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Good morning. Most of us have debt of some kind, whether it’s a mortgage, line of credit, car payments or unpaid credit cards, even if only temporarily. It’s not something we like to talk about, especially if our debts are high and rising. The average Canadian has around $21,000 in debt per person, excluding mortgages. Hopefully, we’re motivated to reduce that, but those who think they might get laughed at or stigmatized for falling far behind tend to further hurt themselves by concealing their debts, refusing help or even spending more in public to show everything is OK. This can even have negative effects on your mental well-being, never mind your finances.
There are experts who can help eliminate the red ink, but some people who feel ashamed or embarrassed about their money woes don’t want to share such details even with a debt counsellor who has no other connection to themselves or their families. But perhaps something like Debtors Anonymous could help.
Research of other stigmatized behaviours, such as alcoholism and overeating, has shown that community-oriented behaviour-change programs can increase positive emotions and well-being, so why not debt? Turns out, it works, according to a recent Canadian study. Self-identified middle-class people who participated in a community group paid off $4,370 more of their debt than those in the control group (who were not offered any financial education during the study), while those in a private online setting with classes delivered by an instructor paid off $3,531 more.
“If you are someone who fears stigmatization, you can get help in a community-based course or environment, and you’re going to experience gains in your well-being, and you’re going to actually start engaging in behaviours that will set you up to continue with debt repayment beyond the course,” says Miranda Goode, an associate professor of marketing at Western University’s Ivey Business School in London, Ont., and one of the authors of the study.
The reason is pretty simple: connecting with people who feel the same way and fear the same things can create supportive relationships that motivate you to change your ways. “The crux of that is really that you’re among people who are experiencing similar circumstances who are also feeling like they could be judged, so they can share and relate,” Goode says. “There’s a bit of an opportunity to have a cathartic release because you no longer need to hide. You can talk about this in a safe environment, and you build up connections with other people because of that. You experience this motivation that propels you forward, and you can start dealing with your debt instead of hiding it.”
Not every debtor fears being stigmatized, but plenty of people need help one way or another. Nearly half of Canadians say they regret the amount of debt they’ve taken on, according to MNP Ltd.’s last quarterly survey, and 47 per cent are concerned about their current level of debt, a record high and seven percentage points higher than the previous quarter. Only 51 per cent are confident in their ability to cover all their living/family expenses in the next year without going further into debt.
It’s not just our debts that we’re concerned about, though 39 per cent of Canadians are worried about paying them off, according to a new poll by the Bank of Nova Scotia. The poll also found that 44 per cent of us are stressed about paying day-to-day expenses and 38 per cent are worried about saving for emergencies. All told, we’re spending an average of 15 hours a week worrying about our finances, up from 10 hours a year ago. That works out to roughly 31 days a year and so that’s going to overlap with our working lives. Indeed, more than 80 per cent of North Americans admit to thinking about their personal finances during work hours, the Financial Wellness Lab estimates.
Yet we continue to spend more despite our debts, high interest rates and inflation, with retail sales increasing 0.7 per cent in January from December, according to Statistics Canada’s preliminary data, following a 0.5 per cent increase in December. Retail sales jumped 8.2 per cent in 2022, led by gasoline and general merchandise. Seems like quite a few of us need some retail therapy, which could force us to get some debt therapy down the road.
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Andy Holloway, editor of the FPI and Financial Post Magazine, and senior features editor of the Financial Post. If you have any quips, queries or comments, get in touch at [email protected]
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