Your debt won't disappear

When it comes to their finances, it appears some Canadians are simply giving up and waiting for a miracle.

Credit Canada commissioned a recent Angus Reid study that found more than one in five Canadians said they “expect their personal debts to disappear or be forgiven.”

This finding was nothing short of shocking to me and I hope to all of you reading it as well.

This shocking statistic is coming from the same county’s citizens that have been spending themselves into oblivion since the 2009 financial crisis.

Countless people are living beyond their means and the number buying houses that they can’t afford seems to increase every year.

Who exactly do people think will pay their debts off for them?

For most, it seems that they expect the government to be the one that will bail them out. Unfortunately, and I know this is hard for some to grasp, the government doesn’t actually produce revenue like a company does.

Any “revenue” the government brings in comes from taxes – something that becomes harder to take from people who are broke.

Just how bad are Canadian’s finances right now?

Another study released by FP Canada last week (in conjunction with Financial Planning Week) found that 40% of Canadians say their bank account can’t withstand any kind of financial emergency – climbing steeply from 30% two years ago. Among Canadians aged 45-54, the number is even higher at 53%. 

So why are people giving up?

This kind of attitude does make sense to some degree given the ongoing pandemic. A normal economic crisis is typically short-lived but COVID appears to have no end in sight even though we’re getting close to the one-year mark already.

It’s a somewhat natural by-product of the “COVID fatigue” that many are feeling. 

But just because it makes sense to feel this way doesn’t mean you should go along with it. Sure, you could continue to ignore your debt until it is eventually “forgiven.” But understand that the forgiveness won’t come from a government-led bailout but instead from bankruptcy.

The consequences of defaulting on your debt will haunt you for at least six or seven years and it will take a very long time to get things back on track with your retirement planning.

While this may be the best solution for some, it is most definitely not the path most others want to go down. 

Instead, try to take a hold of your finances now – to the best of your ability with your given situation. Understand that this pandemic will come to an end and life will return to normal. Take steps now to create a financial plan that includes debt management and budgeting steps to undertake.

No matter how bleak your situation may feel, it can only get better if you try to take control of it instead of giving up. If you need to, reach out for professional help!

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.