A report from a financial group said one in five Saskatchewan and Manitoba residents had to take money out of savings accounts to pay debt and daily expenses in 2023.
The MNP consumer debt index said 60 per cent of residents across the two provinces are concerned about inflation rates and getting a handle on their debt.
The group also said 29 per cent of residents across the two provinces are choosing to only make minimum payments on credit cards and 19 per cent are making minimum payments on lines of credit.
“Many households took steps to budget more carefully to adjust to higher interest rates over the past year, which may be why some are feeling better equipped to handle an interest rate increase. However, not everyone has been able to fortify their budgets,” said Pamela Meger with MNP LTD in Regina.
“With the cost of living on the rise, households that were already stretched thin may find themselves accumulating more debt just to cover basic expenses. This pattern often leads to further challenges, trying to solve one problem by creating another.”
Nearly half of residents said they regret the amount of debt they have taken on in life and three in five are concerned about the ability to eventually repay their debts.
“Credit has been a lifeline for many Saskatchewan and Manitoba residents grappling with rising expenses. The data shows that the weight of repaying this debt is compounding the financial pressure on many households, especially amid higher interest rates,” Meger said. “Many households took steps to budget more carefully to adjust to higher interest rates over the past year, which may be why some are feeling better equipped to handle an interest rate increase. However, not everyone has been able to fortify their budgets.”
MNP said it found that residents’ financial situations are taking a toll on mental health, causing anxiety in 61 per cent of residents. Fifty-nine per cent said they were experiencing stress, 49 per cent felt isolated and 39 per cent shared feelings of embarrassment as a result of their situation.
Meger said that at a certain point, some individuals realize there is no clear path to repaying what they owe regardless of interest rates or timelines.
“Financial stability and preparedness significantly contribute to a person’s overall well-being. Individuals experiencing financial distress should seek help, the same way someone facing a health crisis would seek help,” Meger said.
She said the shame and guilt associated with unmanageable debt often cause people to delay getting help and many draw out the situation using credit to stay afloat.
“Sometimes it takes years or even decades for an individual to reach out and seek help. While some may need to consider steps like a consumer proposal or bankruptcy, others may simply require guidance to help them create a budget and a plan to address their debt. Everyone’s circumstances are unique, so it is important to get tailored, unbiased advice from a licensed professional.”