Juggling Dynamite

Whether for financial, environmental and/or consumption revulsion reasons, many of our friends and clients have decided to not give ‘things’ for Christmas this year; my own family included.  Gifts of time and positive experiences with others are always in high demand.

When we do give a ‘thing’, thoughtfulness includes contents and packaging.  See We toss 540k tonnes of wrapping paper after the holidays. Here’s how to give without the garbage.

Also watch this video clip for sustainable, zero-waste holiday gift ideas.

Here is a link to The unwrapped life and to Well.ca for waste-free household and personal care products.

The latest Canadian consumer insolvency report is available here from Hoyes, Michalos, and includes a list of their top 10 debt statistics for 2019 as follows:

1. Ontario bankruptcies and consumer proposals increased by 15.9% in the first ten months of 2019, while Canadian insolvencies increased 9.7%. The pace of growth is accelerating.
2. Average weekly earnings have only risen 2.5% in the first 9 months of 2019.
3. The average insolvent debtor spends 31% of their household budget on food.
4. Food costs have increased by 3.4% in the first 10 months of the year and were up 3.7% year-over-year in October 2019.
5. The average insolvent debtor spends 40% of their household income on housing costs.
6. 95% of insolvencies involve renters. Almost half of renters in Ontario (46%) spend over 30% of their income on rent and utilities, with 21% spending more than 50% of their income on housing.
7. Median rental rates in Canada were up 8.9% in October 2019.
8. The balance of consumer credit reached $640 billion in October 2019, up 2.7%, from October 2018.
9. The interest-only portion of debt servicing costs increased by 7.6% in the first half of 2019.
10. Outstanding balances on unsecured lines of credit increased by 2.4% in the first 9 months of 2019.

Trustee Doug Hoyes predicts insolvencies are likely to accelerate further in 2020:

“…financial institutions and low-interest rates helped create a consumer credit binge we thought would never end. People don’t borrow money expecting they won’t repay it. Yet that is what is happening. As debt repayment and every-day living costs outstrip earnings for an ever-increasing portion of middle-income earners, who cannot rely on asset growth to fund the gap, insolvencies will rise.

That is why I believe that this uptick in filings won’t be slowing down anytime soon. This is only the beginning. And if we see a recession, if housing prices fall or stagnate, that opens the risk to a whole new rung of asset-owing Canadians who may need to file insolvency to dig themselves out.

The downpour will become a deluge.

BNN talks to Robert Colangelo, SVP Canadian financials at Dominion Bond Rating Services Morningstar about rising consumer insolvencies and bad loans at Canadian banks. Here is a direct video link.