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Ontario Today51:38What did you do when you realized you couldn’t afford your life?
Featured VideoFinancial literacy counsellor Pamela George joins us to talk about managing ever-growing levels of household debt and we hear how listeners have addressed the red in their own budgets.
With credit card balances at all time-highs, and the debt facing Canadian households reaching levels not seen in any other G7 country, people are looking for solutions, and for some giving up on a ballooning mortgage is the answer.
“I downsized and moved into an apartment and it’s the best thing I’ve ever done for myself,” education worker Deborah Diebel of Wiarton, Ont., said on CBC Radio’s noon hour call-in program, Ontario Today.
“I’m happier and I have fewer expenses.”
Diebel bought her home in 2008 and on paper she should have been able to afford it, she said. But the budget to maintain a three-bedroom home from the 1880s was more than Diebel could handle.
Home ownership is not necessarily all it’s cracked up to be and it’s not for everybody.– Deborah Diebel
For many years, she found solutions: Diebel rented out rooms in her home, couch-surfed when she listed the house on Airbnb, and traded in her car for a smaller, more affordable vehicle.
But after crunching the numbers and talking with a financial planner, it still wasn’t enough.
“I looked at the list of everything I would need to do to maintain the house and just realized if I sold, that whole list just disappeared,” she said.
“Home ownership is not necessarily all it’s cracked up to be and it’s not for everybody.”
Her story is not unique.
Canadian household debt higher than ever
“The level of household debt is more than the size of the economy,” said Aled ab Iorwerth, deputy chief economist with the Canada Mortgage and Housing Corporation (CMHC).
That’s unprecedented in recent Canadian history, he said.
Much of that debt is tied up in ballooning mortgages, thanks to growing interest rates.
And with 100,000 mortgages coming up for renewal in Canada every month, the number of people facing loans they can no longer afford is likely to rise.
“We’re getting more and more concerned about the refinancing risk in 2024, 2025,” said ab Iorwerth, referring to the number of people who bought homes during the pandemic when interest rates were still relatively low.
You can’t afford your life. Now what?
Ottawa-based financial literacy counsellor Pamela George sees many clients who, despite earning comfortable salaries, are still struggling to make ends meet, she said.
“They work for good money. They can’t believe that they work for north of $100,000 and they can’t buy groceries or meet their mortgage. That is hard for them to grasp. They’re shocked and they’re calling me in a panic,” she said.
The first step to making your life more affordable is recognizing the problem, said George.
According to George, essentially they have three solutions available to them: earn more money, spend less of it, or do both at the same time.
“I had someone call and she goes to Montreal every two weeks so she can strip in order to make money to pay her rent,” said George. “The rent is being paid. Good on her. And she’s not the only one.”
Although Diebel made a tough choice in selling her home, she doesn’t regret it.
“Now I can enjoy my life a little bit more,” she said. “I can actually build the life I want. I can go on trips. I can do more things.”
WATCH: Canadians in too much debt
Featured VideoCanada’s housing agency, the CMHC, is warning high household debt could put families and the whole economy at risk. Canadian household debt is higher than any other G7 nation.
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