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

[Sliver]

Dang, that sounds super appealing. Will try that next time I need something. Seems like it would be kind of fun, too.

[DoubleF]

Originally Posted by Table 5

We tend to buy used design-classics by quality manufacturers...ie Knoll, Haller, Vitra, Cassina, Herman Miller etc. It's often really well-built furniture that was designed in the first half of the 20th century...stuff that is considered timeless, so you never have to worry about it being some fad. It's not cheap, but often times it's a better value long term.

The key though is to buy quality (ie. stuff made by countries like Germany, USA, Italy, Switzerland, Denmark, Japan, etc) not fakes or repros or stuff from the Brick (ie. stuff made in China). The good stuff is really well built, so it will last generations...which also means you can buy it used without worrying if it will hold up. All furniture will lose value from new, but a well-maintained design classic will not lose its value beyond a certain point. I like to buy it at that point!

We also buy for the long-term. If I'm buying a dining table, I want it to last for 20-30 years so I don't have to buy another. Which is why I'll buy the quality item...which again, will not lose any value after a certain point because it's a desirable item.

There is plenty of it out there. Kijiji, estate sales, online, etc. For example I see tons of great mid-century furniture on Kijiji that has 10x the build quality of anything new today.

Apart from the value aspect, I think buying quality items is better for the environment, and it feels good to support craftsmen who still give a crap.

Did you borrow to cover the costs of this quality furniture?

In all seriousness though, there's no wrong answer. You have some kickass furniture, I have some nice stuff that I bought on clearance that is still worth a bit, as long as we're both happy and not drowning in debt, it's fine, right?

[Slava]

Originally Posted by bizaro86

Ok, I know you said not to talk about tax rates or returns, but the person in your example needs $32k after tax per year for 30 years, or a total lifetime spend of $960k. I really don't think that person needs $1.5 MM, unless one of the unstated goals is to leave an estate of over $1MM.

For them to be out of money at age 95, you need to assume 33% taxes (which is greater than the marginal rate for that income level) and zero percent returns. I agree with those assumptions nobody is over saving.


A real return of 3% is reasonable. If the same retiree took 3% of their 1.5MM, that would be $45k pretax, or right around 32k aftertax. Leaving a $1.5MM estate. Imo being able to leave a 7 figure estate isn't a requirement to retire.

Well I actually gave them that $50k including CPP/OAS after tax, so they needed about $48k pretax to make that work. I realise I didn't take any taxes off the CPP/OAS, but it wasn't meant to give a perfect answer either.

And of course the other thing I didn't address was inflation, because this is a made up scenario and we don't have an age or anything else for this person!

So I used a 25% tax rate here, took that figure and came to something like $1.48m. Sure, they would get a rate of return, and yes the CPP and OAS are indexed. This doesn't mean that they need that money the day they turn 65 though. It's the dollar amount (not discounted at all) for 30 years. Could it be done more accurately? Of course. But it's an illustration because I don't think that many people are "over-saving".

And what is over-saving, anyway? If you know that you're dying on a specific date, you can definitely budget things out perfectly. But not unlike the doomsday people in 2012 who thought the world was ending and spent all their money, that can have tragic consequences if you live longer than you expect. I can't pan that way for people because it's completely irresponsible. Work on estate planning to deal with those issues and make sure you have enough money to live.

Anyway, hopefully that clarifies things.

[Calgary14]

Originally Posted by blankall

You do have to pay to live somewhere though. It's not always a guarantee that you property will rise dramatically over time, but your rent definitely will. If you've borrowed properly, then you should be paying more for a mortgage than you would for rent for the first 5 years or so...and then dramatically less afterwards, plus you have the capital gains, which is tax free. Eventually you'll be living mortgage free. The landlord will always want their rent.

Renting has its own costs too. Frequent moves can be both economically and psychologically tolling.

Should've prefaced it by stating rental properties, not principal residence

[Cecil Terwilliger]

Originally Posted by Table 5

We tend to buy used design-classics by quality manufacturers...ie Knoll, Haller, Vitra, Cassina, Herman Miller etc. It's often really well-built furniture that was designed in the first half of the 20th century...stuff that is considered timeless, so you never have to worry about it being some fad. It's not cheap, but often times it's a better value long term.

The key though is to buy quality (ie. stuff made by countries like Germany, USA, Italy, Switzerland, Denmark, Japan, etc) not fakes or repros or stuff from the Brick (ie. stuff made in China). The good stuff is really well built, so it will last generations...which also means you can buy it used without worrying if it will hold up. All furniture will lose value from new, but a well-maintained design classic will not lose its value beyond a certain point. I like to buy it at that point!

We also buy for the long-term. If I'm buying a dining table, I want it to last for 20-30 years so I don't have to buy another. Which is why I'll buy the quality item...which again, will not lose any value after a certain point because it's a desirable item.

There is plenty of it out there. Kijiji, estate sales, online, etc. For example I see tons of great mid-century furniture on Kijiji that has 10x the build quality of anything new today.

Apart from the value aspect, I think buying quality items is better for the environment, and it feels good to support craftsmen who still give a crap.

I need a new couch, maybe a new coffee table, a new end table, a rug for the living room. I have no taste and I’m lazy.

Wanna be my interior decorator?

Also, I own a coupe. You’ll probably need to bring a truck.

[Table 5]

Originally Posted by DoubleF

Did you borrow to cover the costs of this quality furniture?

Surprisingly Kijiji sellers tend to have poor financing options Perhaps I'm a bit old school, but I tend to pay for things in full and only once we saved up for it. If we don't have the cash for it, it means we can't afford it.

In all seriousness though, there's no wrong answer. You have some kickass furniture, I have some nice stuff that I bought on clearance that is still worth a bit, as long as we're both happy and not drowning in debt, it's fine, right?

Yep, we all have different priorities. My wife is an interior designer and Im in the creative field too, so we put higher priority on this than most. But definitely not the only way to go about things!

[Traditional_Ale]

Table 5, furniture expert.

Username checks out.

[Fuzz]

Originally Posted by Table 5

We tend to buy used design-classics by quality manufacturers...ie Knoll, Haller, Vitra, Cassina, Herman Miller etc. It's often really well-built furniture that was designed in the first half of the 20th century...stuff that is considered timeless, so you never have to worry about it being some fad. It's not cheap, but often times it's a better value long term.

The key though is to buy quality (ie. stuff made by countries like Germany, USA, Italy, Switzerland, Denmark, Japan, etc) not fakes or repros or stuff from the Brick (ie. stuff made in China). The good stuff is really well built, so it will last generations...which also means you can buy it used without worrying if it will hold up. All furniture will lose value from new, but a well-maintained design classic will not lose its value beyond a certain point. I like to buy it at that point!

We also buy for the long-term. If I'm buying a dining table, I want it to last for 20-30 years so I don't have to buy another. Which is why I'll buy the quality item...which again, will not lose any value after a certain point because it's a desirable item.

There is plenty of it out there. Kijiji, estate sales, online, etc. For example I see tons of great mid-century furniture on Kijiji that has 10x the build quality of anything new today.

Apart from the value aspect, I think buying quality items is better for the environment, and it feels good to support craftsmen who still give a crap.

I love that strategy. I tend to either get the best deal I can on something that I know is going to die, like a dishwasher or microwave, but if it is the type of thing I know I will use for a long time, I'll put the money in. I still use the speakers daily I bought in 1997. It hurt a bit dropping $700 back then, but it was better than buying a crappy integrated stereo that is disposable after 2 years. I've built a few of my own furniture pieces, and use some decent solid wood dressers my parents got from Ikea 30 years ago. If it is built well, it will hold up. I've got a nice hutch from my grandma that I am going to refinish, it's probably 60 years old, made in Canada.

[Cecil Terwilliger]

[TheIronMaiden]

This has been a very interesting/informative thread so far.

[GGG]

Originally Posted by bizaro86

Ok, I know you said not to talk about tax rates or returns, but the person in your example needs $32k after tax per year for 30 years, or a total lifetime spend of $960k. I really don't think that person needs $1.5 MM, unless one of the unstated goals is to leave an estate of over $1MM.

For them to be out of money at age 95, you need to assume 33% taxes (which is greater than the marginal rate for that income level) and zero percent returns. I agree with those assumptions nobody is over saving.


A real return of 3% is reasonable. If the same retiree took 3% of their 1.5MM, that would be $45k pretax, or right around 32k aftertax. Leaving a $1.5MM estate. Imo being able to leave a 7 figure estate isn't a requirement to retire.

This is key to me. My plan is not to leave much of an inheritance. Enough money to get me to 90 without touching the house. Then use the house for end of life care or beyond.

[Weitz]

Originally Posted by GGG

This is key to me. My plan is not to leave much of an inheritance. Enough money to get me to 90 without touching the house. Then use the house for end of life care or beyond.

Man. Who wants to live till 90?

[White Out 403]

I want to take Table 5 shopping to estate sales now.

[chemgear]

Originally Posted by White Out 403

I want to take Table 5 shopping to estate sales now.

It's just ####ty furniture that people thought was worth something, right?

[Table 5]

Ha, I'm by no means anything close to an expert. I'm just married to an interior-design with good taste, so have picked up some insight over the years. You don't want to me to go shopping with you...I'll just get tired after 10 minutes and find the nearest couch.

[chemgear]

Duplicate

[GGG]

Originally Posted by Weitz

Man. Who wants to live till 90?

My Grampa just turned 90. Still living on his own and just this year needed a walker and had to change his bicycle out for a trycyle. I’ll take that life at 90 without question. Up until this past year he was younger than 70 year olds.

Really depends on health though. I’m sure there are people who live a miserable 75-85 and die but financially I think 25 years is reasonable.

[Fuzz]

Originally Posted by Table 5

Ha, I'm by no means anything close to an expert. I'm just married to an interior-design with good taste, so have picked up some insight over the years. You don't want to me to go shopping with you...I'll just get tired after 10 minutes and find the nearest couch.

Ya, but it would be a damned sweet couch!

[you&me]

Originally Posted by DoubleF

...

I hate being a millennial re-definer, but rich is such a poor term nowadays with the way it's been misused. I think part of the confusion of my comment is the difference between a financially prudent individual and some idiot who somehow lands a large sum of money and doesn't know what to do with it. There are plenty of people who live and look rich on the outside (thus spending habits), but on the inside they're up to their eyeballs in debt. You're talking about rich in the manner about someone's net worth being a large sum, not an individual whose net assets are significant, right?

In this case, I wasn't trying to use a specific definition of "rich" (hence the quotes in most of my post), but just a more general "rich" as gets commonly thrown around and something pertaining to someone that has "rich" behaviours, such as financing a car at 0% so they car invest the capital elsewhere at 5%... There's no specific definition for someone that does that, but that's a "rich" sort of behaviour.

Originally Posted by Sliver

Do you have any evidence to back this up? I don't think rich people finance cars. They just pay cash.

I skimmed the article you linked, but the stats seem kind of dated. I will concede that a lot of wealthy people "purchase" their vehicles, but that is very often on some sort of line of credit, which is still not the same as an actual "cash" purchase.

But otherwise you might be surprised at the frequency very HNW individuals purchase very expensive cars using some form of finance or lease... I'm not talking a new E-class here, but at the level where the cars themselves become assets with prices in the 7 and even 8 figures.

[GirlySports]

You could furnish your entire house for free if you looked hard enough on kijiji and Facebook marketplace.