April 8, 2014

By Margaret H Johnson

The criticism is back. Yes, in the Vancouver Sun today, a personal finance article quotes Equifax as suggesting, “Consumers are reining in spending while experts say signs of indulgence remain evident.”

Now that is somewhat confusing. The unadjusted consumer credit (debt) figures excluding mortgages have consistently gone up like, forever. Since 1975 up from $20 billion to the present level of almost $520 billion as reported by the Bank of Canada in March 2014. Or, if you want something a bit more current, the outstanding consumer debt rose from $509 billion in January 2013 to the $520 billion level today. Statistically, this seems to contradict what Equifax has reported and agree with the other experts.

The word indulgence bothers me a bit because it implies that debtors/consumers are doing something wrong. A little further into the article Barbara Yaffe asks, “Are Vancouverites, Canada’s most indebted consumers, finally getting a handle on their debts or continuing to spend cash they don’t have?”

This leaves no doubt. Are people getting smarter, getting control of their debts?  - or - are they continuing to overspend?

So, in the course of two sentences, the reader is perplexed. What’s going on? Everybody wants to know who to blame. The over spenders or who, who, who?

This is, ladies and gentlemen, the conventional wisdom that gets reported in the media about credit and debt. We don’t hear about who exactly owes the $520 billion, just conflicting reports about good and bad that lack any substance. There is no, “Who, why, what, where, how, when,” to any of these stories. Just vague mysterious references to abstract Canadians who are this or that – or, another example, Vancouverites are the most indebted in Canada. Who are these debt-ridden demons? What occupation groups, what income levels, where do they live? Do the own real estate? Are they married or single? How many children? Are there any seniors?

It doesn’t take much to puncture the bubble of superficiality. These kinds of stories paint a picture of out of control spenders – bad debtors – who are driving the country down into serious trouble by spending money they don’t have. And that’s it. No details, no financial profiles, no demographics.

Many readers are in a hurry. Many don’t want too many details. They see the heading, read the unjustified theoretical assertions and move on to the next story. Some agree. Some disagree. Most will nod their heads and say, “Oh, is that right?” Nothing further is asked or given.

Unless of course, you drag around a piece of that $520 billion bundle of debt yourself. If you do, you might feel ashamed you’re in debt, but like so many others, you’re trapped. The interest rates on the existing debt and ever increasing family expenses and taxes go up while middle and lower incomes fall significantly behind. Most people I have counselled are not stupid or bad people. I’ve seen all walks of life and most income groups. Yes, overindulgence comes up from time to time, but this is not the main problem. This is not the cause of the $520 billion debt that most individuals and families owe a chunk of.

Most people are honest but struggle over a long period of time to meet the basic costs of housing, raising children, education, day care, transportation costs that often include toll bridges and additional parking fees at skytrain stations, and so on.

Marital breakdown is often both an outcome of a long battle with money issues and a cause of insurmountable debt problems.

Illness – both physical and mental – are high on the list of causes of debt and debt problems.

Unemployment and underemployment are significant causes of debt problems, too.

Gambling in its many socially acceptable manifestations - casinos, bars, lottery tickets, electronic gaming, sports events, race tracks, political elections, cards, and on and on – leave a trail of unpaid debt and struggling debtors.

What we need to do with the abstract portrait of debt and debtors sketched by those in the media is get more personal, more detailed, more focused on what is really happening to individuals and families, and what they realistically need to resolve their financial problems.

Consumer credit is an extension of other areas of life. Debt doesn’t just appear the next morning like a festering pimple. Rather, consumer credit is a product of the 20th century and in many respects, is a symbol of the computer age as the universal credit card has transformed both society and commerce. The credit card is part of our identity. It is a passport to the marketplace.

However, the generation of consumer credit beginning in the 1970s has allowed us to postpone the realities of income shortages into the future. We have been borrowing from Peter to pay Paul for so long we consider Peter and Paul to be permanent parts of our strategic financial plans – and we’ve been spending far too much time with Peter and avoiding Paul.  

Yes, the devil is in the details. But also we find the truth. This is what is needed the most to find realistic and affordable solutions.

Remember, if you are experiencing financial difficulties do not wait. Call Solutions Credit Counselling at 1(877)588-9491 or fill out our Debt Consolidation Questionnaire and get your Free Credit Counselling Advice today.

For more information visit Debt Canada - your Canadian credit education centre.

If you are a woman in debt, speak with Women and Money first. We specialize in helping women with their personal and business financeMoney management advice you can count on!


We have created this website for public use. Every reasonable effort has been made to ensure that the information presented is current and accurate. However, users of this website should verify information before making decisions. We do not provide legal advice, and the information provided on or through this website should not be seen as such. If you have a legal problem, we encourage you to contact a Lawyer in your community for assistance.