‘Dirty debt secret’ guides couple out of the red, others struggle to stay afloat

As Canada's debt-to-disposable income ratio rises, it can bond or break relationships, experts suggest. Statistics Canada says the average Canadian household had about $1.82 in credit market debt for every dollar of disposable income in the second quarter of 2022.

As Canada's debt-to-disposable income ratio rises, it can bond or break relationships: experts

1:53:00FULL EPISODE: What impact is debt having on your life? How did you get out of it?

With Christmas around the corner, Matt Walker says he's terrified to once again have a credit card after four years without one.

Walker and his wife, Dioné, racked up approximately $40,000 in debt from travelling, getting married and having kids — all the while not adjusting their spending habits.

"You get to a point where all you're paying is just interest," he toldCross Country Checkup's Ian Hanomansing. "We had points where we took out a loan and tried to pay that off just to lower the interest rates. It was never enough to pay off. You have so much debt. It just kind of snowballed."

Statistics Canada says the average Canadian household had about $1.82 in credit market debt for every dollar of disposable income in the second quarter of 2022. That puts the country'sdebt-to-disposable income ratio at 182 per cent — the ratio peaked last year at 185 per cent.

Inan effort to beat down inflation, the Bank of Canada raised its benchmark interest rate in October by 50 basis points to 3.75 per cent. But even as inflation cools, food prices continue to rise, putting further stress on people's finances.

Just to take away that parachute, having no credit to fall back on, it's so scary.

– Matt Walker

The Medicine Hat, Alta., couple was able to eventually turn things around and have been debt free for about one year.

"My wife did a lot of financial research, and it was a lot to swallow. No credit cards, no lending, and we had $700 a month that we had to pay on a loan. Just to take away that parachute, having no credit to fall back on, it's so scary."

And when they did eventually clear that financial hurdle, Walker says it didn't feel real at first.

"It kind of forces you to be like a team. Open dialogue, trying to discuss where we're at and not have it be like a secret from your wife," he said. "It felt like having one person [be] part of your dirty debt secret."

Debt can bond or break relationships

Nora Beninger says finding a new partner with a shared financial approach was a major criteria after her first marriage ended.

The Ottawa resident says she was with a "financially irresponsible" person who accumulated significant debt, making her feel as though she lost control of her life.

"I just remember the constant fear that I would end up eating cat food in retirement," Beninger said.

As a refugee who came to Canada at a young age, her parents arrived with essentially nothing, she says. They were always very money conscious — a trait that was passed along to her.

Remarrying nine years ago, Beninger — a chartered professional accountant — says it was important to her to be with someone who had a similar attitude about money.

"He told me right away that he owned his house outright. I knew this guy had no debt. He also told me he had enough money stashed away to get him through one year if he was ever laid off."

Beninger says she and her husband, Brent, don't need a life of luxury to be happy.

"I don't stay awake at night anymore. We're in it together, and we're rolling and pulling in the same direction. It is such a huge difference."

The relationship/money connection is indisputable, says Bruce Sellery. Money can be either the source of a life well lived or the cause of angst, pain and heartbreak, he says.

The CEO of Credit Canada asserts that very few couples take the time and energy to have critical conversations surrounding their financial health that could end up saving both money and the relationship.

He stresses it's "way cheaper" to stay married, if it makes sense — and is safe — to do so.

Sellery suggests taking the "yours, mine and ours" approach.

Paycheques come in and go into a joint account to cover shared expenses like the mortgage and property tax.

"Maybe there's some savings, but then there is money that is yours — and you do whatever the heck you want with that money. Same with your partner. I promise I will not say a word about it. You won't judge me and I don't have to hide packages when they arrive from Amazon."

Ailing partner, pandemic purchases led to near insolvency

Sue Defoor's longtime partner was diagnosed with Alzheimer's disease in 2017, while they were living on Vancouver Island.

She decided to move them to Brockville, Ont., to be closer to her family for support — ultimately losing money on the "rushed" sale of her house and from mounting programming and service care costs for her ailing partner.

Covid hit and then everything went to hell in a handbasket.

– Sue Defoor

"COVID hit, and then everything went to hell in a handbasket," she said. "You had to use your credit card [to buy necessities online] because you couldn't go anywhere and didn't want to bring anything [illness] home to him."

Defoor says as interest rates "started going through the roof" she couldn't afford to do anything. She says she pondered consolidation but ended up deciding to sell her house and move into an apartment.

The third person in a relationship: money

Navigating financial compatibility between partners is key for relationships to flourish, according to Justin Michel.

The Mississauga, Ont., psychotherapist says it's important for couples to be on the same page financially whether they're married or not.

Before getting into romantic relationships, people have a relationship with money itself that is fostered and developed in childhood, Michel says.

"It's kind of like money is this third person in the marriage or in the romantic relationship."

The pandemic was good in many ways for some of his clients, Michel says, as it brought finances to the forefront of their conversations at home.

"Before, you had two people where the narrative was just: Go to work and come back and do whatever we can … and those few hours we have remaining on the weekend. Rinse and repeat."

But during the pandemic, when couples were forced to stay at home, there was a lot more opportunity to have those kinds of conversations, Michel adds, and realize how much they differ in terms of financial values.


With files from The Canadian Press and Philip Drost.

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