Debt-challenged Canadians will never be able to escape from the debt trap unless they take personal responsibility for their financial situation. And governments--at both the federal and provincial levels--appear content to watch as a significant percentage of the Canadian adult population slides into modern day serfdom to lenders.
In the context of consumer debt, how does someone become the proverbial skunk at the garden party? By announcing in a very loud voice that the number one cause of consumer debt in Canada is poor management of personal finances.
There are two other causes of household debt in Canada. The first one is external factors resulting in a major change in household finances. This might arise from job layoff or business failure, relationship breakdown, or major expenses such as paying for post-secondary education or incurring major medical expenses.
The second one involves serious psychological and mental health issues that, left untreated, will make it very difficult for an individual to avoid debt problems. This would include those who suffer from depression, as well as those who are addicted to gambling or drugs. It might also include certain types of compulsive behavior such as those with purchasing certain items that can be characterized as "wants" and not "needs".
I would suggest, however, that these latter two reasons for Canadians experiencing debt problems ranks far behind the elephant in the room, the average Canadian's incompetence managing their finances.
When a Canadian baby is born he or she is not in debt. And not all Canadian adults find themselves in debt. So why do some Canadians, and not others, find themselves in debt?
1. No one is teaching children the basics of personal finance
The number one reason why the majority of Canadians receive either a failing or mediocre grade dealing with their finances is the failure of parents, Canadian educational institutions, and governments--both at the provincial and federal level--to adequately educate Canadians about financial fundamentals like a budget, the difference between wants and needs, and the appropriate use of credit.
2. Canadian lenders are preying upon unsophisticated Canadian consumers
I have no sympathy, whatsoever, for the bad debts of Canada's big banks, major credit card companies, and retailers offering credit cards with exorbitant interest rates. So ye shall sow, so ye shall reap.
Canadian credit card companies are more than happy to target vulnerable groups including those recently discharged from bankruptcy and university students when marketing credit cards. All too often these financial institutions lend money to people for things other than buying a home, basic transportation, or a post-secondary education.
3. The federal Government and provincial governments do not appear concerned about
modern-day debt serfdom
In Medieval times there was the nobility who controlled land ownership and then there were serfs who eked out a subsistence existence. In Canada today are there nobility and serfs? The answer would appear to be a resounding yes.
Today Canadian governments--at both the federal and provincial levels--do not appear to be concerned about the fact that a significant percentage of the Canadian adult population has been reduced to a modern day serf--not in service to a nobleman--but to their lenders.
In this YouTube video Preston Watson, a veteran of the payday loan industry identifies why so many Canadians find themselves in debt trouble.
In this YouTube video veteran payday lender and industry consultant, Preston Watson, names poor household financial management as the number one cause of consumer debt in Canada.
There will always be people in debt. That does not forgive federal and provincial governments from doing little to educate consumers about financial literacy and failing to provide reasonable safeguards in the lending industry.
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