The latest MNP Consumer Debt Index conducted by Ipsos suggests a growing number of Manitobans are $200 or less away from financial insolvency at the end of each month.
The results of Ipsos research released on Jan. 21 showed the number of residents in Manitoba and Saskatchewan struggling to meet their monthly financial obligations jumped from 42 to 56 per cent or 14 points since September of 2018. Residents in these provinces are closer to financial insolvency than residents living in any other Canadian province, the study suggests.
About one-third (36 per cent) of the region’s households reported that they don’t make enough money to cover their bills and debt payments. This represents a seven per cent increase in this category over the same period.
“The research shows us that many just don’t have enough wiggle room in their budget to make ends meet, not to mention deal with their underlying indebtedness,” Gord Neudorf, a licensed insolvency trustee with MNP based in Winnipeg, said in a press release on the study.
“When you combine higher interest rates with household expenses that outweigh income, it makes it very difficult to reduce debts. In fact, many end up taking on more debt, especially if they encounter unexpected expenses.”
About half (47 per cent) of the residents of the two Prairie provinces said they would be unable to cover living and family expenses through 2019 without incurring more debt. Less than a third said they were confident in their ability to effectively survive financially should they experience a life-changing situation.
About 51 per cent suggested the effects of interest rate increases were financially detrimental to their household and about 40 per cent said they were concerned about their current debt levels and regret taking on the amount of debt they have incurred.
“Often, the cause of trouble appears to be debt accumulated over the long term,” said Neudorf. “In some cases, it’s been acquired over many years. They may have managed to pay the monthly interest until now, but they just can’t carry it any longer at higher interest rates.”
Half of the studies respondents said if rates continue to increase, they are worried about their ability to repay their debts, an increase of nine per cent since September. About 35 per cent said rising interest rates could lead them to claim bankruptcy.
“Financial stability is possible to regain, even for those who are severely in debt,” Neudorf noted, suggesting that help from a licensed professional would help educate residents about financial literacy and awareness.
The report also suggested that more Canadians across the country – except Atlantic Canadians – are $200 or less from financial insolvency; less than 40 per cent of Canadians are confident in their ability to financially survive a life-changing incident; 36 per cent expect their debt situation to improve while about 47 per cent indicate that their debt situation will improve in the next five years; fewer Canadians believe they can absorb an interest rate increase of one percentage point; and one-third of Canadians say they are concerned someone in their household or themselves will become unemployed.
The MNP Consumer Debt Index measures Canadian attitudes about consumer debt and gauges the ability of Canadians to pay bills, survive unexpected expenses, follow a budget and absorb interest-rate fluctuations without approaching insolvency.
– With notes from MNP Consumer Debt Index.