Photo: iStock

An increasing number of Canadians are a mere $200 away from being unable to pay all their bills and debt obligations in a month and the picture is no less bleak in the Okanagan, a local insolvency trustee says.

An increasing number of Canadians are a mere $200 away from being unable to pay all their bills and debt obligations every month month and the picture is no less bleak in the Okanagan, a local insolvency trustee says.

Mike Wright, an Okanagan based insolvency expert, explained the MNP Consumer Debt Index is a gauge of how Canadians feel about their ability to pay down debt, and the report they issued Monday showed those polled were less than confident.

When asked how they felt their financial health landed on a scale of excellent to poor, the rating dropped 12 percentage points to just eight points in the most recent quarter. That figure normally floats in the mid-20s and has never been lower in the history of the MNP Debt Index, which launched in 2017.

The report also indicates fewer Canadians this quarter expect their debt situation to improve one year from now, while a growing number anticipate it will worsen. Half of Canadians believe they will not be able to cover all of their living and family expenses in the next 12 months without going further into debt.

Alongside this, job anxiety has reached an all-time high, with two in five worried someone in their household could lose their job.

The latter aspect is especially pronounced in the Okanagan. Wright said people are “close to the wire” as industries that once offered steady incomes struggle.

“The Okanagan has a lot of people working in some pretty volatile sectors— tourism, construction, resource based work—and we know that tourism, for example, has been hit pretty hard.”

Wright explained that the combination of weather events, COVID restrictions, and restrictions on short term rentals has left a lot of people reliant on that industry’s success in a tough spot.

Similarly, construction is pretty active these days but if tariffs come into play, even that industry could be in for a tough time.

Economic volatility isn’t entirely new but as debt loads rise, the risk of insolvency causes further issues.

“People don’t typically save enough money anymore— they’re not setting money aside for irregular expenses, things like back to school, shopping, Christmas and holidays, annual vacation, fixing vehicles, buying winter tires, those sort of things that we know are going to happen,” he said.

“We don't always know when or how much they're going to cost. And we’re not saving for emergencies that take time away from work because of illness or unexpected events.”

In general, he said, there’s a lot more motivation to use debt to pay for these eventualities and expenses and because of higher interest rates and higher inflation, people are closer to insolvency.

Wright, however, said that confidence can be rebuilt with some planning and the situation doesn’t have to be bleak.

“The sky is not falling… people do, to a certain extent, have the ability to influence their own destiny and their own fate,” he said.

“So I encourage people to plan as much as possible, because it allows them to do weather the tough times easier.”