today, in order for anyone lead a life that is neither luxurious or destitute, they most likely have to go into debt to do it. You need a car to go to work and get around, so you get a car loan. You need a place to live, so you get a home loan. Maybe you eventually want to make improvements on that home, and so you get a home equity line of credit. All of these are forms of debt, and they’re debt that people take on every day.
Not only has going into debt almost become a necessity for today’s living but because of that, consumers are more lenient at the thought of going into debt themselves. When applying for a mortgage, most individuals think about what they need and if they’ll be accepted; giving little thought to the actual debt they’re going into. The same goes for a home equity line of credit. While consumers will of course take into consideration the monthly payments and what they can afford, the thought that they’ll actually be in debt, is far less alarming than it once was.
So, should we be concerned over our lack of concern?
Well, while it’s not great that we’re becoming accustomed to being in debt, it really is a norm that we must come to terms with today. And most of the debt covered in the study focused on mortgages and home lines of credit, two types of debt considered to be “good debt.” So maybe that’s reason enough in itself to not feel so threatened by it. And, there really is no reason for Canadians to be scared off by their debt. After all, we are starting to lower our debt and, as long as we continue to be vigilant about paying it off, the debt we are taking on isn’t likely to get us into too much trouble. So what’s to be scared about?