BC Facing Rising Household Debt

How are British Columbians dealing with the slowing economy? According to a study released by the Certified General Accountants Association of Canada, BC’ers are running up their debt, not adjusting their lifestyle.  With the slowing economy, household debt increased by $300 million in 2008, leaving Canada dealing with its highest household debt recorded.  In BC, 56% of people reported carrying a higher debt load, compared to 42% nationally.

What is causing BC’ers to carry more debt than their other Canadian counterparts?  The cost of real estate is partly to blame.  Real Estate in BC, specifically the Lower Mainland accounts for a higher percentage of household debt than in other parts of Canada.  Specifically, people carry bigger mortgages in BC than they do in other parts of Canada.

In addition to real estate, the lackadaisical attitude that people in the western world have developed in regards to household debt is a common contributor.  People are getting used to living day-to-day on borrowed funds; rather than living within their paycheck means. Rock Lefebvre, the vice-president of research and standards for CGA-Canada states, “There is no doubt that access to credit has been one of those very influential indicators. And the other thing that has changed a lot is people’s behaviour towards debt. There has been a big change in how people view debt, and how they view money.”

“What Canadians told us when we surveyed them is they are spending more on discretionary items, and that can range from plasma televisions to a coffee in their favourite coffee shop in the morning,” he said.

What is the moral of the story? Canadians in general, but specifically people in BC need to scale back their spending in the face of the slowing economy.  BC’ers need to be aware of where their income is and how to manage their lifestyle within their income limits, versus using credit to maintain their lifestyle.