Nearly half of Canadians have debt repayment on the brain with 2020 fast approaching.
According to a New Year’s Resolution Personal Finance Survey from Willful, an online estate planning platform, 46% of Canadians have “pay off debt” on their New Year’s Resolution list.
Willful surveyed 1,507 online members of the Angus Reid forum across Canada over the span of two days in December, with the hope of finding out what financial New Year’s resolutions are top of the list for Canadians this year. Paying off debt was number one.
That goal could has the potential to attract some sneers, considering 2018 was the ninth consecutive year in which Canadians said in an annual CIBC poll that paying down debt was a top financial goal — even though that debt just keeps on growing.
Canadians’ consumer debt balances reached $1.85 trillion in the first quarter of this year, according to a May report from TransUnion. This is a 4.2% increase from the first quarter of 2018, the credit reporting agency said.
And with rising debt balances has come rising insolvency levels.
Just last week, we reported that personal insolvencies are at a 10-year high, according to the latest data from the Office of the Superintendent of Bankruptcy. In October, Canadians filed 13,200 bankruptcies and consumer proposals.
Insolvencies related to student debt, in particular, are also climbing. According to an annual bankruptcy study by Hoyes Michalos & Associates Inc., student debt contributed to almost 18% of insolvencies in Ontario last year.
The same firm has also released data that reveals millennials now make up 37% of personal insolvencies in Ontario.
All that said, Canadians are actually keeping up with paying their credit bills on time, according to a report from Fitch Ratings.
But a starker picture came into focus last month, when a Manulife Bank Debt survey revealed that 40% of Canadians don’t actually ever expect to escape debt. According to that survey, 60% of Canadians carry a credit card balance for non-mortgage related debt — a 12% increase from this spring.
Should those ambitious resolutioners actually achieve their goal of paying off debt in 2020, they’ll need to be mindful of how easy it can be to relapse.
We wrote about the dreaded debt relapse earlier this year, and some strategies on how to avoid it. They include first and foremost celebrating the achievement of being debt-free, making a new financial plan, and building an emergency fund or other form of savings to ensure you don’t fall back into debt when the unexpected hits.
According to Willful’s survey, 76% of Canadians have at least one personal finance resolution on their list; 30% are looking to create and stick to a budget; and 25% are committing to creating a will.