Experts say tackling debt starts with honest conversations

WELLINGTON COUNTY – Reports suggesting consumer debt loads are on the rise across the country are seemingly everywhere.

The Financial Consumer Agency of Canada is reporting more Canadians are borrowing to cover regular expenses, and that a third say debt has increased since 2019.

Credit reporting agency TransUnion Canada reported that in the third quarter of 2025, total consumer debt (including mortgages) rose to $2.6 trillion, year-over-year. Non-mortgage debt was pegged at $673 billion for the same period.

In the same period, Statistics Canada reported $1.77 was owed for every dollar of disposable household income.

Heather McKague, a certified financial planner with Parallel Financial in Elora, said she has noticed a shift in recent years with more conversations coming up around debt, particularly with younger clients.

“It’s been brewing, honestly,” McKague said.

And once debt takes hold, it can be hard to get ahead, she said.

Having worked in personal finance and business lending for 20 years at RBC, McKague said she has seen it all.

Her number one piece of advice is to focus on paying down high-interest debt first, rather than trying to evenly distribute debt repayments.

She’s not suggesting anyone skip minimum payments – she’s recommending the biggest chunk of change available be put into paying down high-interest debt first.

That’s because the longer high-interest debt sticks around, the more money goes toward paying interest on the debt rather than the debt itself. 

Another way of looking at it: The penalty paid on debt with a lower interest rate isn’t as harsh as the penalty paid on high-interest debt over the same period of time.

Knocking down high-interest debt sooner than later means fewer dollars are devoured by interest, and more cash goes toward paying the principal and kicking the debt for good.

Once high-interest debt is cleared, then debt carrying lower interest rates can be attacked in the same focused way until one day you’re free.

McKague also said she is seeing a changing trend involving older, wealthier clients who want to help children purchase a first home.

Despite being mortgage-free themselves, she said some parents are remortgaging their home and taking on debt for their children into retirement.

If you’re considering going down that road, she advises getting honest about whether it’s really a good idea, and asking a lot of questions about potential future scenarios.

McKague said conversations around money need to be open and honest – and a little soul-searching along the way helps too.

After all, what’s your greatest asset? McKague asks. It’s you.

“Let’s start one step at a time, putting your foot forward, carving out that little piece for yourself,” she said.

Jason Jack at Jack Financial in Drayton agrees.

“Paying yourself first is just not what people do anymore,” he said.

Both McKague and Jack advocate for putting 10 per cent of your income into savings.

But valuing and paying yourself means having an honest look at wants versus needs, cutting unnecessary spending, and learning to live within your means while ignoring the noise of consumerism.

“As far as financial planning goes, one of the biggest obstacles people have is debt,” Jack said.

Spending habits have shifted in recent years, he continued, attributing the change to the ease of online shopping and a desire for more.

But debt goes beyond consumer spending and vehicle loans; mortgages now are outsized; bringing higher everyday debt loads.

And taking care of that debt means you can’t ever sit back and relax – there needs to be a constant source of income to service it.

“Servicing debt is not cheap,” Jack said, adding it can take years to crawl out from.

Having a plan with accountability is crucial to success – and what works for one may not be the answer for someone else.

Jack said people may not realize you don’t have to be wealthy to turn to a financial advisor for help.

“What’s the worst thing that could happen?” he said.

He looks at income, assets, liabilities, budget, weighing fixed and variable costs, and formulates a plan.

Someone who is fiscally responsible is generally not lucky, Jack said. It’s done through intentional planning, calculated risk, ownership or living off less. 

“Society gives us so many [options] to sabotage ourselves; and that’s not society’s fault, that’s our fault for buying into the sabotage.”

Getting personal and honest is a good place to start.

“What is your relationship with money? Who did you learn it from? What are your thoughts surrounding money?” are good questions to ask yourself, Jack said.

For Wesley Cowan, an insolvency trustee at MNP – headquartered in Alberta, with offices in Mount Forest and Guelph — he’s often seeing those who have exhausted other options.

Cowan said illness, job loss, business failure, a death in the family and out-of-control consumer debt can lead people to seek out an insolvency trustee.

Cowan explores at all the options available, but if the collection calls won’t stop or creditors are threatening to sue, a trustee can submit a consumer proposal or help you file for bankruptcy.

A consumer proposal, the most popular option, Cowan said, is a formal way of settling debts involving everyone coming to an agreement on how much of an outstanding debt will be paid back over time, up to five years. Your credit rating and lending risk score take a substantial hit, and it stays on your credit report for three years after the payment plan is finished.

Declaring bankruptcy is a more extreme option. You surrender ownership of any non-exempt assets to a trustee who sells those assets to try and recover some money to pay creditors. It bottoms your credit rating and risk score and lingers on your credit report for nine years.

An option people can try before going either route, Cowan said, is to try and roll high-interest debt into a lower-interest debt repayment loan or line of credit.

“A lot of people are sort of shameful or afraid to reach out for help,” Cowan said, but federally-licensed and regulated insolvency trustees are there to help.

For those in Wellington County struggling with shame and the emotional burden of debt and financial stress, Compass Community Services offers cost-free, one-off counselling sessions.

The hour-long sessions, funded by the United Way and the province, can be booked online for offices in Fergus and Mount Forest at: compass.janeapp.com.

Executive director Erica Pellin said financial stress consistently ranks in the top four reasons people seek mental health support at Compass.

“Financial stress is front and centre for everyone right now,” Pellin said. “Even people with disposable income and wealth are feeling more stress and anxiety about finances than ever before.”