Risky financial decisions contributing to debt

Risky financial decisions and only making minimum payments on borrowed money are leading more than half of Atlantic Canadians in a recent survey to believe they will never be debt free.

“For some, it might be out of recklessness or impulsivity, but for others it is simply out of necessity. They are just having a tough time making ends meet and are making questionable money choices in their attempt to stay afloat,” said Joe Wilkie, a debt expert with the insolvency firm MNP Ltd., in a press release.

According to the Ipsos survey conducted for MNP Ltd., 54 per cent of Atlantic Canadians admitted to risky financial behaviour in the past year. Of this group, 24 per cent said they only make minimum payments on credit card debt and 17 per cent making minimum payments on lines of credit.

Other debt issues in the survey results include 14 per cent saying they had been lured in by deals and special offers while 12 per cent admitted to spending beyond their means in order to "keep up with the Jones'". As well, 10 per cent of respondants made a major purchase on credit without paying it off right away or a purchase with deferred payments.

"A lack of financial literacy may explain why many are engaging in financially risky behaviours. Some are in denial about their finances, and are living well beyond their means, while others are trying their best to get their debts under control but may not have the education or the support to do so," said Wilkie. "Regardless of the reason behind the behaviours, many people are pursuing more credit without taking into consideration the longerterm ramifications."

Twenty-five per cent of respondants also believe they will never be debt free and have lost hope.

"A lot of people experience hopelessness when it comes to their debt.

“They don’t want to ask for help, they are embarrassed and feel they are in it by themselves. This only makes the situation worse for them," said Wilkie.