Digging A Grave: Canadian Household Debt Is “Debtly”
For the ninth consecutive year, paying down debt is at the top of Canadians annual to-do lists.
According to a poll released by CIBC, 26 percent of Canadians say paying down debt is their top personal finance priority for 2019. However, only 6 percent of respondents said saving for retirement is their top priority.
Canada’s combined household debt is over $2 trillion, roughly equal to our country’s entire economic output! Together, Canadian households and companies have added $1 trillion of debt since 2011, pushing the total to $4.4 trillion, which is over 200 percent of our gross domestic product. As far as debt-to-GDP goes, we’ve now surpassed other developed countries such as the U.S., the U.K., and South Korea.
A report from the Organization for Economic Co-operation and Development (OECD) shows that Canadian households are among the most indebted in the world. Approximately 70 percent of Canadian households have debt, with the average indebtedness at an incredible 170 percent of disposable income–in other words, meaning for every dollar households earn after taxes, Canadians owe $1.70. Roughly 10 percent of Canadian households have debt levels over 350 percent. 350 percent!
29 percent of Canadians said they took on more debt in the last year. Within that group, a whopping 34 percent said they had to borrow money just to cover their day-to-day bills. Between 1999 and 2016, money owed to Canadian lines of credit increased 400 percent, from $35 billion to $142 billion. During the same period, credit card debt and vehicle loans doubled. A report from the Canadian Centre for Policy Alternatives found household and corporate debt-to-GDP increased 20 percent between 2011 and 2016.
On an individual level, how can you cut down on debt? Check out our handy 2019 New Year’s Financial Resolutions for ways to better manage your finances and cut down on costs!
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