The barista swipes the credit card, then hands it back, saying, “Sorry, your card was declined.” The customer mumbles about this being some kind of mistake, searches through her purse for spare change or another card, blushes and eventually leaves, minus the java, promising to return later.
This is an embarrassing exchange many of us have experienced. It is a moment likely repeated at the cash register in businesses across Squamish and the country during this month of Christmas-spending reckoning by people of all sorts.
It is a fact: Canadians have a problem with household debt.
Nationally, credit debt sits at $572.3 billion – yes billion, not million – while mortgage debt accounts for $1,234 billion, according to Statistics Canada figures released last month.
Leverage, which means household debt measured against disposable income, rose to 163.7 per cent in the third quarter of 2015, up from 162.7 per cent in the second quarter of the year. Put another way, Canadians have $1.64 of debt for every dollar of disposable income.
In 1980, the ratio of household debt to disposable income was 66 per cent. The ratio passed 150 per cent in 2011.
In day-to-day terms, this debt leaves many of us feeling stressed, wondering if our credit cards will work or if we should call and ask for an extension, again.
A Finnish review released in 2014 found serious health consequences from debt stress. Individuals with overdue loan payments had suicidal thoughts and suffered from depression more often than those without such problems, the review found.
Recommending spending less is too simplistic a solution. With housing costs outpacing wage increases, many of us are running faster just to stand still. According to the non-profit Canadian Credit Counseling Society, housing costs should total no more than 35 per cent of a family’s income. For our family, rent consumes my entire month’s salary and then some. That doesn’t leave much for us to penny pinch. There is help. There’s free advice from the society, debt consolidation and making arrangements with creditors.
Most of all, there should be more honest talk about the amount of debt we are all carrying. At least then, we won’t all feel alone as we search through our purses for those loose coins for coffee.
