Confessions from a Christmas overspender
Credit Education Week Canada just ended and you didn’t even notice, did you?
Did you know that while 60 per cent of Canadians are earning the same or less than last year, 48 per cent are spending more? Did you know that while 32 per cent of Canadians have increased their debt, a narrower look at millennials pushes that number to 44 per cent? How much more debt, you might well ask. Of those Canadians across all age groups who have taken on more debt, a third have seen their debt increase by more than 20 per cent.
Those numbers come from a survey conducted for Credit Canada, the notfor-profit credit counselling agency, and Capital One Canada, the credit card provider.
This being the cusp of the Christmas season, there has been a flurry of surveys cautioning consumers about debt loads and urging them to up their game when it comes to financial literacy, with the occasional merry note about some respondents’ determination to stay within a budget. An Equifax Canada survey found that 58 per cent of respondents are focused on being “financially fit” for the holidays.
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Yet we become bedazzled by enticements to spend. The Black Friday countdown has begun, the curtain is being pulled back on holiday display windows (Selfridges, the posh London department store, unveiled its famous Christmas windows in mid-October because it’s meaningful, apparently, to set world records in such matters), story time visits with Santa at his log cabin at Trinity Square by the Eaton Centre begin Saturday (tickets available for pre-purchase at $15).
I have a Christmas list on my phone, just a scramble of potential purchases or possible shopping destinations. Aleppo Savon. Filson. 4:25 candy bars (are they still available?). The rebuilding of Paris (is that a book?). Te-Koop. G.H. Hurt & Son.
I have no memory of typing G.H. Hurt & Son into my notes. I see now that it’s based in Nottingham, in the U.K., and creates gorgeous knitted wear, including the lace baby shawl that swaddled Prince Louis Arthur Charles as he emerged from St. Mary’s Hospital in the arms of the Duchess of Cambridge. I have no newborns to shop for. But the notation is telling because my eyes have sometimes been bigger than my pocketbook. This is bad. So of course I am thinking about debt.
The last time I wrote about debt in a column-writing way was 18 months ago when the debt-to-income ratio broke the $1.70 barrier, meaning that Canadians owed $1.70 for each dollar of disposable income.
Rounding roughly, that was a doubling of where we were at if one were to look back 30 years. The ratio has since risen to $1.77.
Who looks back 30 years, you might well ask? I do. I can see from my Blueline ledger that in November 1989, I spent $22.77 at Cotton Ginny (R.I.P.), leaving a bank balance of $98.23. In early December I splashed out big time on chocolates, spending $85 and leaving a balance of $383. A general notation for Christmas gifts on Dec. 10 was $116. Balance that day: $612.
My takeaway? What a responsible shopper was I!
But flip forward a few pages and the financial story turns from fairy tale to nightmare.
A page scrawled in large, loopy writing reveals a Visa balance of $2,026 (mine), another Visa balance of $1,200 (my husband’s), a $1,500 sum owed to Mastercard, another $1,090 to Optima (launched in 1987 by American Express to allow card holders to carry interest bearing balances) and $400 in “S fees,” whatever they were. Total owed: $7,266. Exclamation marks were entered alongside the final ugly sum.
We had been juggling the whole mess by paying $100 monthly to each credit card. I see I have kept the contract agreement for our first ever line of credit — not a home equity line of credit — for $10,000 at prime plus two per cent.
Were we that bad at finances? Our mortgage was $1,430 a month. Yes, lucky to have a house. We had had a baby, and shared a nanny. That was expensive too, and a second baby would follow soon thereafter.
Having a baby meant buying a car and shedding our habit of getting around by bicycle or public transit. The car cost us $267 monthly. House insurance. Car insurance. Utilities. A monthly RESP deposit of $38.20.
My salary was somewhere south of $40,000 a year. My husband’s was less.
If I withdrew $20 I noted it in the ledger, for Pete’s sake, as in, money spent for Similac. (That’s baby formula.) We were hardly extravagant. Home renovations? I once paid someone to paint one room.
This isn’t a hardship tale. But it is an admission that I was bad at budgeting.
In commenting on those survey results, Credit Canada CEO Laurie Campbell was quoted saying there “seems to be shame associated with the failures that made us wiser with money.”
Maybe the holiday season is a good time to ’fess up. She suggests knocking down the barriers to having conversations about money management.
And establishing a budget. I will do this on Saturday.
G. H. Hurt will not be on it.