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

[GGG]

Originally Posted by Oling_Roachinen

Meh, the cost of televisions and even phones have gone down so dramatically that trying to compare the situations is foolhardy.

If you paid $750 for a 19'' colour TV back in the 1980s, that's the equivalent of $1800 today. Forget about the 'big screen' coloured TVs that were going for thousands. Wait for Amazon Prime Days or Black Friday deals and today you could get a far far superior television for peanuts. I mean here's a 43-inch 4K Toshiba with built-in Alexa and Fire TV going for $229.99 on Amazon.com.

I could have a 40+ inch television on everyone of my walls and still have paid less, once adjusted for inflation, than my parents did on their televisions.

It's the cost of cable that has gone above inflation. But really I don't think there's many in that 47% that would be living debt free if they scaled back to basic cable.

Instead, if you want to start drawing fairer conclusions, at least look at the increase of cost of living. Things like the 3x-5x tuition increases over the past couple decades. In the States the median household cost under $50,000 in 1980, compared to the $200,000+. During the bust of the 1985 the cost of housing in Calgary was $75,000 ($179,000 in today's dollars) based on average sale. Today it is $450,000+. Well over double.

I'm not trying to defend the people obviously living beyond their means, but let's not get into the boomer's "Back in my day I got a paper route twice a week that paid for my rent and college tuition, why don't people do that today?"

Tuition relative to minimum wage is lower now then it has been in a long time.
https://www150.statcan.gc.ca/t1/tbl1...4501#timeframe

This chart only goes back to 2006 but at that time minimum wage was $7 and tuition was 4700 now it’s 6500 and minimum wage is $15 per hour. So a summer minimum wage job now pays a lot more as a percent of tuition than it used to.

In 1985 that house had a mortgage interest had a 12.12% interest rate versus 3.1% today

https://www150.statcan.gc.ca/n1/pub/...0/t098-eng.htm

So on the 179k mortgage 25 yr term was about $1800 per month
A 450k mortgage 25yr term @ 3.1% is 2152. Not as dramatic of an increase. In addition it is far easier to qualify for a mortgage with many more down payment options then there were historically.

It’s not that much more expensive.

Especially for the upper middle class - Vacations, Activities for kids, boats, trailers, winter vacations etc just didn’t happen.

[burn_this_city]

Home prices have also been affected by this. Number of dual income families has doubled since 1976.



https://www150.statcan.gc.ca/n1/pub/...016005-eng.htm

[Bend it like Bourgeois]

The world changes. Imo it’s not avocado toast or stagnating wages.

My grandparents grew up in little house on the prairie Alberta complete with horse and wagon. He was a teacher and she a nurse. A big deal in the depression era. They still bought a cheap lot, built their own house from the ground up, and grew their own vegetables. Their kids were idiots with the luxuries like tent trailers and sprawling 1000 sq ft bungalows. Their grandkids were bigger idiots. I can’t even fix my own car beyond a tire swap. And my kids are the biggest idiots. They can hardly make a lunch and would starve before giving up data.

Comparisons to the past are worthless. On average, everyone today is better off than the generation before them even if their credit isn’t. It’s not systemic, just the next problem to solve. If we get through health, luxury, and equality and all that’s left is economics? We’ll be fine.

[peter12]

We aren't building enough houses.

[81MC]

Honestly, I don’t see these tiny savings that come at such a ‘sacrifice’ as the solution to these issues. Is anyone out there really insolvent because they chose a $60 phone plan vs. $30? Sure, you can look at phone, cable etc. etc. and cut way back. You might save a couple hundred a month, assuming you had a poor package and went to nothing at all.

For perspective, I take a date out to a fairly casual dinner. I am not getting out of there for less than $80 at almost everywhere in the city, and that’s if we don’t stay for a 2nd cocktail. To me, this expense is the greatest thief of money, maybe 2nd to the ridiculous car payments that are apparently totally normal.

FWIW - I lost my entire savings. And ended up in a good amount of CC debt in the two years after me and wife split up (entirely my doing). I did the math, and was spending well over 3k/month just at bars and restaurants. That #### eats your money faster than you can down a double rye.

[Fuzz]

Originally Posted by burn_this_city

You could probably get a data plan if you ditched the landline like everyone else did 5-10 years ago. The utility of having data for maps, banking, communicating is easily one of the better uses for your money. No more trudging down to the AMA for the latest maps of Alberta and the City of Calgary.

Meh, the land line is $5/month with unlimited long distance with my Shaw package so no, it's not going to get me much data. With Shaw wifi and offline maps in Calgary you can get by pretty well. Are there a few times that occasionally I wish I had it? Sure, but that's a minor inconvenience, not a need.

[GirlySports]

Jayswin: $100 is not a laughable contribution. You should be very proud of yourself.

[GGG]

For cell phones the number of kids with new phones and data is ridiculous.

$15 Freedom Mobile and hand me down phones, that’s it.

[GirlySports]

Originally Posted by 2ArmBands

I’m in my mid 30s and last year our family of 4 went to Mexico for the first time. We have done nothing but local “vacations” up to that point and it was our first big vacation.

I could have done something better with the money no question. Not to say the trip was funded by credit but the money could have been put to use elsewhere.

I will say it was an experience that none of us will ever forget. Memories for life. I think something needs to be said for that. I do sympathize with the “you only live once” mentality to an extent.

Not saying it's right or wrong but going on such a trip means sacrificing something else. Obviously it was worth it. The next big decision is if and when to go again.

[Sliver]

Originally Posted by GirlySports

Jayswin: $100 is not a laughable contribution. You should be very proud if yourself.

Totally agree. Sounds like a guy working on getting his financial house in order on top of facing other challenges. Nothing but total respect from me on that. Great job, man.

[opendoor]

Originally Posted by Oling_Roachinen

Sorry, are you assuming they are not putting down any down payment?

It's a lot easier to save up for that $75,000 when you're not drowning in debt from student loans, rent is low and it's only 2x your yearly salary compared to the 10x it is today (quick and dirty average income in 1985 was 36,900 (1985) compared to 46,700 (2017)

There's a reason that first-time home buyers keep getting older and older.

Interest rates need to be factored in, but the way you did that straight math just doesn't add up except for the extreme cases of someone buying with no down payment which doesn't happen.

Dependent on interest rates of course how you approach home buying, but when they were astronomical it just made sense to save up when it was relatively easy to do so. Now it doesn't make as much sense (or at least let's say it wasn't as critical) to save up but that's part of the reason debt is so high too.

Not that I don't agree with your overall point, but I believe those income numbers are in 2017 constant dollars. So the actual income in 1985 would be more like $19K in 1985 dollars.

[CliffFletcher]

Originally Posted by FireGilbert

Kids these days are not better or worse at saving than their parents were.

You don't really believe that, do you? I'd bet the grandparents of virtually every person here are cheap as ####. You know who else is cheap? First generation (and to a lesser extent second-generation) immigrants. Cheap Asian parents are a cliché for a reason.

Every generation you move away from real poverty and hardship, the slacker and less disciplined people become with money. It's just a natural progression.

Originally Posted by FireGilbert

Looking at what wages, house prices, and interest rates were 40 years ago it was easier to save enough to buy a house or have a nest egg.

40 years ago most families were still single-income. And if a mom worked, she had a job at Zellers or as a receptionist, not as an accountant. The household with two professional earners is a recent thing.

Originally Posted by FireGilbert

The older generations spent more on optional things like music, smokes, and alcohol while the younger generations spend more on the necessities of life such as rent and education.

Younger generations also spend much more on dining out and travel. And detached homes are 50 per cent bigger than they were 40 years ago. Look at a neighbourhood built in the 50s or 60s. They're full of 1,200 sq ft bungalows with one or maybe two bathrooms. And they were considered perfectly suitable for middle-class families with 2 or 3 kids.

[CliffFletcher]

Originally Posted by White Out 403

If this keeps up for a couple more decades, it will be a real mess. I imagine the USA is even worse.

Actually, household debt in Canada is considerably higher than in the U.S., and higher than any other country in the OECD. We used to be more frugal than Americans. Something happened culturally in the last 20 years and we became far more free-spending.

Originally Posted by peter12

The cost of housing is the number one culprit. All the Rich Dad blathering on in this thread is tiring as hell.

That's not what the data shows. Take housing debt out the equation and just look at consumer debt, and Canadians are still world champion debtors.

[81MC]

Edit-wtf

[Dion]

Originally Posted by Geraldsh

Listen to the old guys - when I got my first job and bragged about my pay check my Dad told me
“It’s not how much you make, it’s how much you spend that will get you in trouble.”

It still took quite a few years for that simple homily to sink in.

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.

[CliffFletcher]

The rise of the two-income professional household has reshaped what people think of as middle-class. A household with one adult earning 130k and another earning 90k has a household income of $220k. A household with one adult earning 90k and another earning 60k has a household income of $150k.

Individually, the salaries aren't so far apart that the couples in question would see each other as belonging to different socio-economic classes. But collectively, that $70k difference in household income is huge.

So when family A has two new vehicles at 45k each, and has their kid in an elite sports team that costs 8k a year for fees and travel, family B just sees that as normal middle-class standards and follows suit.

[Jacks]

I have lots of staff who are always broke. Two of them drive a newer vehicle than I do, one of those two gets a new vehicle every couple of years, trades in the old one and loses equity every single time. I think his payment on a loaded F250 (gotta tow a trailer) is something like $1200/month. Almost every person eats out 2-3 times per day, buys at least 2 Timmies, several of them smoke/vape, etc. Probably $30-$50/day with after tax dollars that they could be saving. Lots of them have a new phone even though I supply them with a company phone that has unlimited minutes and 5GB of data, I don't get that at all.

The biggest problem is easy credit and people not living within their means. 30+ years ago there weren't many people I knew that had a credit card, today I know several teenagers who have their own credit card, every adult has one if not several. I know it's a "back in my day" story but we used to get "family allowance" as a low income household. It was $40 a month/kid and that was our allowance but we had to do a couple of hours a day in chores before we got that. If you wanted more money you did odd jobs for neighbors or picked bottles and cans for the deposit.

Kids should not only be taught about basic finances but they should also be taught how to shop for reasonably priced food, cook for themselves, fix things around the house and even make basic clothing repairs. Not sure you can blame that on the schools, the parents need to be teaching their own kids but I think the problem runs a couple of generations deep so the parents are part of the problem.

[Traditional_Ale]

After reading this thread I am confused. If I have no debts of any kind but no real assets of any kind (I'm guessing a couple of nice instruments don't count) then am I eff'd, or am I okay? I don't even use a mobile device anymore. My only bill is my rent.

Also, I buy the physical road maps. All it has to do is save your ass once and its paid for itself is my take.

[Locke]

Originally Posted by Jacks

I have lots of staff who are always broke. Two of them drive a newer vehicle than I do, one of those two gets a new vehicle every couple of years, trades in the old one and loses equity every single time. I think his payment on a loaded F250 (gotta tow a trailer) is something like $1200/month. Almost every person eats out 2-3 times per day, buys at least 2 Timmies, several of them smoke/vape, etc. Probably $30-$50/day with after tax dollars that they could be saving. Lots of them have a new phone even though I supply them with a company phone that has unlimited minutes and 5GB of data, I don't get that at all.

The biggest problem is easy credit and people not living within their means. 30+ years ago there weren't many people I knew that had a credit card, today I know several teenagers who have their own credit card, every adult has one if not several. I know it's a "back in my day" story but we used to get "family allowance" as a low income household. It was $40 a month/kid and that was our allowance but we had to do a couple of hours a day in chores before we got that. If you wanted more money you did odd jobs for neighbors or picked bottles and cans for the deposit.

Kids should not only be taught about basic finances but they should also be taught how to shop for reasonably priced food, cook for themselves, fix things around the house and even make basic clothing repairs. Not sure you can blame that on the schools, the parents need to be teaching their own kids but I think the problem runs a couple of generations deep so the parents are part of the problem.

I'll chime in on this one because I see it a lot.

As much as people bemoan 'the good old days' of having your job and pension and the stagnation of wages, we've long since passed the days of serfdom.

People dont work for the same employer for 20+years or their entire careers anymore, or its very seldom at best.

Employees with skills are very mobile now, and thats in every industry (other than Government, thats not an industry) and employees dont want to be tied to their employers for everything.

Its nice having a company phone thats provided and paid for, but without a personal phone of their own they can feel that they're constantly at work or on call or when they leave that employer and have to return the phone its difficult if thats been your primary contact point for family and friends for a while.

It makes a lot of sense to have a personal phone and your company phone. You're still only paying for 1 phone which is a pretty reasonable expense.

[Scroopy Noopers]

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.

Yes but did his carriage have air conditioned leather seats?