January Debt Index Update (MNP 3 Minute Debt Break)

As pandemic-related economic pain and wage losses continue, there are signs 2020’s financial stressors will likely continue into 2021. Now in its fifteenth wave, the MNP Consumer Debt Index has dropped to 89 points, the lowest point since it was introduced in June 2017.

Conducted quarterly by Ipsos on behalf of MNP Limited, the Index tracks Canadians’ attitudes about their debt and ability to meet their monthly payment obligations.

Four in 10 Canadians say they are not confident they can cover their living expenses for the next year without going further into debt, a four-point increase from September. Around the same number feel concerned about their current level of debt or regret the amount of debt they have taken on.

Fewer than three in 10 Canadians are confident in their ability to cope with life-changing events without increasing their debt burden. Similarly, just one in four feel confident in their ability to cope with loss of employment or a change in wage or seasonal work.

Unexpected crises are one of the greatest cause of serious financial trouble. One unforeseen event is often enough to send people into a tailspin. Yet the pandemic set multiple life-changing financial disturbances into motion for thousands of Canadians — many of which they either didn’t or couldn’t have prepared for. For already indebted households, any reduction in income or unexpected increases in expenses can have a snowball effect as many take on even more credit just to stay afloat.

The survey found nearly three in 10 Canadians have taken on more debt as a direct result of the pandemic. This includes using credit cards or lines of credit to pay off bills, borrowing money from friends or family, taking out a bank loan or using a payday loan.

The survey highlighted the risks of heavy reliance on credit: almost half of Canadians are afraid they could end up in financial trouble when interest rates begin to reverse course. Accumulating personal debt is also keeping some up at night, with one in four indicating debt worries are interfering with their sleep, up 3 points since June. The story is similar for those worrying how they’ll pay their bills or afford essentials for their family.

But, everyone’s debt situation is different. It’s important to not just rely on what people have told you or what you’ve read online. Get professional, unbiased advice. MNP LTD offers free consultations via videoconferencing and by phone. Visit MNPdebt.ca to book an appointment or to start a live chat.

Subscribe to MNP 3 Minute Debt Break on your favourite streaming service.