Episode 14: Debt & Mental Health
Hello, I'm Jessica Samuels, and welcome to A Way Forward presented by Beam Credit Union. I'd like to acknowledge this podcast takes place on the ancestral traditional and unceded lands of the Okanagan Silicz people. Co host Mike Golick, who's the CEO for CMHA Kelowna, and I have a guest today. Her name is Maggie Sinclair, and she's the chief growth officer with Beam Credit Union. We're going to dig into the debt status of Canadians, what's causing it, and the toll it's taking on our mental health.
Jessica Samuels:Maggie, thanks for joining us today. We're going to talk about how Canadians are doing when it comes to debt, and it's not very well. Some quick stats off the top. A record breaking 2,500,000,000,000.0 in Canadian household debt. It's a record high according to the most recent stats that I saw.
Jessica Samuels:And also that many Canadians are $200 away from being able to pay their bills. And they don't have positive feelings or a kind of idea that that is going to change in the coming months. Talk about stress, which we will talk about. What is driving this debt in Canada?
Maggie Sinclair:Yeah, it's a great question. And when you think about, you know, how easy credit is today, like the credit culture, it's just that much easier when you think of even what you don't even realize is debt, but pay, buy now, pay later. When you do that and you think of how quickly and easy you're not thinking that debt, then all of a sudden now you've got not one or two payments a month. Now you've got four, five, six. And so it's adding up and people aren't even realizing it until all of a sudden they're starting to feel it.
Maggie Sinclair:And to your stats, one stat. Most Canadians today, a $1.8 in debt. Almost all Canadians have some form of debt, whether it's credit card, mortgages, a car loan, a student loan. And right now, 1.8 towards debt, and they're against a dollar of earnings. So they're already in the hole before they get started.
Maggie Sinclair:So it's $1.8
Jessica Samuels:per dollar. So they're earning a dollar, but they owe $1.8
Maggie Sinclair:They owe $1.8 So imagine that compounding all the time. And then you add that buy now, pay later, and you add that extra of the number of transactions that they've got going through their accounts. And just to keep up to it is hard.
Jessica Samuels:Speaking of transactions going through the account, I've seen some ads for how many of those subscriptions do you think you have that just automatically come out of your account? And it was actually something I saw on media and the person was like five or something. And they checked their account and it was like 16. I checked my account and I made some edits. Let's put that a few.
Jessica Samuels:But yeah. And sometimes maybe too, it's some of those hidden pieces that we don't realize. How come my credit card statement is so high each month digging into that. But there's some other factors as well that's contributing to the rise of household debt in Canada. What are some of those more significant factors that Canadians are experiencing?
Maggie Sinclair:Yeah, when you look at rising house costs, when you look at interest rates, you know, the fluctuation in interest rates, in the cost of living, I mean, of living skyrocketing, you've got groceries going up, gas is going up, rent, mortgages, they're all rising. And actually, salaries aren't staying at the same pace as the increases. And so people are using credit to close that gap. They're not realizing how much more. I remember when I first started in the industry and spending time as an advisor, we used to encourage people to have three months of emergency savings.
Maggie Sinclair:Lots of times we would use a credit line to do that. But that was like $3,000 or $4,000 3 months now, it's just gotten so big that people are you know, that credit is that's hard, it puts a lot of strain on people.
Jessica Samuels:You know, it's it's such truth that you're speaking. And as you and I prepared for this segment, you made a point. And it was so interesting. It really, you know, when that penny drops, where you're just like, it's not only about the money. And I'm like, it's not what else is
Maggie Sinclair:it about? You know, it's it's what the money make how the money makes you feel. And the stress that comes along with balancing children's expenses. Look even the cost of hockey and soccer and baseball and everything. So managing all of that and the stress of being able to keep up and to continue to provide and do whatever you want to do, it's the number one cause of sleepless nights.
Maggie Sinclair:Anxiety can lead to depression. It adds into a lot of times it talks about divorce, and it's because money is still a taboo topic. Why? I don't know, but it still is. People don't want to talk about it, they're either embarrassed or they're concerned or they think that regardless of the type of education they have, you name it, they should know better.
Maggie Sinclair:And reality is, it's not that. It's that everything's changing around them And the ability to keep up is is tough. Yeah. So it happens to everyone
Jessica Samuels:to coin a phrase, know, keep him up with the Joneses or the whomever, right? And you mentioned the pressure. Of course, we're talking about the mental health aspect, and you touched upon something there as well, the stigma. The stigma about debt, somehow, means that, I don't know, you're a bad person, or you're not able to keep up with Jones's. You know, Mike, recent studies, I mean, not that they need to be recent, think we can establish pretty well here to know that the mental health impacts of debt and financial instability is perpetuating a mounting mental health crisis issue that is facing For
Mike Gawliuk:sure. And when I hear you talk about it, I can feel the weight on my shoulders. And ultimately, would say, yeah, can feel inescapable, right? Something that you can't get out from under. When you talk about keeping up with the Joneses, it was interesting because when I did a little bit of the research, there was a term the anticipated stigma of debt and how some people fear that being exposed, that they have debt, actually spend more to conceal it.
Mike Gawliuk:And that perpetuates a cycle of financial instability and is a significant trigger for a mental health crisis. So absolutely, that's one of the factors. The stress that comes with debt is certainly experienced through stress and potential mental health concerns, but that also shows up physically when we look at diseases like heart disease, emotional exhaustion, and in some cases, even increased mortality. So the data shows that having debt and carrying debt to this load has significant effect.
Jessica Samuels:And the comment that Maggie made earlier, it's about more than the money kind of resonates with me even in that, because it's the debt. But then how you're feeling about it, keeping wake at night, stress. You don't want to tell people, you know, I don't mind. I don't mind telling people. I kind of make light of it, but it did take a bit for me to work this through with my friends.
Jessica Samuels:You know, I had a banner year last year. I had a significant birthday. I did all of the things. This year, I am doing nothing. But what's interesting is I've had to say it to a few times to some people.
Jessica Samuels:We've been like, let's do this. No, I'm austerity measures. I'm cutting back, making all the jokes. No, I'm not. And it's like, oh, just this, just that.
Jessica Samuels:And I'm like, hard no. And so that pressure. And I'm not going to feel ashamed. I had a wonderful year last year, and I'm going to have a great year this year, just scaled down significantly. But you can feel that where you want to do the things, whether it's keeping up or it's like, oh, one little event here or one road trip here or one visa purchase here.
Jessica Samuels:Pretty soon it's not one and one and one. It's all of them.
Maggie Sinclair:Well, if I can, when you think about, you've had a great year, but think of the average individual who's having to even pull that together. When I saw the other day that on Skip The Dishes, you can buy now pay later. So you can separate a meal into four payments. And for someone that might be the only way that a family gets to eat. But imagine now the stress of adding that to the next payment and the next payment.
Maggie Sinclair:And it just surmounts. Like it just keeps getting bigger and it's tough. I really feel for people today.
Jessica Samuels:And thank you for just painting another picture with this, because I painted a picture of having the option to have had a wonderful year, which is what you're saying. There's a significant portion of the population who will never have that option. So, you know, wow, poor Jessica, but they're having to make this choice. It makes things tough for someone who is feeling well, who is mentally well. But Mike as well, if you're someone who's already struggling with a mental health issue, it adds to it.
Mike Gawliuk:Yeah. Well, I mean, certainly one of the things that you spoke to, the use of payday loans, certainly for people that we support and know that are experiencing a mental illness, that can be ultimately a go to. Are struggling to manage finances. Again, when you talk about a good year, there's lots of people that aren't having good years. And so how does debt impact people with a mental illness?
Mike Gawliuk:Mental health problems can also worsen financial problems. They again rely on certain things. But what we've identified in previous podcasts and I think is important to identify too is that you can't talk about this issue without talking about poverty. And we've talked before about social determinants of health. And again, those are non health factors that can impact people's health.
Mike Gawliuk:It just so happens that money happens to be one of those social determinants of health and not having that certainly can then impact in terms of the ability to get a roof over your head, to have to do the buy it now, pay later for your dinner. And ultimately what that can also lead to is increased social isolation and loneliness. If people are just like they don't have it, they can't get it. The ability to engage socially, they don't necessarily have what they need in order to do that. So it's two sides of a coin.
Mike Gawliuk:You talked earlier about maybe saying no to going out. Certainly what we're seeing with Canadians in general, they're going out less trying to save money. And again, that's a way of managing. But the downside or the flip side or the shadow side of that is social isolation. And as we've talked about, social isolation can lead to negative poor health and if untreated, can result in a mental illness.
Mike Gawliuk:And so those are things to be certainly concerned about. And then when you look at people experiencing mental illness, not everybody with a mental illness is on income assistance. But there are a lot that are. And again, to the issue of poverty, those income assistance rates like talk about a dollar to a dollar and 80, like you're not even in that ballpark. It just doesn't keep up.
Mike Gawliuk:And so, you know, again, the ability to just survive for some people is a significant challenge. And for those with mental illness, certainly far reaching.
Jessica Samuels:Right. And I don't believe we've mentioned as well, we were talking about rising house prices, mortgage affordability, cost of living, job volatility as well. Right? We have a climate here where the workplace, the workforce, not the workplace, the workforces, we don't know what's happening and talk about debt. We have businesses that are facing more debt, small businesses, which means, you know, some folks are getting, you know, laid off at higher rates.
Jessica Samuels:And so this continues. And so, you know, that $1 to $1.8 again, because the discrepancy just begins to pull itself apart. So we've established that managing debt is hard. And, and, and, and probably feels insurmountable, you know, to most people, they probably don't know how to approach it. And then if you are also struggling with your mental health, whether that's something that came before or as a result of it can definitely feel like there's things that you can't do.
Jessica Samuels:So, you know, here we are, Maggie, we're, we need some, some solutions and recognizing that, you know, there's going to be some solutions that are better for other folks. But the idea here is just kind of a little trickle of an idea for folks to kind of get the ball started, or something is going to click and they're going to
Maggie Sinclair:say, Okay, this might be right. Yeah, and it might be really old advice in a way of but making a budget. If you start with that, I would even say start with understanding where your money is going and where you're spending it, how you're spending it, writing it down on a piece of paper. It doesn't have to be a fancy budget to actually go, how much money is coming in and where am I spending it and how am I doing that? Starting there and then looking at options for yourself, understanding where you're going.
Maggie Sinclair:And I would say, talk to the financial institution that you deal with. There are ways to help, but I always say talk to them early. Don't wait until you've done all the relief that you possibly can. Go in with a plan. Go in and say, Here's how much I'm making.
Maggie Sinclair:Here are my expenses. Here's what I've got. I know I've got opportunity for relief payments. I know there's a way skip mortgage payments or loan payments or interest only and find those things. But then what else?
Maggie Sinclair:And so they will help you. And they need to sit and be a partner with you and be with you at wherever you are in your journey. They should you know like you know we start we got to do this together and so I think that you know understanding what options are out there for you and knowing what they can do to support you. But I always say go early, like, you know, walk in, sit down with a budget, a simple budget and say, I've done this, but I need help, right? You know, not to be afraid to ask for help.
Maggie Sinclair:Yeah, that stigma piece. Yeah, yeah, yeah.
Mike Gawliuk:Well, I think that goes perfectly hand in hand with the reality of mental health. And as people are impacted negatively by debt and start to experience mental health, we've talked about before some of signs and the symptoms when you know that things are going from, you know, mental health and approaching potentially mental illness. And so that's reaching out for assistance and doing so early is going to give you the best chance of being able to manage through what again can feel like an overwhelming and never ending circumstance.
Jessica Samuels:Right. And Maggie, what about those times when it's debt management or debt management services is the best and most likely option? I don't, you know, I don't want to put you in position of recommending them. And that's not what we're asking. But what are what should folks be aware of if this is a path that they want to go down?
Maggie Sinclair:Yeah. So I think, you know, every there's a solution for everyone and there's the right one. So, you know, using a debt service management team is the right one. Be aware and think about first and foremost, know your debts, because if you understand your debts, you can understand what their options are that they're presenting to you. I think to be cautious and aware, you know, do your research, understand the reputation of the business that you want to work with, that you want support from.
Maggie Sinclair:Ask the questions, understand and be aware of the contract, understand the fees that might come along with it. Also understand, if they say they can wipe it clean for you, walk away. Just know that they need to help you, but they're not going to solve it for you. It's going be a partnership. Those are the things.
Maggie Sinclair:There's good options there for those that need it. They're there for a reason and utilize them and there's good people there. But be cautious of having to pay the upfront fees or any of those extra costs, because that's not what you're there for. You're there to get help to reduce your expenses, not increase them. Right.
Maggie Sinclair:Can I ask you about debt consolidation?
Jessica Samuels:I mean, is that again, I'm sure it depends on folks scenarios, but is that a viable option for some people sometimes?
Maggie Sinclair:For sure. If you can lower your rate of interest and lower your payments by putting everything together, it works well. What it also does is it helps you get to where you know you're going to pay your loan like where you'll have a fixed term, it'll be done in five years and you won't have to worry about it. When it gets challenging or where the downside of a consolidation loan is, is if you don't change the habits. So that lifestyle, that spending habit, if consolidate everything together and then you go back out and you continue to increase your credit card again, now you've actually worsened your position because now you've got the new debt and the old debt.
Maggie Sinclair:And it is right for the right individual to pull it together. And I've seen individuals come in, we've put it all in, it's like there is that weight off your shoulder that you were talking about. It's like, okay, I can afford it. You want to be sure that the payment that comes out of it is affordable. You don't want it to be so big that it's keeping you up at night now.
Maggie Sinclair:So I think consolidation for the right reasons absolutely works for people.
Jessica Samuels:Having that financial literacy piece is kind of is that the right that you know, you Yeah, you talked about like, you know, making a budget, I mean, even it can start with there but but educating yourself on financial literacy seems like a good first step. And it will help you along the way, even if you are facing consolidation or some other things,
Maggie Sinclair:you know, the literacy is about understanding the differences and what's going to work best for you. Because every one of us are unique, Every situation is going to be unique when we're needing the help and what the help is that looks like it. Understanding that so that you're not put into a worse position because someone's trying to fool you or mislead you or misguide you so that you feel comfortable and that you're confident that you understand, well, wait a minute, I only owed a thousand. Now, why do I owe a thousand and 80? What it is.
Maggie Sinclair:So helping people along the way. But when you don't, find someone you trust, go your financial institution and find someone that you trust that you can talk openly to that will help you and guide you so that that does develop your literacy as well.
Jessica Samuels:Okay. And sometimes bankruptcy might be the most viable option.
Maggie Sinclair:Yeah, I won't be an expert on it. But what I will say is that, absolutely, you go, you want to talk to an expert in bankruptcy. But at times what you need to be aware of is what the different types of bankruptcy there are and the pitfalls or the downside to it and the upside. Because there's some debts that actually don't get wiped clean. I think there's a misconception out there that everything goes away.
Maggie Sinclair:So alimony and taxes and things like that, some of that doesn't actually get wiped off. And so people still have these debts and they thought that they were going to be cleared. And then depending on the type of bankruptcy, you have this risk of future. You might not be able to get a certain job that you might want. Seven to ten years is how long it stays on your bureau.
Maggie Sinclair:And so, when we talk about job stability, then now you've even taken out of the market in some ways at sometimes. Or, you know, being able to get a mortgage or even renting if you need, you know, landlords will look at that. So, you know, just be aware of the pros and cons of it. And when it's the right thing to do, it helps people. It really does.
Maggie Sinclair:It takes the burden of those debts away. But it's what does it do on the other side to help them to be sure that they're comfortable that that's the right choice for them. Great advice, Maggie. Thank you.
Jessica Samuels:Mike, before we wrap up, I feel like it's a it's important to mention a service that is provided across the province, but also here through CMHA Kelowna. It's called the Central Okanagan Rent Bank, and how it can tie into kind of maybe some of the debt that folks are facing. So explain a little bit about Rent Bank.
Mike Gawliuk:Yeah, I mean, Bank is a program that provides people with zero interest loans, grants, or a combination thereof, depending on their financial circumstances. It's designed as an initiative to prevent them from being evicted from their rental homes. And so they can apply to CMHA. It's a fairly rigorous process. So we look at all of the financial picture and what's going on and those elements and then make a decision around providing them with that financial support.
Mike Gawliuk:Realistically, it could be that someone is in between jobs or there's been an injury and it might just be a one time scenario. It may also be a step along the way to addressing some of the issues that you spoke to and ultimately for people to take a look at their financial situation and ideally work towards getting that unrelenting stress off of their back. Certainly, when we talk about that, that's exactly what Rent Bank is for. In this environment, we've talked about it. We're seeing increased demand around that.
Mike Gawliuk:And it just speaks to again this issue. I would certainly like to say thank you because you've shared with us a number of things and we talk about a way forward and you've shared a few ways forward for people who are struggling And it's of super value to our listeners for sure.
Jessica Samuels:Yeah. Thank you both for being here.
Maggie Sinclair:Thank you.
Jessica Samuels:Okay. Once again, we have a few resources. Now, Maggie went through some of those kind of buyer beware or things to watch out for if you are considering going to your financial institution or debt consolidation or debt management. We'll have some links to some neutral third parties. We're not going to make any recommendations.
Jessica Samuels:And then, of course, you can always find Central Okanagan Rent Bank on the CMHCalona.org website. And, you know, we have lots of episodes that reference some of the things that we talked about today. You can find all of those on the way forward podcast page presented by Beam Credit Union. Lots of information, but please, as always, meantime, do take good care. Beam Credit Union supports mental health initiatives across British Columbia because caring for each other builds stronger, more connected communities.
Jessica Samuels:United has won. Beam's founding credit unions now serve 190,000 members across BC.
