The 'Secret of Dirty Debt' guides a couple out of harm's way, the others struggle to stay afloat

As Canada's ratio of debt to disposable income rises, it can tie or break ties: the experts say

With Christmas around the corner, Matt Walker says he dreads once again having a credit card after four years without one.

Walker and his wife, DionĂ©, accumulated about $40,000 in debt from traveling, getting married, and having children — while not adjusting their spending habits.

"You get to a point where all you're paying is interest," he told Ian Hanomansing of Cross Country Checkup. "We had a point where we took out a loan and tried to pay it off only to get interest rates down. It's never enough to pay it off. You have so much debt. It's like a snowball."

Statistics Canada says the average Canadian household has about $1.82 in credit market debt for every dollar of disposable income in the second quarter of 2022. That puts the ratio of debt to disposable income at 182 percent—the ratio peaked last year at 185 percent.

In an effort to curb inflation, the Bank of Canada raised its benchmark interest rate in October by 50 basis points to 3.75 percent. But even as inflation eased, food prices continued to rise, putting further pressure on people's finances.

The Medicine Hat couple, Alta., were eventually able to turn things around and be debt free for about a year.

"My wife did a lot of financial research, and had a lot to swallow. No credit cards, no loans, and we have $700 a month that we have to pay off on loans. Just to take that parachute, have no credit to fall back on, it's very scary."

And when they finally cleared that financial hurdle, Walker says it didn't feel real at first.

"It forces you to be like a team. Open dialogue, try to discuss where we are and not make it seem like a secret from your wife," he said. "It's like having one person [become] a part of your dirty secret debt."

Debt can bind or break ties

Nora Beninger said finding a new partner with a shared financial approach was a key criterion after her first marriage ended.

The Ottawa, Ont., resident said she was with a "financially irresponsible" person who racked up significant debt, making her feel as if she had lost control of her life.

"I just remember the constant fear that I would eat cat food in retirement," says Beninger.

As a refugee who came to Canada at a young age, his parents arrived with nothing, he said. They have always been very money conscious – a trait that has been passed on to them.

Remarried nine years ago, Beninger—a professional accountant for hire—says it's important for her to be with someone who shares her attitude about money.

"He told me straight away that he owns the house outright. I know this guy has no debts. He also told me he has enough money saved to pay it off for a year if he gets laid off."

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

"I'm no longer awake at night. We're together, and we roll and pull in the same direction. It's a huge difference."

The money connection is undeniable, said Bruce Sellery. Money can be a source of a life well lived or a cause of anxiety, pain and heartbreak, he says.

Credit Canada's CEO emphasized that very few couples take the time and energy to have critical conversations around their financial health that can ultimately save money and the relationship.

He stressed it was "much cheaper" to stay married, if it made sense - and was safe - to do so.

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

Paychecks go in and out of the joint account to cover joint expenses such as mortgages and property taxes.

"There may be a little savings, but then there's money that's yours - and you do whatever you want with it. Same with your partner. I promise I won't say a word about it. You won't judge me and I no need to hide packages when they arrive from Amazon."

Sick partner, pandemic buying led to near bankruptcy

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

He decided to move them to Brockville, Ontario, to be closer to his family for support — ultimately losing money due to the "hurried" sale of his home and from inflated program and treatment costs for his ill partner. This article was written by EDUKASI CAMPUS. 

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