Many Canadians struggling with debt amid high price of gas, groceries, housing, inflation

There’s a perfect storm underway that has almost everyone feeling the financial pinch.

The price of everything has gone way up across Canada and it’s forcing many people to make some difficult decisions about what they can afford.

There’s no doubt everyone is feeling the effects, but things have been especially tough for those who don’t earn much, those who are single parents, or the many Canadians who are trying to care for both their children and parents.

“Unfortunately, this isn’t something new. One of the trends we’re seeing is those with lower levels of income and less savings are certainly feeling the pinch more and while we all lose out when inflation runs out of control, as it has,” explained Isaiah Chan with the Credit Counselling Society.

“What we find is that those of us with higher incomes often have a bit more space to absorb increasing costs, though that space is running out very quickly and those who have higher incomes can generally make less drastic changes. There’s certainly greater concern for those who are already being pushed to the brink and it’s heartbreaking for us when we see someone having to choose between eating less and keeping a roof over their head.”

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Chan adds the reality many people are facing right now is difficult, especially for those living in expensive regions like Metro Vancouver.

“You’re dealing with high cost of transportation, high cost of food, and then high cost of housing as well, so that’s a trifecta, in terms of someone’s budget,” he said.

Although Chan admits it’s not easy, he suggests people insulate themselves financially as much as possible.

That can be done by reducing the amount of debt and minimizing discretionary expenses, he adds.

“For some of us, we may need to tackle the tough conversations with ourselves and our families, like, ‘What are the things we want to prioritize in our lives? What are some of the difficult financial decisions that we’ve been avoiding?’ Nothing beats planning ahead for these changes. It’s going to take some time here for inflation to be brought back to acceptable levels and one of the challenges is that when inflation increases rapidly, our incomes tend to fall behind.”

The national inflation rate for March blew past expectations, jumping to 6.7 per cent, according to Statistics Canada. The rate jumped to its highest level since 1991.

And the Consumer Price Index was already high before that — in February, the CPI was sitting at 5.7 per cent. Meanwhile, the Bank of Canada has been raising its key interest rate the last few months, after it held it at 0.25 per cent for the majority of the pandemic.

Making difficult decisions

Chan says his clients right now who are asking for help are showing a vulnerable side they may have never wanted to.

“I was speaking with a parent who’s really upset that they had to choose between some different activities for their kids and, at this point, it’s about focusing on the positives there and saying, ‘Okay, what do you have available in your budget and what are the things you can do for your child?'”

He says discretionary spending is something people really need to decide if they can handle right now. He is urging people to reconsider things like travel abroad this year.

“I know that’s a tough pill to swallow for a lot of us who’ve been grounded due to the pandemic. From a transportation perspective, take transit, dust off your bike and practice carpooling, where possible and speaking with your employer to see if there’s flexibility for you to work from home certain days to avoid a costly commute. And most importantly, follow a budget and track your spending.”

Chan acknowledges not everyone has the option to give up driving or to work from home, but he reiterates it’s key to put a focus on finances right now, which could also mean deciding where you can afford to live.

“There have been a number of people I’ve spoken with, be it at work or family and friends, where the conversation is whether the benefits of living in a major urban centre [and whether] it outweighs the cost and that seems to be the predominant theme. There isn’t a silver bullet for individuals who are really feeling the pinch, it’s more a weighing of, ‘What am I able to give up? How do I live within my budget?'”

‘Give and take’

But there are also many people who have been considering ditching their vehicles for something less fuel-reliant. For those who are unable to get into the electric vehicle market, or those who simply can’t find one due to supply challenges, some industry experts have pointed to e-bikes or car shares as potential choices in the interim.

But as people try to balance their budgets, Chan says there is a warning sign to be aware of, so you don’t slip to deep in the red.

“I think a warning sign is if you’re sacrificing your future, so if you’re finding you’re not able to save for retirement and you’re not able to save for some of the bigger plans you have in life, there has to be a moment there where you take a moment to assess your situation … You may be able to flex your housing situation, how can you flex your transportation situation? It really is about give and take.”

In Vancouver, many people CityNews has spoken with have expressed a feeling of helplessness.

“As far as groceries, I went in [the store] the other day and small box of blueberries were $10. It’s hard. You have to really watch what you’re doing now. Just generally, [I’m] trying not to spend so much because everything is so expensive. It’s hard on a senior’s income,” Elizabeth recalled.

Brian is among the many who has opted to take his bike everywhere. However, he says that doesn’t mean he’s saving money right now.

“Groceries to me have always been expensive. For the last 10 years, the price of bread, the price of eggs, the price of everything has been going up, so what are you going to do? I’m on disability and I have a part-time job. I have to second guess every purchase right now. Normally, I like to buy clothes and books and all that but, but I’ve definitely had to restrain. It kind of sucks,” he said.

Julie-Marie admits she’s struggling just to get by day-to-day.

“It is making things difficult in everything. With gas, I can’t go everywhere I want to go anymore. With food, I’m noticing not only are the prices bad, but there’s just not consistency of products on the shelf anymore, so I’m finding it to be depressing. I am cutting back, especially with entertainment and travelling — I’m not travelling anymore, and I buy less groceries weekly.”