Beyond the Headlines

Here's something to think about as we head into the Christmas shopping season: the amount of consumer debt held by Canadian families continues to grow at alarming levels, and Nova Scotia families are no exception.

According to new data gathered by the credit agency TransUnion, in the three months ending September 30, the average Nova Scotia owed $25, 277 in non-mortgage debt.

That's up from $24,066 in the first quarter of 2012.

People live in Halifax have an even higher average debt load:  $26,956 in the quarter ending September, 2013.

That debt includes credit cards, lines of credit, installment and car loans, but not mortgages.

"Canadians are not necessarily getting the message that they are carrying too much debt," said Thomas Higgins, TransUnion's vice-president of analytics and decision services.

To make matters worse, Higgins says while our debt load continues to rise, family incomes have remained relatively flat and savings rates have declined.

"It puts people into a difficult situation, there's not as much room to weather a storm, if and when it comes," said Higgins. "We do know there is going to be another storm; the question is how big and how long it is will have a big impact on whether people can manage through that crisis with the debt-loads they have today."

Higgins says people need to start looking at how much they owe, not just their monthly payments.

For example, about 40% of all household debt is on lines of credit, which tend to have variable interest rates. If the economy heats up and interest rates go up that would mean much higher monthly payments for families already struggling to make ends meet.

My conversation with Higgins reminded me of the days, years ago, when I was a loans officer at a bank.

When people got overwhelmed by their debts, we would often give them consolidation loans to pay off their credit cards, and reduce their monthly payments and interest rates. But before we would give them the loan, we were instructed to take their credit cards and actually cut them up in front of them.

A tad humiliating yes, but the message was clear:  if you don't stop racking up debt on those cards,  the next time you come you will be in serious financial trouble.