A study of 25 municipalities across the province found that the average consumer debt for Newmarket residents is higher than the provincial average.
The report from Borrowell found that the average consumer debt, not including mortgages, in all of Ontario is $27,523 in the first quarter of 2021, including student loans, car loans, lines of credit, credit card debt and other personal loans.
In Newmarket, the average consumer debt was above that at $30,982.
That is the seventh highest average debt in the province and the third highest in York Region, according to Borrowell.
Of the municipalities included in the report, the places where people had the highest consumer debts were Oakville with $48,410, followed by Richmond Hill with $37,827, and then Markham with $36,809.
It’s hard to paint a picture of why the GTA has higher levels of debt but in Newmarket, employment could be a factor, according to Susan Heim, executive director of Family & Credit Counselling Services based in Thornhill.
“I found that sales and service had the highest representation in terms of occupation held by the population of Newmarket and also retail and personal services are the top two sectors where these people are employed,” she said.
Sales and service occupations represented 11,555 residents, according to Newmarket demographics from the 2016 census.
“Clearly the pandemic has impacted those sectors very, very significantly and related jobs were the hardest hit since the onset of COVID,” Heim said. “With the job losses that means that people have had to dip into savings, rely much more on credit and avail themselves of government support measures.”
However, despite the pandemic’s impact on employment, the average debt in Ontario decreased by three per cent since the same time last year.
In Newmarket, there was a decrease of one per cent.
“Increased public health measures and restrictions over the past year have limited what Ontario residents can spend their money on. With many workplaces enforcing work-from-home policies, gas and transit purchases have likely decreased since March 2020,” the Borrowell report said. “In addition, limitations on dining out, in-person shopping, and similar activities have limited discretionary spending. These trends have played a role in decreased revolving debt over the past year.”
However, as the province prepares to re-open, debt is expected to rise again, according to Borrowell.
“We’ve seen positive consumer debt trends over the past year, but the next few months could mark a significant shift,” said Andrew Graham, the financial institution’s co-founder and CEO.
He said with financial aid programs like loan deferrals coming to an end and potential increase in spending on the horizon, “The financial habits that consumers developed over the past year will almost certainly change as more opportunities become available to socialize and spend this summer. We could see an increase in consumer debt over the next few months.”
Heim agreed, saying emotions may take over logic as restrictions are eased and debt could rise.
“The attraction, the appetite for spending is absolutely going to pick up. When you talk in terms of services that people have not been able to avail themselves of, so retail shopping, going to malls, haircuts, restaurants, sporting events, concerts, that’s typically where people use their credit cards to pay for these items and these services,” she said.
For residents who are worried about the potential for more debt as the pandemic comes to an end, she advises not to avoid the situation.
“Don’t ignore the problem. Open your statements monthly, create a budget, and there are organizations that can help with these situations as well,” she said.
Heim’s biggest piece of advice is to budget.
“Budgeting doesn’t have to be a complex process, it’s a matter of sitting down with pen and paper and taking a look at all your monthly expenditures,” she said. “Food, rent, that absolutely has to be paid but where people really need to focus is the discretionary spending and because there’s going to be such an interest in getting out there and resuming normal activities and probably over doing it, take a look at your discretionary spending.”
As a not-for-profit organization, Family & Credit Counselling services helps York Region residents with public workshops, budget planning, and credit counselling to offer solutions and payment plans for people with debt. All their services are confidential and there’s no judgment.
Heim also said you don’t have to wait until debt becomes a problem to take advantage of those services.
“Just as someone would go see their family physician for preventive measures as opposed to when they’re sick, the same holds true with financial wellness,” she said. “If you get into the habit of establishing a budget and working to it, you can certainly avoid falling into these pitfalls especially with the unknowns such as COVID.”
