SASKATOON – The impact of low oil prices is affecting people’s finances in Saskatchewan. New figures from credit reporting agency Equifax shows more people in Saskatchewan and Alberta are defaulting on their debts.
The rate is now 1.6 per cent, and it has been rising for more than a year. The average household debt is $23,347.
A recent Ipsos-Reid poll indicated, among all the provinces, people in Saskatchewan and Manitoba are most likely to have increased their debt. It also showed they are less likely to budget and more likely to have increased their summer spending.
The downturn goes beyond the hundreds of layoffs that have already happened in the oil sector. With less disposable income on the market, retail is now feeling the pinch.
The latest Statistics Canada figures show retail sales in Saskatchewan decreased 0.3 per cent in July, down for the third consecutive month. The opposite is true in many other parts of the country, where retail sales showed positive gains.
Some economists say this change will affect the most vulnerable first.
“So you can imagine a number of low income people that are going paycheque to paycheque, they are carrying some debt, they’re able to service that debt, but then if they lose their job now they’re in trouble,” said Joel Bruneau, an economist at the University of Saskatchewan.
Experts say it’s not surprising. With big salaries come big purchases. Car loans, for example, have increased 3.9 per cent from last year.
Certified financial planner Janea Dieno says the mindset of big spending can get consumers in a lot of trouble.
“I find what a lot of people do is they spend and spend and spend and at the end of the day they go back and go, ‘Oh I still have the mortgage and the car and the boat, and the credit card payment to pay off’,” said Dieno.
She advises clients to pay themselves first before spending on lifestyle items.