Experts urge people to 'buy what they can afford' as debt piles on British Columbians

Digging out of Debt

Nanaimo resident Ashta Cormier came out to the West Coast with a degree from York University under her belt and $20,000 in credit card and student loan debts.

At 22 years old, she faced the possibility of having to file for bankruptcy.

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Cormier's story is not unique. Last month, credit reporting agency TransUniona announced in their quarterly analysis that personal debt levels in Canada had "ballooned" to their highest levels ever. The average consumer debt increased at its greatest rate in nearly two years, said TransUnion, and has jumped more than 37% in the last five years. The debt for the average British Columbian leads the pack, averaging out at $38,837 compared to the national average of $28,768.

With the spectre of extra Christmas spending looming, the problem of debt only tends to worsen over the holidays, said Julie Jaggernath of the Credit Counselling Society, who added that January is a particularly busy time for their Nanaimo office.

The holiday debt burden is like an extra brick stacked on an already teetering pile of financial obligation, which often begins in youth with student loans. Add car payments and mortgages, or a shift in career choice that involves going back to school, and it can often become unmanagable, which in turn leads to an ever-increasing spiral of dependance on credit.

An additional problem arises when a person's financial situation changes without an according shift in spending habits, added Jaggernath.

"There were there kiosks everywhere where you could get a credit card," said Cormier. "On campus, in the cafeteria, out at the big sporting events - that was also a place where they set up these kiosks, and they would offer free gifts and incentives for getting more credit cards."

Cormier thinks part of her debt problems were due to how young and "immature" she was going into university, which made it hard for her to resist the temptation of such offers.

"They made it really easy for me to get credit cards, and if that one was maxed out it was like, 'here's a new one,'" she said. "I had no semblance of financial responsibility. It was a part of my life where I was using consumerism to make me feel better about things that money had nothing to do with."

For Andrew Lamb, the problem with debt came when he decided to shift his career away from seasonal work and return to school for a practical nursing diploma.

He said that while he is in school he has to rely on credit, and faces a $60,000 debt upon graduation next June.

"The first five years of actually getting back in the work force will be debt repayment," said Lamb.

For Christmas this year he said he will be "cutting back on other things to make it possible." One way to accomplish that will be to buy presents just for the kids instead of for the adults.

Jaggernath agrees with this approach.

"We encourage people, rather than saying 'we can't afford it,' look for things you can afford," she said.

Traditions can be revised and new, less expensive ones started, she added. It's also important to shop with a plan in mind.

"A lot of people have gotten so used to spending beyond their means," said Jaggernath. "It's a sign of the times."

Laura Jones, executive vice-president of the Canadian Federation of Independent Business said she thinks "it's not such bad advice to not use a credit card over the Christmas season."

She said as fees from credit card companies have skyrocketed in the last few years, and are set to increase again in April 2013, it has been hard on small businesses. It has also resulted in increased prices for consumers, she said.

Customers often don't realize the hidden cost to a business when they use a credit card, and that they are just as happy or happier to do the transaction in cash or debit.

Cormier agrees, and said that after consolidating her debt with the help of a financial advisor, her student loan is now paid off. She doesn't plan on ever having another credit card. "Our whole money system is built on debt, and it's a system that I just don't want to subscribe to," she added. 250-729-4238

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Amount of Canadians who expect to give holiday gifts this year: 82%

Average amount a Canadian expects to spend on holiday purchases this year: $1,182

Average amount a British Columbian expects to spend on holiday purchases this year: $1,326

Amount of that bought to be bought with credit cards: 24%


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