Maybe it was hearing that for the first time since the recession hit, our household debt levels surpassed those of the United States. Or maybe it’s the fact that 2012 is looming ever-closer, and that means that the time is running out on Mark Carney’s promise to keep interest rates low for the remainder of the year. Maybe, just maybe though, Canadians are starting to smarten up and realize that it’s time to do something about our debt. Because finally, we are!
The fact that we’re finally doing something about our debt probably comes after Canadians found out that in the third quarter, we held record debt levels of 152.9% of disposable income. This caused serious concern for the BoC and many other financial experts, and once again we were called to take action against our debt. And what a good time for that call to action it was! Canadians are recommended to not allow their debt levels to surpass 40% of their income, as after this time it’s found that most people start defaulting on their debts. With levels almost 4 times that much, we do have debt problems indeed, and unlike in just September of this year, it looks like we’re starting to take them seriously.
After a poll taken by RBC was released in September, it was found that 58% of Canadians were not worried about their debt (this poll looked at only after-mortgage debt while this new study encompasses all forms of debt including 2nd mortgages and HELOCs.) But how far we’ve come in just a few months. Not only have we realized that this amount of debt is dangerous, but now we’re actually starting to do something about it!
According to a more recent report, this one done by TD Canada Trust, Canadians will sock away more for a rainy day in 2012 than we did in 2011. While this past year, the report shows that 53% of us put away the recommended 10% of our paycheque into savings, next year 7% more will join in, raising that number to 60% of Canadians that are going to start saving. And when we save, we generally have more money and therefore, we generally pay off our debt. But it’s not just wishful thinking that all, or at least a good portion, of those savings will go towards paying off debt; yet one more survey, this one done by Leger Marketing, shows that we are actively trying to pay off our debt.
That survey was done very recently, and it asked Canadians what they were going to do with their Christmas bonuses, given to them by their employers. While one’s first thought would be to splurge on all those goodies we’ve been eyeing while out shopping for others, only 17% of respondents said that they’d be using the money to buy a gift for themselves, while another small 15% said that they would be using the money for a vacation. The majority of Canadians questioned though, said that they’d be using that money to pay off their debt – 53% to be exact.
Some, who aren’t feeling so positive about the change in debt levels, say that the only reason Canadians are planning on saving more, spending less, and paying down debt next year is because it’s the first year after the recession that we’ll actually have more money to put away. That may be true, but isn’t that still a very, very good thing? “
