The sharp increase in the cost of living and soaring interest rates have taken many Quebecers by surprise who had never worried about their personal finances before.
A quarter of Quebec employees believe that they would have difficulty meeting their financial obligations if they had to wait for their pay, even just one more week, reports the National Payroll Institute based on a survey whose results were to be revealed this Tuesday. This is more than last year (21%) and even more than in 2021 (16%) before inflation and interest rates spiraled out of control, but also while employees still had the financial cushion that they had formed during the COVID-19 pandemic.
“We are easily led to believe that these people who are financially tight must not have been careful, but that is often not the case,” explained in a telephone interview with Duty Pierre Fortin, president of the insolvency trustee Jean Fortin and spokesperson for the Institute for the occasion. “The cost of living and interest rates have increased so quickly that many people who were previously relatively comfortable, to the point of not even feeling the need to make a personal budget, suddenly find themselves in difficulty , often for the first time in their lives. »
He gives the example of someone who earns $100,000 per year, has a mortgage of $350,000, has a line of credit of $10,000 and has a credit card with a limit of $5,000. “This person, with a relatively reasonable level of debt, went, overnight, and without changing anything in their situation, from a debt ratio of 36% to 44%, that is to say a level beyond which several financial institutions will refuse to finance you. »
The Institute reports that of the 37% of Canadians who currently say they are in a situation of financial stress — that is, they are no longer able to save a single penny or are spending more than they earn — more than a third have incomes greater than $100,000.
“People often tend to sweep the problem under the rug. They take six months, a year or two years to admit that they can no longer do it,” says Pierre Fortin. Nearly two in five Quebecers experiencing financial stress (38%) feel socially isolated. “People are embarrassed and ashamed to talk about their financial problems, to say why they go out to restaurants less and reduce their lifestyle. »
“But we must not see everything in black,” assures Mr. Fortin. In Quebec, we always do a little better than the rest of Canada. This is due in particular to housing prices (and the extent of mortgage debt) which are relatively lower, consumer debts which are also a little lower, as well as the labor market which is a little more vigorous. .
And then, in Mr. Fortin’s firm, we were used to seeing one file in two end in bankruptcy before COVID. This proportion is currently closer to 30%, the others leading instead to settlement agreements with creditors. “This is a sign of lower debt levels. »