January 21, 2014

By Margaret H. Johnson

I asked a friend of mine where all of the recent studies on consumer debt come from. He said, “Some come from Mars and others are beyond the rings of Saturn.”

“Come on. Seriously.” I chided.

Okay. Seriously, most of the credit and debt surveys pose as indisputable facts when they are not. The first flaw is their claim to empirical validity. They’ve either sent around a questionnaire to a bunch of people (we never know who the people are or where they live) - and asked some questions i.e. asked for opinions - or they’ve analyzed their own information themselves.

A bank survey would be one example.  Normally they would only be looking at a select few of their own bank customers. Rarely do we know anything at all about the people, their geographic region, the income groups, marital status, age, family size etc. And, of course their statistical messages tend to be positive and promote their services or industry.

A survey does not qualify as a scientific review with valid conclusions. Although surveys are a useful research tool, they are far too often presented as conclusive proof when they really amount to just an opinion.”

I asked him about the recent Equifax survey that suggested Canadians are carrying more debt but pay it off.

He said. “First question: Who does Equifax work for? Are they a neutral body? The answer is no. Equifax is a private for profit company that works for the credit industry.

Comments like, Canadians are carrying more debt now than a year ago, but it seems like many have a better handle on paying it back.” This is an assertion, not a statement of fact further diluted by the word seems. For some reason Equifax wants us to believe people are handling their debt better.”

A somewhat more outlandish assertion comes when either the newspaper or Equifax reported, that while Canadians have more debt now than they did a year ago, they're having no trouble paying it off.

In my school years this would be labeled an unjustified theoretical abstraction. There is no valid statistical evidence to support it. A more logical conclusion would be the opposite. Canadians borrowing more and more debt each year proves that they are not paying it off or handling anything any better.

Not only do I agree with you but I take exception to the usage of the word handling. What does that mean? You know, many people go further and further into debt because they lack sufficient income to meet all of their legitimate expenses. The debt spiral that began in the 1970s in Canada has deepened from a total of about $20 billion in 1975 to the seasonally adjusted total  $515 billion as reported by the Bank of Canada in November 2013. What does this mean?

The answer to the statistically constant dependency upon consumer credit far exceeds the confines of a short blog. What we do know is that the US hits a debt ceiling on a regular cycle now. We know consumer debt is at an all-time high in Canada which means we are in unchartered territory.

What we do need is more detailed and scientifically valid research on consumer credit conducted by qualified researchers. We need to do this sooner than later, before we hit our own personal debt ceiling.

Remember, if you are experiencing financial difficulties do not wait. Call Solutions Credit Counselling at 1(877)588-9491 or fill out our Debt Consolidation Questionnaire and get your Free Credit Counselling Advice today.

For more information visit Debt Canada - your Canadian credit education centre.

If you are a woman in debt, speak with Women and Money first. We specialize in helping women with their personal and business financeMoney management advice you can count on!

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