An appetite for the good life is driving women into bankruptcy
Reaching for a Gucci “Hobo” bag or the wheel of a BMW Z4 has landed young Canadian women in a heap of financial trouble. So much trouble, in fact, that a record number of them are landing in bankruptcy court. It had to happen, economists say. With more and more women holding down higher-paying jobs, the access to thousands of dollars worth of credit has never been easier. Combined with the borrowing power is a new want-it-all attitude that not only means having more than the neighbours, but having as much as, say, style icons like Gwyneth Paltrow or Paris Hilton. Living in a never-never land of perpetual debt is even manageable for many—until an unexpected financial shock like a job loss brings a hard day of reckoning.
In 2004, women made up nearly 45 per cent of some 84,400 bankruptcies, according to Bankruptcy Canada—still not as high as men, but up from only 25 per cent three decades ago. A whopping 874 per cent of the cases involved credit card debt, followed by bank and finance company loans. Big ticket items like cars and furniture were widely listed as assets, as were houses, all financed to the teeth. Says CIBC World Markets senior economist Benjamin Tal, “You might think that a larger participation in the labour market among women would lead to fewer bankruptcies, but with the money comes the appetite.” One thing’s for sure, financial distress is no longer the preserve of low-income single mothers trying to feed their children, says Laurie Campbell, executive director of Credit Canada, a not-for-profit counselling service in Toronto. “We are seeing women in their late 20s who owe $30,000 in credit card debt,” says Campbell. “Some of them make $60,000 a year, but month after month, you can imagine the amount of money they are paying toward interest.”
Young people, especially young women,
says Tal, are “more open to using debt to carry all kinds of expenses that maybe they can’t afford.” He calls them the Credit Card Generation. In Windsor, Ont., Credit Canada’s Wendy Dupuis sees many young couples with money problems—thirtysomething, good jobs, house, cars, cottage, boat, expensive vacations. “The whole mindset is, T make a good income, I deserve to have these things,’ ” she says. “It is all about instant gratification and an aspiration to reach way above their means.”
Tal also cites increases in self-employment among women. In a 2005 study of women entrepreneurs, he reported that some 800,000 women in Canada were running their ownrisky—businesses. Many of them were welleducated, well-paid, and overly optimistic. “Any period of self-employment,” Tal says, “may have created a hole in their economies from which they can’t recover.” But playing catch-up is not the main problem. Dupuis blames poor money management skills on parents, particularly those who let adult kids
live at home—and spend every cent they make. Such a lack of fiscal responsibility may foster what researchers at Cambridge University call financial phobia, an ailment they say afflicts as many as one in five Brits—particularly young women. When phobics were forced to deal with financial matters, the researchers found, their heart rates soared. Some of them even became dizzy.
Clearly, declaring bankruptcy is a last-ditch effort at reclaiming financial control. But it often doesn’t happen without months and months of collection notices, Campbell says. “Some women can keep their heads in the sand for a long time”—and their hands upon that Gucci bag, filled with plastic. M
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