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Leaving debt for your children and grandchildren

Friday, June 30, 2017

Current and future government debt
Despite some hopeful sentiments currently being spouted in the political arena, many experts say that leaving the next generation with significant debt in British Columbia is inevitable. This conclusion takes into account current consumer debt across the province, which is expected to reach almost $80 billion in the next few years. As consumer debt across Canada has risen steadily, Vancouver and other cities have certainly followed suit and it falls on taxpayers to worry about this―both now and down the road.

Abakhan&Associates_Licensed_Insolvency_Trustee_Bankruptcy: mother and son discussing debt options

On the positive side, experts believe that British Columbia has a greater ability than most other provinces to pay its debts as a result of taxes generated. But this still certainly supports the fact that overall debt will remain and the only people left to pay it off after the current generation is the next, and the ones after it. And how will individuals be able to avoid debt and perhaps even bankruptcy in Vancouver when they are forced to pay off provincial debt? Furthermore, it is likely that the money owing throughout British Columbia will continue to grow.

What will contribute to this certainty are some of the provincial infrastructure projects already lined up, including BC Hydro’s Site C. This is expected to be built in under a decade for $20 billion, with some experts adding fuel to the fire by stating it will take taxpayers as many as seven decades to pay it off. The organization also has significant debt that could cost British Columbia close to $100 billion in the long term. In the meantime, the company performing the Port Mann Bridge and highway expansion, and the Massey Tunnel replacement, will also likely require close to $7 billion in total.  

Tips on avoiding too much debt for later generations

Younger generations are facing unique challenges of future debt as heavy credit card spending, the recent real estate market boom in Vancouver, and aforementioned infrastructure projects have significantly contributed to the uncertain economic climate. However, tuition fees and subsequent student loans form another significant area of concern for both current and future generations when it comes to debt. Establishing a savings account by tightly budgeting and being mindful about spending will help to make large expenses more affordable and realistic. 

With the job market already more difficult for individuals who have graduated in the past decade, significant debt caused by student loans is implicated in the reasons for young adults living in their parents’ homes longer, getting married later, and struggling to make large purchases like a car or a home. It also makes them less likely to save for their own children’s education, which will ignite a vicious cycle.

In anticipation of the responsibility that comes with continuing to pay off the current provincial debt, it is important for consumers to learn solid money management habits and also pass them on to the next taxpaying generation. Speaking with one of Abakhan & Associates’ Licensed Insolvency Trustees for debt help in Vancouver can help you to learn to spend more cautiously and ultimately, avoid bankruptcy.

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