Canadians naive about how long they’ll be in debt

[polak]

Originally Posted by undercoverbrother

Idiots

Or genius.

Spend all this money that isn't yours, live it up, have a life far better than the average person can dream of and then shoot yourself in the head when you're 65 and it's time to pay up.

I feel like that is starting to be the way to go..

[rubecube]

Originally Posted by polak

Or genius.

Spend all this money that isn't yours, live it up, have a life far better than the average person can dream of and then shoot yourself in the head when you're 65 and it's time to pay up.

I feel like that is starting to be the way to go..

Or, if you have dual-citizenship, move to a different country. It's pretty much impossible for creditors to go after you because credit scores and debts are not (in most cases) covered under international jurisdiction.

[Regorium]

I have a pretty significant HELOC and it's so easy to just pull another 10k to buy a stock, or 30k to buy a rental property. I've been good so far in that all of the money I've used are for investing and not for just buying things, but the temptation has been quite strong.

At 3.35% (Prime + 0.5), that money is basically free. It's less than $100 a month for the upkeep.

I think that it's pretty clear that these guys aren't poor. They own multiple investment properties and probably have huge cashflow from white collar jobs.

As an aside, I'm pissed that I'm paying 3.35 on my HELOC and not 3.25 like those guys.

[Johnny199r]

I'm in my 30s and am debt free. I can't stand the thought of debt. My spouse has some debt from before we got together which she will finish paying off by the end of the year. I won't take debt on for any reason.

[Muta]

Originally Posted by polak

Or genius.

Spend all this money that isn't yours, live it up, have a life far better than the average person can dream of and then shoot yourself in the head when you're 65 and it's time to pay up.

I feel like that is starting to be the way to go..

If you don't have kids, this is actually a highly intriguing way to go.

[Mr.Coffee]

Originally Posted by Johnny199r

I'm in my 30s and am debt free. I can't stand the thought of debt. My spouse has some debt from before we got together which she will finish paying off by the end of the year. I won't take debt on for any reason.

That (honestly) is really good. Well done. Almost calls for a cheers I'd think.

[ranchlandsselling]

Originally Posted by chemgear

http://www.cbc.ca/news/business/the-...orry-1.3106533

For the Toronto-area couple, it all started back in 2009 with a lavish $78,000 wedding.

Then came numerous overseas vacations. When touring Egypt, Ali bought four souvenir papyrus scrolls for $6,000. In Italy, Haji picked up a $7,000 Chanel bag.

After the birth of their daughter, the couple moved into a newly built home and spent more than $100,000 on upgrades, including a custom kitchen, hardwood floors and a high-tech fireplace.

The wedding, trips and high-end purchases were made possible with cash from two home equity lines of credit secured against a couple of investment condos the family owns. The debt from those loans now totals $370,000. They also recently got an unsecured $30,000 line of credit to buy solar panels for their new house.

"We are addicted for sure. Who wouldn't be addicted to something so easy [to get]?" says 35-year-old Ali about the free-flowing lines of credit that have enabled him to splurge on the finer things in life.

But the place is still largely unfurnished and he's yearning to install a $40,000 glass railing for the staircase.

"Without the glass railing, the look of my stairs is not doing it justice," he says.

Kind of a stupid story.

They're in Toronto where the average detached home is now over $1.0 million. Doesn't say how much their home is worth or what they paid. Just a lavish number, $100,000 in upgrades. They sound like the type of people that live in at least an average house, so it's worth over $1.0 million.

They've spent about $370,000 in HELOC's against (a couple) of condo's they own. So, let's say that's two, so $185,000 on each. With HELOC's you can borrow 65% so assuming they've got two condo's and if they've borrower the MAX (meaning they could be worth a lot more) each worth approximately $285,000, ($570,000 against $370,000 in debt) or $200,000 minimum in equity from two condo's.

Don't know how much they make, don't know how well off their immediate family (parents are), etc. It's a dramatic story shy on details because it's more interesting that way.

It ends with this. . .
"If you get a line on this [house] and God forbid something happens to me or [my wife] and we are unable to sustain our lifestyle or stream of income that we have, then we would be in trouble and that may lead to us losing this house," says Ali.

Which means there's currently very little debt on their primary residence.

I'm fairly frugal, only debt is on mortgage and a line that's been used to invest in equities, own all vehicles and trailer outright. I have plenty of savings and investments that could (if accessible) wipe out all of the LOC and most of my mortgage yet these people look like they could have more equity than I do. . . I mean if housing prices tank they could be in trouble, but really only if they take out all the equity of their primary residence too. Not to mention the lack of details on their investments, income, etc.

A quick summary of me in the globe could say "Calgary family doesn't follow the herd" when in reality I'm potentially much worse off than these people and tons of others that may spend like them.

[ranchlandsselling]

Nm

[The Yen Man]

Yah, I agree with the above poster. We have no idea what their financial background is. Yes, they're pulling from their line of credit, but they may also have a lot of money tied up in investments that give a bigger return. If they're able to pull money out of HELOCs for lower interest, why not? There's not a lower rate you can borrow money at.

For all we know, their family may be pretty wealthy, but just not reported. I know people who are wealthy, and still pull money out of their HELOCs. It just depends on how risk adverse you are.

And last I checked, HELOCs are backed by the properties. They default on the payments, the bank takes their condos. So what's the problem?