(The Canadian Press)

By Derek Craddock

FINANCIAL BURDENS

‘Be careful with debt’ says P.A. financial advisor as more residents feel the pinch of inflation

Nov 15, 2023 | 5:00 PM

Prince Albert residents continue to feel the pinch of the high cost of living with more people putting money towards paying down debt than into savings.

With interest rates at high levels, inflation at a point not seen in decades (3.8 per cent), and expenses like carbon taxes hitting fuel and home heating, consumers are struggling to pay for everything from groceries to mortgages and other necessities.

It’s also forcing many people to shift their focus on where to put their money, according to Adriann Locke with Thierman Financial in Prince Albert.

Locke said that before 2022, when the Bank of Canada started raising its key interest rate, many people could put more money into savings with interest earned being more than interest paid on debt.

At the end of 2023 with the policy rate at five per cent, Locke said paying down debt is the more responsible option.

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She also stressed the importance of having a budget, regardless of your age or financial situation.

“If they’re not budgeting, they have to be budgeting now more than ever because people need to be aware of what their expenses are, and they need to make sure they’re living within their means,” she said.

Spring Financial reported in the summer of 2023 that the average household debt, not including mortgages, for Saskatchewan was $22,582. That includes debts like credit cards and personal loans, vehicle loans and lines of credit. The national average for the same time frame was just over $21,000.

The Canada Mortgage and Housing Corporation (CMHC) said in the second quarter of 2023, the average mortgage payment for a Saskatchewan homeowner was $1,452. In the second quarter of 2021, average mortgage payments were at just over $1,200.

The benchmark home price for Prince Albert last month according to the Saskatchewan Realtors Association was $251,100.

Financial burdens have also affected charities trying to help those seeking support. The Prince Albert Food Bank has seen its number nearly double in the last six years to nearly 1,400 hampers handed out a month.

Earlier this month, the local Salvation Army told paNOW it was handing out an average of 200 meals a day for six days a week so far this year. In previous years, that number was around 60 meals a day.

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For Locke, she said it doesn’t matter whether their clients are young people looking to build credit or those hoping to retire, if they’re not careful with debt, it can become a major strain.

“If you do need to go into debt for something, make sure it’s something that’s a need and not a want because debt is a commitment. You can’t just walk away from it without having consequences.”

According to government statistics from the Office of the Superintendent of Bankruptcy, Prince Albert and the North were above the provincial average for insolvency at 4.3 people per 1,000 in 2022. That was up from 3.2 per 1,000 people in 2021.

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derek.craddock@pattisonmedia.com