The oil and gas price wave in Alberta, preparing your finances for whatever happens

It’s been said that most people in Alberta are either working in the Oil and Gas industry or have someone close to them that does.

With oil prices plummeting to the lowest they’ve been since April 2009, many consumers are fretting over the health of the economy and job security. According to Statistic Canada, Alberta’s unemployment edged up to 4.7 per cent in December from 4.5 per cent the month previous. Shell Canada, one of Alberta’s largest oil projects, recently cut hundreds of jobs – striking fear into residents that more lay offs are to come. With this in mind, I thought you might be interested in a story looking at the impact on Albertans’ personal debt and expert tips on how to prevent consumers from falling into a financial crisis during this time.

When it comes to debt in Alberta, the province holds highest average household debt in Canada, sitting at $124,838 –nearly $50,000 more than the Canadian average. A recent BMO Report shows that despite the slump in oil and the decreasing number of jobs in the province, consumers are still spending at an unsustainable rate. Experts are warning consumers to take stock of their financial situation and prepare for the anticipated job cuts.

Average Household Debt
National ATL ON AB BC
2013 $72,045 $47,237 $76,970 $89,026 $79,089
2014 $76,140 $64,120 $67,507 $124,838 $99,834

Bruce Alger, licensed trustee with our consumer insolvency team in Alberta elaborates on his concerns, “Albertans continue to have the highest household debt in the country, and as other expenses continue to hike up such as utilities, property tax, and potentially interest rates, now is the time more than ever for consumers to have discipline and caution in term of their expenses.”

Alger offers some tips to consumers in Calgary to brace their financial situations:

Plan for the worst and start an emergency savings fund if you haven’t already – the goal is to get to several months of living costs put away in case of job loss

  • Seek out where you can easily cut down on every day costs and apply the saving against debts or your emergency fund
  • Talk with a financial expert, like a licensed trustee, who can offer free advice on how to deal with any mounting debts or debts that have the potential to become a problem.

So our question to you is, has the price of oil affected you or someone you know? Have you started to take a review of your finances and developed a plan to ride out the oil and gas wave?

If you or a family member are facing financial struggles or would like some help with managing your debt, one of our professionals is available to discuss your situation. There are many options available to help and you may not need to go bankrupt. Contact us for a confidential, no-obligation, complimentary consultation. Call us toll free from anywhere in Western Canada 310 8888. Visit us online at BC: www.GTDebt.ca or AB: www.GT.Alger.ca.



Not our parents’ generation when it comes to personal debt

It’s been said before:  In a number of ways, we are not like our parents’ generation. Things will always change. Bottom line, we often think and act differently from our parents.

Perhaps new technology and the digital revolution spring to mind first?  It’s true. From the fax and laptop to smart phones and wearable technology, the world looks and works in many new, and evolving, ways.

What’s also true is our change in attitude and actions when it comes to personal debt. In 2012, the Globe and Mail reported on a poll conducted by a firm of bankruptcy trustees. The results show that most Canadians are quite comfortable with using debt as a financial strategy. Yet, this was a time when debt loads had risen to alarming new highs. The survey found that nine out of 10 respondents would consider borrowing money to cover an unexpected expense that was not an emergency.

By contrast, in the 1960s, families frequently lived a ‘middle class’ lifestyle and managed to own a home on one income (usually the Dad’s). The mindset was typically to save for needed things—rather than to borrow. And, this lifestyle rarely included the additional luxuries we see fairly common in our lives today: second cars, cable TV, eating out, vacations and plane travel, smart phones and tablets, pricey gym or golf memberships, designer duds etc.

The downside to our view of what constitutes the appropriate lifestyle of the 21st century is that to acquire and maintain this level of consumerism we may spend more than we earn (a concept that would rarely be considered acceptable in the 1960s)! In our work at Grant Thornton, we often see where this can lead:  Consistently living beyond ones means, borrowing, excessive purchasing and maximizing high-interest credit cards can put individuals and families into highly stressful situations with increasing debt loads (whether we believe we can afford it or not).

Our role is to help people address their debt problems and find ways to rebuild a solid financial future. We can help with tips and reminders so that you may not need our assistance again in the future, including: disaster proof your life (get your life insurance and an emergency fund in place), spend less than you earn, aggressively pay down high interest debt, read the fine print on any purchase agreements (you may be liable for significant interest payments if you miss the eventual payment due date) and delay consumption (save for that vacation rather than charge it).
If you are facing financial struggles or would like some help with managing your debt—one of our professionals is available to discuss your situation. There are many options available, ask us about a consumer proposal.  Contact us for a confidential, no-obligation, complimentary consultation. Call us toll free at 310 8888.

BC: www.gtdebthelp.com

AB: www.GT.Alger.com

A Consumer Proposal Can Mark New Beginnings towards Financial Health

Fall is the perfect time to take a serious look at your finances and to consider options to deal with your debt, perhaps a Consumer Proposal? You and the kids are back to daily routines after the summer months during which you might have found yourself using more credit on extras such as vacations, fuel for the RV, costs for soccer camp and summer festivals. Let’s not forget to mention the ever growing hype of back to school shopping which, in 2013, will see us spend an average $428 per child, up 18.2 % from 2012. This is higher for post-secondary/university students at an average of $572 per child according to a recent survey conducted for the Bank of Montreal.

Freida Richer, CIRP and Trustee with Grant Thornton Alger Inc. notes that there seems to be a habitual tendency for people to postpone the review of bills and state of their finances until after the summer months at which point they are hit with the reality of their overspending. Ideally, you should have enough cash flow to support aggressively paying down the debt in 3-6 months, while putting the brakes on credit purchases. The bad news is that if the debt load is too high and you have little cash flow, this plan is not feasible but the good news is that Albertans are working and receiving a steady flow of income which may support the ability to resolve the debt through a Consumer Proposal. A practical solution as it is based on your ability to pay. Also, you need to anticipate that in just a few months, you will be entering the most expensive month of the year so it’s important to plan now.

A Consumer Proposal is an offering to repay a portion of total unsecured debt through monthly payments and/or a lump sum payment. The creditors vote on whether to accept or reject the proposal and, generally, as long as the offering gives them a greater return over bankruptcy, the vote will be ‘yes’. Once accepted, the amount you offered to repay is legally binding and you will not have to pay anything more. Some advantages to this solution is the freezing of interest and ability of creditors to take collection action against you.

Trustees are authorized to administer Consumer Proposals – other proposals are not the same.   For more information on proposals and other debt solutions, please contact Freida directly at 780-442-1990 or call toll free (anywhere in Alberta) 310-8888 to find out more information or to schedule a free consultation.

Visit us online www.gt.alger.ca