We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.
Cost of living in Toronto and elsewhere: Canada’s rising annual inflation rate is a cost-of-living crisis
Two articles about living costs for Canadians were published this week. According to a recent Angus Reid poll, many Canadians’ quality of life is further diminishing as more debt is accumulated and the pandemic continues. Then Statistics Canada announced that the annual inflation rate reached its highest level since February 2003 in September.
When you hear the term “cost of living“, it’s often accompanied by the phrase “rise” or “have risen”. Recent data shows that Canada as a whole has experienced an increase in the cost of living. In this Brandon Blog, I describe how the rising cost of living in Toronto and elsewhere has the potential to create more debt and therefore more stress on Canadians.
Cost of living in Toronto and elsewhere: What is the Consumer Price Index?
Consumer Price Index (CPI) is a national measure of prices based on living costs across major cities in Canada. As the most quoted measure of living costs today, the CPI shows how costs have changed from year to year and illustrate that not everything is as cheap as it once was.
It is inflation that tells the whole story. A rising cost of goods and services reduces the purchasing power of the dollar. Cost increases are measured by this indicator. A CPI calculation represents the average cost of an accepted basket of the standard of living items, such as:
- food prices;
- cost of housing;
- transportation costs; and
- medical costs
How does inflation affect our daily lives? Inflation increases food, gasoline, and utility costs, reducing savings and discretionary spending. Price increases create economic inequity. They are tough on the middle class, and even harder on the lower class.
What is behind the rise in prices? The federal government, via Statistics Canada, reports that the consumer price index in September was up 4.4 percent compared to last year. In August, the reading grew by 4.1% year-over-year. Last month, consumers paid 32.8 percent more for gasoline than in September 2020. This increase in gas prices is what drove most of the increase.
Cost of living in Toronto and elsewhere: The negative side of the cost of living increases
As the cost of living and the inflation rate rises, Canadians are often caught short by unexpected financial burdens that can quickly devour their earnings. At the same time, the cost of day-to-day living, like food and housing, is increasing, which makes it hard for Canadians to save money for the future. Research shows that for low-income families, housing, food, transit and child-care costs generally are all increasing at a faster rate than incomes. This can easily push poorer households below the poverty line.
All of us have heard about the cost of living increases, and so far it has been a controversial topic. We haven’t reached a consensus regarding this issue. Some say we shouldn’t worry about it, while others say we need to act.
The surge in inflation highlighted the failure of Prime Minister Justin Trudeau’s economic policies, said Erin O’Toole during the recent federal election. How did PM Trudeau respond? In his view, monetary policy is not one of the top priorities for his government after the election. He continued:
“When I think about the biggest, most important economic policy this government if re-elected, would move forward, you’ll forgive me if I don’t think about monetary policy. You’ll understand that I think about families.”
Canadians were encouraged by Erin O’Toole to vote out the government. Well, that did not happen!
Cost of living in Toronto and elsewhere: How the rising Consumer Price Index affects you
Researchers at Angus Reid Group conducted an online poll of 2,015 Canadians in September to determine the affordability of living in Canada. The survey found 26% of respondents had incurred at least one new debt, with 72% reporting that this debt has negatively affected their lives. The most common type of new debt was credit card debt.
In a previous Brandon Blog, I reported that many households were able to pay off higher-rate credit card debt during the lockdown while receiving payments from federal government COVID-19 pandemic support programs. After a return to normal, however, that will look, those same households run the risk of increasing their credit card balances again. The reality is that most people used their credit cards as a supplement to their income to pay for living expenses and/or lifestyles due to insufficient income.
According to the new survey, Canadians have now started taking on new credit card debt. As a result, their quality of life is further diminished as more debt accumulates and the pandemic continues. Canadians’ savings have also been impacted by increased spending on essentials, job loss and lower-income, according to the survey.
High real estate prices are forcing many Canadians to delay home ownership, according to the survey. Meanwhile, we have seen that the one thing the pandemic couldn’t stop was the booming real estate market in large Canadian cities. Even areas not typically associated with significant price increases are showing growth in real estate prices now that more big city dwellers are opting for a more flexible lifestyle by working remotely. Based on these results, it is clear that there is a larger gap between those who can afford to buy a home and those who cannot.
60 percent of Canadians said they would prioritize saving for an emergency fund or nest egg. In other words, Canadians’ priorities have shifted in 2022, with most thinking about saving for emergencies, retirement, and a major purchase like a house, car, or cottage.
Cost of living in Toronto and elsewhere: Tips to combat the financial hit of rising living costs
If we spend $10 at a coffee shop every day, what should we do differently ahead of time so that we’re not tempted to spend that $10? All of these things become habits, and habits are hard to break.
Regular readers know that in prior blogs about household debt and spending, I have stressed the importance of household budgets. Every source of family income and every expense must be considered. You need to look critically at all family expenses and separate the wants from the needs. Attempt to cut every expense you have (yes, every single one!) with the aim of saving 10% – 50% right now. Also, consider creatively if you can earn extra income in any other way.
There is no doubt that rising inflation, ongoing economic challenges worldwide, and the risk of interest rates going up are causing many Canadians to feel stressed and stretched to the limit. But it is still possible to spend less and build savings, even as your living costs rise.
As you do so, here are a few tips to help you stay on top of your finances and avoid debt in spite of rising costs:
- Even though restaurants reopen, that doesn’t mean you have to buy most of your meals there. You can buy food at grocery stores instead.
- Take advantage of what’s on sale or can be purchased at a discount when planning your meals.
- If you can, buy bigger packages when they’re on sale for a lower price than smaller packages.
- Analyze all your household and utility bills to find savings.
- Savings are possible in many areas, including the bank account, cell phone, and internet plans.
- Those $10 a day you spend at coffee shops add up to $170 a month if you do it 4 days a week.
When you’re looking forward to preserving your overall well-being through a sound money management plan, it’s easy to remember why you’re making frugal choices.
Cost of living in Toronto and elsewhere summary
I hope you found this cost of living in Toronto and elsewhere Brandon Blog post informative. Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.
The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.
The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.
We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.
That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.
Call us now for a no-cost consultation.
We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.
We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.
