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More than half of Canadians are living within $200 per month of not being able to pay all their bills or meet their debt obligations, according to a recent Ipsos survey conducted on behalf of accounting firm MNP.

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“With such a small amount of wiggle room, any kind of unanticipated hardship, such as a job loss or even a car repair, could send an already struggling family into financial despair,” said Grant Bazian, president of MNP’s personal insolvency practice, which is one of the largest in Canada.

For 10 per cent of Canadians, the margin of error when it comes to household finances is even thinner, at $100 or less.

But those with anything at all left at the end of the month were in better shape than many: A whopping 31 per cent of respondents said they already don’t make enough to meet all their financial obligations.

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Debt is causing Canadians a fair bit of stress, the polling suggests, but few appear to be on track to buff up their monthly financial cushion.

Two-thirds of survey takers said they are “less than very confident” about their ability to create an emergency fund.

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Many Canadians don’t understand how interest rates work

Another hair-raising finding from the survey: Roughly 60 per cent said they don’t have a firm grasp of how interest rates affect debt repayments.

The statistic helps explain why many indebted Canadians end up taking on more debt and high-cost loans, said Bazian. “That’s how so many end up in an endless cycle of debt,” he noted.

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But the data also raises the question of whether Canadians understand the implications of an interest rate hike by the Bank of Canada (BoC).

A decision by the BoC to start lifting its key policy rate from historic lows would raise the cost of carrying debt across the country. The Bank uses interest rates, among other tools, to influence inflation and economic activity. Many economists believe it could start to raise rates in the first half of 2018, as economic growth picks up pace.

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Although the BoC will probably lift rates gradually and over time, the impact on Canadian wallets will be substantial.

For example, as Global News has reported before, a one percentage point rise in the BoC’s key interest rate would likely push up variable mortgage rates by a similar amount. A variable mortgage rate that’s currently set at 3 per cent, for example, would go up to 4 per cent, which represents a 33 per cent increase in interest payments for the mortgage holder. That’s an extra $83 a month for every $100,000 in outstanding mortgage debt.

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Lines of credit are another popular financial tool that generally carries variable rates that are influenced by the general level of interest rates.

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Many Canadians regret the amount of debt they have

Regret was another theme of the survey. Nearly half said they wished they hadn’t racked up so much debt during their lifetime, and nearly 40 per cent said they regretted the debt they’ve taken on in the past year alone.

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Notably, respondents who showed a low level of confidence about their understanding of their personal finances were significantly more likely to feel anxious about their debt.

Meanwhile, those with a finer grasp of their financials were considerably more likely to have cut down their debt load over the past 12 months.

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Ipsos conducted the survey between March 27 and March 30 via online polling of a weighted sample of 1,500 Canadians. The poll is accurate to within +/ – 2.9 percentage points, 19 times out of 20, had all Canadian adults been polled.