15 ms·

53% of Canadians on the Brink of Insolvency

66 points by adventured 6y ago

AzzieElbab 6y ago
"A new survey by MNP Ltd. has found that 53 per cent of respondents said they are $200" pretty sure the only number that is different from pre-pandemic statistics is $200, used to be $1000. People in Canada have really low net cashflows and believe in real estate as the only form of saving/investment. It is common for people to spend more than 50% of income on mortgages, even after government introduced benchmarking.
- icegreentea2 6y ago
  It was $200 and "about half" for a while. Ipsos does their polling for them... https://www.ipsos.com/en-ca/over-half-53-canadian-households-200-or-less-away-insolvency-yet-still-optimistic-about-financial https://www.ipsos.com/en-ca/over-half-53-canadian-households... (Earliest one I found so far, its 2016) https://www.ipsos.com/en-ca/news-polls/half-48-canadians-are-less-200-away-monthly-being-financially-insolvent https://www.ipsos.com/en-ca/news-polls/half-48-canadians-are... https://www.ipsos.com/en-ca/news-polls/Canadians-and-Bankruptcy-Oct-2019 https://www.ipsos.com/en-ca/news-polls/Canadians-and-Bankrup... https://www.ipsos.com/en-ca/news-polls/MNP-Debt-Index-Wave-8 https://www.ipsos.com/en-ca/news-polls/MNP-Debt-Index-Wave-8 https://www.ipsos.com/en-ca/news-polls/MNP-Debt-Index-Wave-7-Jan-21-2019 https://www.ipsos.com/en-ca/news-polls/MNP-Debt-Index-Wave-7...
  - AzzieElbab 6y ago
    is it safe to assume those articles are automatically generated every year? :)
    - kspacewalk2 6y ago
      I smell a startup idea.
- CarelessExpert 6y ago
  > People in Canada have really low net cashflows and believe in real estate as the only form of saving/investment. Do you by any chance happen to live in Vancouver or the GTA?
  - gscho 6y ago
    Thinking this way is not isolated to those locations. For example there has been a huge influx of people buying properties sight unseen and over-asking price in places like Nova Scotia. https://www.ctvnews.ca/business/where-in-canada-are-house-prices-increasing-the-most-maybe-not-where-you-think-1.5379679 https://www.ctvnews.ca/business/where-in-canada-are-house-pr...
    - CarelessExpert 6y ago
      It's still a dysfunction that's especially, uniquely acute in just a few geographic regions. Speaking for all Canadians, as though a massive country of 30M people is a monolith, is ridiculous. Every time I see a comment like the OPs above, it's inevitable that a) they're from Toronto or Vancouver, and b) they think their experiences represent those of the entire country.
  - AzzieElbab 6y ago
    both. do we have any other cities? :) Sorry, I passionately dislike Montreal and Alberta
    - CarelessExpert 6y ago
      Frankly, you should be sorry. Obviously everyone has their preferences for where they want to live. But there's no part of the country I "dislike"--let alone "passionately" so--and I'd hope and expect the rest of my fellow Canadians to be similarly generous and open-minded about the rest of their country and their countrymen. It's a shame you can't seem to find that in yourself, as every part of the country has something unique to offer, whether that's a small town in Saskatchewan or a massive suburb in Ontario.
    - 6y ago
corry 6y ago
While I don't doubt that Canadian debt levels are unsustainable, note this finding is from an insolvency firm and IMO should be taken with a huge grain of salt. http://www.paulgraham.com/submarine.html http://www.paulgraham.com/submarine.html
- VBprogrammer 6y ago
  Don't I know it. Even now I can see a headline and know it will have a quote from the founder of the company I used to work for without even opening the article. Most likely the whole article was written by their PR firm, maybe with a couple of stats dragged out of the DB to add authenticity.
- Sanzig 6y ago
  Indeed, MNP makes this proclamation about once per quarter. I don't doubt that Canadian consumer debt is at an all-time high, and I agree that's concerning. However, MNP's survey methodology makes the 52% number misleading: they basically ask a sample of the population if a $200 increase in monthly spending would make them unable to pay bills and meet debt obligations, and people self-report if that is the case or not. Most people don't have firm monthly budgets, so this is probably more a psychological excercise than a personal finance one. Realistically, most people have more "give" in their monthly spending than they realize: if they get stuck with a $200 per month increase from somewhere, they can probably compensate by reducing bills (eg: cutting cable, changing phone/internet providers, shopping at the discount grocery store) and adjusting spending habits. A better, more informative metric would be to sit down with a representative sample of the population and analyze their monthly bills to find the gap between inflexible expenditures (eg: rent/mortage, debt service, utilities, basic internet + phone packages, reasonable food expenditures) and monthly income. Knowing what the statistics are for that number is a better proxy for how close Canadians are to insolvency than self-reporting. But that's an awful lot of work.
  - tomrod 6y ago
    If psychological, this reveals the level of anxiety in the economy, which highlights a similar problem and suggests similar policy remediations. Financial literacy really should be required in primary education.
deleted 6y ago
[deleted]
artembugara 6y ago
"Lies, damned lies, and statistics"
- kspacewalk2 6y ago
  Lies, damned lies, statistics, and industry-commissioned surveys.
YinglingLight 6y ago
Anecdotally I know a number of Canadians who have gone vegetarian recently. Financially induced, but ethically reasoned, vegetarianism.
brailsafe 6y ago
While none of these numbers seem all that outlandish, having relied exclusively on savings for quite a while myself, it's worth noting that MNP is a huge staffing agency and it's not clear how their survey was conducted, so might as well ignore it entirely.
reedf1 6y ago
Welcome to neo-serfdom. You either own your home, are in a small group of new-money who can afford a home, or are on a never ending treadmill of saving in which house prices are increasing beyond any amount you can possibly save.
- maxerickson 6y ago
  It should be possible for majorities to change housing policies and increase supply. Too bad we don't. It's fine if housing is a significant asset, but we should treat it as a problem if people see it as an investment (the actual utility of most housing declines over time, maintenance and upkeep are required, value only goes up because of location and demand).
  - SketchySeaBeast 6y ago
    The trick is to somehow make the new supply appealing. I live in Edmonton, home of the urban sprawl, and while detached home prices climb, condo and apartment prices are much more stagnant. Sure we can do high density but when everyone wants a lawn it's hard to sell. I guess having no option is a way to do that, but the people I know who don't own homes are the ones who could afford a condo, but won't do it because a house is the dream.
    - blaser-waffle 6y ago
      Calgary is the home of the urban sprawl. Edmonton has a long way to go to get that ugly. Edmonton saw a massive shortage in housing a few years back during the oil boom and moved to build tons of condos and apartments, plus offered tax subsidies if you converted a basement or in-law apartment into a full-on dwelling. So there is a glut of average-tier 2-bed 2-bath apartments everywhere. Plenty of space and COL is reasonable if you're willing to go further out. But, on average, still 100k (adjusting for currency) more than what my coworkers in the NC Research Triangle are paying for a similar square footage house.
  - lotsofpulp 6y ago
    > value only goes up because of location and demand). Unless you can recreate desirable weather patterns and topography, that’s not going to happen.
human 6y ago
I work in the insolvency industry in Canada. MNP is a competitor to our firm. Every year they come up with a survey like this which sounds over-dramatic. The insolvencies in Canada are actually down 35% year over year. Most Canadians have been doing better since Covid because of the very generous Government we have and also because most creditors have halted collection procedures. Also, for people who own homes, the meteoric rise in prices has made it possible for them to refinance at sub-2% rates and pay off credit card debt.
unreal37 6y ago
It's more interesting to me that people want this to be true, and it fits a narrative. There's no way this is true. It fails the sniff test on the face of it.
- curation 6y ago
  Who, do you think, wants this to be true. I am so curious about the information logistics between media and governments and social control.
  - unreal37 6y ago
    Clearly we're living in a difficult time, and the media is looking out for stories that "humanize" the difficulty. Inequality is a one of the challenges of our time. But the problem is, the actual data is a bit mixed. One study says, "bankruptcies are down 27% in the past 12 months"[1]. Another report said that savings was at a modern "all time high".[2] I remember reading stories about how personal debt had fallen the most in 2020, "a record" amount.[3] Today I read that more money has been put into the stock market in the last 5 months as has in the last 12 years.[4] Governments (in Canada) have been sending billions of dollars in direct payments to people who's income has been affected by the pandemic. The cost of direct pandemic support payments per capita in Canada works out to $10,000+. Others have said that this article was written/sponsored by a bankruptcy firm. This same firm has published this same figure ("50% within $200 of bankruptcy") for years and years. And so in 2021, this makes a good story. And people think it feels true. There is inequality. We see it. We feel it. But you can't measure it the way this study did (asking people) and I question the source of the data. [1] https://hbswk.hbs.edu/item/covid-was-supposed-to-increase-bankruptcies-instead-theyve-gone-down https://hbswk.hbs.edu/item/covid-was-supposed-to-increase-ba... [2] https://time.com/nextadvisor/banking/savings/us-saving-rate-soaring/ https://time.com/nextadvisor/banking/savings/us-saving-rate-... [3] https://www.cnbc.com/2021/03/08/americans-paid-off-a-record-83-billion-in-credit-card-debt-in-2020.html https://www.cnbc.com/2021/03/08/americans-paid-off-a-record-... [4] https://www.cnbc.com/2021/04/09/investors-have-put-more-money-into-stocks-in-the-last-5-months-than-the-previous-12-years-combined.html https://www.cnbc.com/2021/04/09/investors-have-put-more-mone...
gher-shyu3i 6y ago
Goes to show that even with the absurdly high taxation in Canada that some liberals in the US are trying to push for (as it if will result in some utopia) the problem persists. It's only if we start to recognize the true underlying problems that we will be able to have better societal support.

66 points by adventured 6y ago

"A new survey by MNP Ltd. has found that 53 per cent of respondents said they are $200" pretty sure the only number that is different from pre-pandemic statistics is $200, used to be $1000. People in Canada have really low net cashflows and believe in real estate as the only form of saving/investment. It is common for people to spend more than 50% of income on mortgages, even after government introduced benchmarking.

icegreentea2 6y ago
It was $200 and "about half" for a while. Ipsos does their polling for them... https://www.ipsos.com/en-ca/over-half-53-canadian-households-200-or-less-away-insolvency-yet-still-optimistic-about-financial https://www.ipsos.com/en-ca/over-half-53-canadian-households... (Earliest one I found so far, its 2016) https://www.ipsos.com/en-ca/news-polls/half-48-canadians-are-less-200-away-monthly-being-financially-insolvent https://www.ipsos.com/en-ca/news-polls/half-48-canadians-are... https://www.ipsos.com/en-ca/news-polls/Canadians-and-Bankruptcy-Oct-2019 https://www.ipsos.com/en-ca/news-polls/Canadians-and-Bankrup... https://www.ipsos.com/en-ca/news-polls/MNP-Debt-Index-Wave-8 https://www.ipsos.com/en-ca/news-polls/MNP-Debt-Index-Wave-8 https://www.ipsos.com/en-ca/news-polls/MNP-Debt-Index-Wave-7-Jan-21-2019 https://www.ipsos.com/en-ca/news-polls/MNP-Debt-Index-Wave-7...
- AzzieElbab 6y ago
  is it safe to assume those articles are automatically generated every year? :)
  - kspacewalk2 6y ago
    I smell a startup idea.
CarelessExpert 6y ago
> People in Canada have really low net cashflows and believe in real estate as the only form of saving/investment. Do you by any chance happen to live in Vancouver or the GTA?
- gscho 6y ago
  Thinking this way is not isolated to those locations. For example there has been a huge influx of people buying properties sight unseen and over-asking price in places like Nova Scotia. https://www.ctvnews.ca/business/where-in-canada-are-house-prices-increasing-the-most-maybe-not-where-you-think-1.5379679 https://www.ctvnews.ca/business/where-in-canada-are-house-pr...
  - CarelessExpert 6y ago
    It's still a dysfunction that's especially, uniquely acute in just a few geographic regions. Speaking for all Canadians, as though a massive country of 30M people is a monolith, is ridiculous. Every time I see a comment like the OPs above, it's inevitable that a) they're from Toronto or Vancouver, and b) they think their experiences represent those of the entire country.
- AzzieElbab 6y ago
  both. do we have any other cities? :) Sorry, I passionately dislike Montreal and Alberta
  - CarelessExpert 6y ago
    Frankly, you should be sorry. Obviously everyone has their preferences for where they want to live. But there's no part of the country I "dislike"--let alone "passionately" so--and I'd hope and expect the rest of my fellow Canadians to be similarly generous and open-minded about the rest of their country and their countrymen. It's a shame you can't seem to find that in yourself, as every part of the country has something unique to offer, whether that's a small town in Saskatchewan or a massive suburb in Ontario.
  - 6y ago

corry 6y ago

While I don't doubt that Canadian debt levels are unsustainable, note this finding is from an insolvency firm and IMO should be taken with a huge grain of salt. http://www.paulgraham.com/submarine.html http://www.paulgraham.com/submarine.html

VBprogrammer 6y ago
Don't I know it. Even now I can see a headline and know it will have a quote from the founder of the company I used to work for without even opening the article. Most likely the whole article was written by their PR firm, maybe with a couple of stats dragged out of the DB to add authenticity.
Sanzig 6y ago
Indeed, MNP makes this proclamation about once per quarter. I don't doubt that Canadian consumer debt is at an all-time high, and I agree that's concerning. However, MNP's survey methodology makes the 52% number misleading: they basically ask a sample of the population if a $200 increase in monthly spending would make them unable to pay bills and meet debt obligations, and people self-report if that is the case or not. Most people don't have firm monthly budgets, so this is probably more a psychological excercise than a personal finance one. Realistically, most people have more "give" in their monthly spending than they realize: if they get stuck with a $200 per month increase from somewhere, they can probably compensate by reducing bills (eg: cutting cable, changing phone/internet providers, shopping at the discount grocery store) and adjusting spending habits. A better, more informative metric would be to sit down with a representative sample of the population and analyze their monthly bills to find the gap between inflexible expenditures (eg: rent/mortage, debt service, utilities, basic internet + phone packages, reasonable food expenditures) and monthly income. Knowing what the statistics are for that number is a better proxy for how close Canadians are to insolvency than self-reporting. But that's an awful lot of work.
- tomrod 6y ago
  If psychological, this reveals the level of anxiety in the economy, which highlights a similar problem and suggests similar policy remediations. Financial literacy really should be required in primary education.

deleted 6y ago

[deleted]

artembugara 6y ago

"Lies, damned lies, and statistics"

kspacewalk2 6y ago
Lies, damned lies, statistics, and industry-commissioned surveys.

YinglingLight 6y ago

Anecdotally I know a number of Canadians who have gone vegetarian recently. Financially induced, but ethically reasoned, vegetarianism.

brailsafe 6y ago

While none of these numbers seem all that outlandish, having relied exclusively on savings for quite a while myself, it's worth noting that MNP is a huge staffing agency and it's not clear how their survey was conducted, so might as well ignore it entirely.

reedf1 6y ago

Welcome to neo-serfdom. You either own your home, are in a small group of new-money who can afford a home, or are on a never ending treadmill of saving in which house prices are increasing beyond any amount you can possibly save.

maxerickson 6y ago
It should be possible for majorities to change housing policies and increase supply. Too bad we don't. It's fine if housing is a significant asset, but we should treat it as a problem if people see it as an investment (the actual utility of most housing declines over time, maintenance and upkeep are required, value only goes up because of location and demand).
- SketchySeaBeast 6y ago
  The trick is to somehow make the new supply appealing. I live in Edmonton, home of the urban sprawl, and while detached home prices climb, condo and apartment prices are much more stagnant. Sure we can do high density but when everyone wants a lawn it's hard to sell. I guess having no option is a way to do that, but the people I know who don't own homes are the ones who could afford a condo, but won't do it because a house is the dream.
  - blaser-waffle 6y ago
    Calgary is the home of the urban sprawl. Edmonton has a long way to go to get that ugly. Edmonton saw a massive shortage in housing a few years back during the oil boom and moved to build tons of condos and apartments, plus offered tax subsidies if you converted a basement or in-law apartment into a full-on dwelling. So there is a glut of average-tier 2-bed 2-bath apartments everywhere. Plenty of space and COL is reasonable if you're willing to go further out. But, on average, still 100k (adjusting for currency) more than what my coworkers in the NC Research Triangle are paying for a similar square footage house.
- lotsofpulp 6y ago
  > value only goes up because of location and demand). Unless you can recreate desirable weather patterns and topography, that’s not going to happen.

human 6y ago

I work in the insolvency industry in Canada. MNP is a competitor to our firm. Every year they come up with a survey like this which sounds over-dramatic. The insolvencies in Canada are actually down 35% year over year. Most Canadians have been doing better since Covid because of the very generous Government we have and also because most creditors have halted collection procedures. Also, for people who own homes, the meteoric rise in prices has made it possible for them to refinance at sub-2% rates and pay off credit card debt.

unreal37 6y ago

It's more interesting to me that people want this to be true, and it fits a narrative. There's no way this is true. It fails the sniff test on the face of it.

curation 6y ago
Who, do you think, wants this to be true. I am so curious about the information logistics between media and governments and social control.
- unreal37 6y ago
  Clearly we're living in a difficult time, and the media is looking out for stories that "humanize" the difficulty. Inequality is a one of the challenges of our time. But the problem is, the actual data is a bit mixed. One study says, "bankruptcies are down 27% in the past 12 months"[1]. Another report said that savings was at a modern "all time high".[2] I remember reading stories about how personal debt had fallen the most in 2020, "a record" amount.[3] Today I read that more money has been put into the stock market in the last 5 months as has in the last 12 years.[4] Governments (in Canada) have been sending billions of dollars in direct payments to people who's income has been affected by the pandemic. The cost of direct pandemic support payments per capita in Canada works out to $10,000+. Others have said that this article was written/sponsored by a bankruptcy firm. This same firm has published this same figure ("50% within $200 of bankruptcy") for years and years. And so in 2021, this makes a good story. And people think it feels true. There is inequality. We see it. We feel it. But you can't measure it the way this study did (asking people) and I question the source of the data. [1] https://hbswk.hbs.edu/item/covid-was-supposed-to-increase-bankruptcies-instead-theyve-gone-down https://hbswk.hbs.edu/item/covid-was-supposed-to-increase-ba... [2] https://time.com/nextadvisor/banking/savings/us-saving-rate-soaring/ https://time.com/nextadvisor/banking/savings/us-saving-rate-... [3] https://www.cnbc.com/2021/03/08/americans-paid-off-a-record-83-billion-in-credit-card-debt-in-2020.html https://www.cnbc.com/2021/03/08/americans-paid-off-a-record-... [4] https://www.cnbc.com/2021/04/09/investors-have-put-more-money-into-stocks-in-the-last-5-months-than-the-previous-12-years-combined.html https://www.cnbc.com/2021/04/09/investors-have-put-more-mone...

gher-shyu3i 6y ago

Goes to show that even with the absurdly high taxation in Canada that some liberals in the US are trying to push for (as it if will result in some utopia) the problem persists. It's only if we start to recognize the true underlying problems that we will be able to have better societal support.