Canadians 'drowning in debt': 47% will borrow to cover costs, survey says

[powderjunkie]

Of all the people you hear about walking away from their houses in the 80's, how many were back on track with a similar property within 10 years? I suspect most, but I really have no idea.


I think dining, travel, and clothing are probably the biggest culprits (plus cars for those not living in the heart of TOR, VAN, or MTL) - most of which can be largely traced back to the housing problem in one way or another.

More competitive job markets + higher housing costs = delayed financial stability = delayed marriage + children --> young professionals working long hours coming home to shoeboxes that are ill-equipped for social gatherings --> lots of money spent dining out.

Also a desire to travel (escaping shoebox in winter) before it becomes harder and more $$ with kids.

Social media plays a big role, but it seems things were trending this way long before it became so prevalent.

It's a bit harder to rationalize the 'need' for multiple pairs $100+ yoga pants and multiple $500+ jackets... I'm certainly not complaining about getting to see the former, and I really appreciate all of my technical outerwear, though I never pay more than 50% MSRP and actually use them in the wilderness (I think I've gotten 3 different Patagonia pieces repaired three times each under lifetime warranty over the last ~10 years). All of that is just to say that the existence of expensive items like this isn't necessarily stupid, but wearing pristine Arcteryx to and from the office is...

[Dion]

Originally Posted by Scroopy Noopers

Yes but did his carriage have air conditioned leather seats?

Don't you mean vinyl seats that get white hot stick to your arse on hot summer days?

[GirlySports]

Let's just conclude women leaving the kitchen is society's downfall.

[peter12]

The whole dual income professional class stuff is a bit of nonsense. Those aren't the people drowning in debt. Besides a household earning 220k is in the top 1% of Canadian households. We're clearly talking about the bottom 1/3 here.

[stone hands]

For the vast majority of people I know anecdotally, they could clear 1M a year and still be drowning in debt. Nobody buys stuff with money they actually have, everyone buys everything on credit no matter how much money you make. It’s a gigantic societal problem that doesn’t seem to care what your take home is. Lifestyle creep is real

[peter12]

Calgary does have a pretty wild consumer culture. When I was getting into consulting at the end of the last boom, it was my first salary over 35k (I had slaved in political and lobby shop internships). Most of us were young, around 24, and there were two groups of us- financially speaking. The first took the opportunity for the windfall it was, and immediately started saving, and the second bought new pick-up trucks.

[PsYcNeT]

Originally Posted by stone hands

For the vast majority of people I know anecdotally, they could clear 1M a year and still be drowning in debt. Nobody buys stuff with money they actually have, everyone buys everything on credit no matter how much money you make. It’s a gigantic societal problem that doesn’t seem to care what your take home is. Lifestyle creep is real

This is how we get those hilarious HENRY lists of people "drowning" with 500k combined incomes.

Relevant:

https://twitter.com/user/status/384408932061417472

https://twitter.com/user/status/384411321099640833

https://twitter.com/user/status/384411458794057728

[V]

‘Capitalism is failing’, haha. Spend less money on stupid sh*t. The way certain posters talk about spending money on this site just blows my mind on a pretty regular basis.

I have a family of 6 and a single income. Not once in my life have I ever bought a house for 450k. Yet that seems to be the bare minimum when folks on this site talk about houses. I don’t get it.

[PsYcNeT]

Originally Posted by V

‘Capitalism is failing’, haha. Spend less money on stupid sh*t. The way certain posters talk about spending money on this site just blows my mind on a pretty regular basis.

I have a family of 6 and a single income. Not once in my life have I ever bought a house for 450k. Yet that seems to be the bare minimum when folks on this site talk about houses. I don’t get it.

I mean, have you bought a house since the boom? I spent less than 400k when I bought mine in 2013, but according to the published purchasing for the same property, in 2006 it had been sold for a bit more than half that.

Market pricing went bug#### crazy between 2009-2012.

[Fuzz]

Originally Posted by peter12

The whole dual income professional class stuff is a bit of nonsense. Those aren't the people drowning in debt. Besides a household earning 220k is in the top 1% of Canadian households. We're clearly talking about the bottom 1/3 here.

I was trying to find a chart that broke out debt by income level to see if this is true. This is the best I could find, but only for 3 cities.





https://www150.statcan.gc.ca/n1/pub/...019003-eng.htm


Interesting that Montreal "poor" are in much less debt than Toronto and Vancouver. Also interesting though is that it looks to be an issue across all income levels in Toronto and Vancouver.


If anyone knows of a better chart for all of Canada I'd love to see it.

[Ozy_Flame]

Originally Posted by peter12

Calgary does have a pretty wild consumer culture. When I was getting into consulting at the end of the last boom, it was my first salary over 35k (I had slaved in political and lobby shop internships). Most of us were young, around 24, and there were two groups of us- financially speaking. The first took the opportunity for the windfall it was, and immediately started saving, and the second bought new pick-up trucks.

After I left Calgary it was amazing to me (when I come back into town) how much people still try and keep up with the Joneses. That mentality was very much baked into the city culture during the early 2000's and it still persists today. Nice cars, fun toys, big vacations . . . Let's be clear this happens in most other cities in Calgary too but it seems to be very prevalent in my hometown just watching family and friends.

I used to see a luxury sports car on the road and ask what I was doing wrong to not have that, but then I slowly realized that half of them on the road were probably bought with money the owner doesn't have and are leveraged up to the tits.

[V]

Originally Posted by PsYcNeT

I mean, have you bought a house since the boom? I spent less than 400k when I bought mine in 2013, but according to the published purchasing for the same property, in 2006 it had been sold for a bit more than half that.

Market pricing went bug#### crazy between 2009-2012.

I left Calgary in 2010, so I went and took a look at the house prices in my last neighbourhood (Whitehorn) and yup, only one of the 29 houses is over 450k. We loved living there and it fit us and the four kids just fine.

[peter12]

Originally Posted by Fuzz

I was trying to find a chart that broke out debt by income level to see if this is true. This is the best I could find, but only for 3 cities.





https://www150.statcan.gc.ca/n1/pub/...019003-eng.htm


Interesting that Montreal "poor" are in much less debt than Toronto and Vancouver. Also interesting though is that it looks to be an issue across all income levels in Toronto and Vancouver.


If anyone knows of a better chart for all of Canada I'd love to see it.

The cost of housing is comparatively quite low in Montreal still. The poor aren't sending 50-75% of their income to a landlord.

[GirlySports]

Originally Posted by Dion

As an old buzzard, my late father sat me down and told me to take 10% of my paychecks and put it in an RRSP.

This is what I advise to young people today.

When you get paid, pay yourself first to an RRSP or TSFA.

[squiggs96]

Originally Posted by peter12

The whole dual income professional class stuff is a bit of nonsense. Those aren't the people drowning in debt. Besides a household earning 220k is in the top 1% of Canadian households. We're clearly talking about the bottom 1/3 here.

As of 2017 you needed $236,000 as a single earner to be in the top 1%. To be in the top 1% of households you need around $400,000 of income between all members.

[peter12]

Originally Posted by squiggs96

As of 2017 you needed $236,000 as a single earner to be in the top 1%. To be in the top 1% of households you need around $400,000 of income between all members.

Didn't know. Appreciate it.

But my point more or less stands the same.

[PsYcNeT]

Originally Posted by V

I left Calgary in 2010, so I went and took a look at the house prices in my last neighbourhood (Whitehorn) and yup, only one of the 29 houses is over 450k. We loved living there and it fit us and the four kids just fine.

And how much did you pay when you bought it originally?

[Slava]

Originally Posted by stone hands

For the vast majority of people I know anecdotally, they could clear 1M a year and still be drowning in debt. Nobody buys stuff with money they actually have, everyone buys everything on credit no matter how much money you make. It’s a gigantic societal problem that doesn’t seem to care what your take home is. Lifestyle creep is real

This might be partly the case (about everyone buying everything on credit these days), but that's basically necessary. A lot of us love online shopping, and obviously that's on credit for example.

There's a marked difference I see in my clients though. People who are better off are buying everything on credit are also paying that bill every month and paying $0 in interest. In the words of Patrick Ewing, "we make a lot of money, but we spend a lot to".

[stone hands]

Originally Posted by Slava

This might be partly the case (about everyone buying everything on credit these days), but that's basically necessary. A lot of us love online shopping, and obviously that's on credit for example.

There's a marked difference I see in my clients though. People who are better off are buying everything on credit are also paying that bill every month and paying $0 in interest. In the words of Patrick Ewing, "we make a lot of money, but we spend a lot to".

thats not what i mean - i buy everything on credit technically, because i'd be a fool not to get cash back for buying it via my credit card

i mean buying it with money you dont actually have. i use my credit card as a debit card and havent carried a balance of any kind in years. the only debt i have is my mortgage

[CliffFletcher]

Originally Posted by peter12

The whole dual income professional class stuff is a bit of nonsense. Those aren't the people drowning in debt. Besides a household earning 220k is in the top 1% of Canadian households. We're clearly talking about the bottom 1/3 here.

It has moved the window of what people regard as middle class behaviours. I used the example of elite sports teams. Spending on sports and recreation for kids has quadrupled in the last 20 years. Who are these people dropping 5k+ a year per kid on intensive sports activities with travel, hotels, etc? It started out as those upper-middle-class, dual-income professional households. But as tends to happen, now the middle-middle-class considers that kind of behaviour to be just a standard part of being Canadian parents, so they've followed suit. Even though they can't really afford it. Maybe it's a downside to the egalitarian pretenses of our society, but fewer people in Canada today seem to recognize that A) there are dramatic differences in income even among families who regard themselves as middle-class, and B) we should tailor our spending to what our income affords us.