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Average Canadian Family $100,000 in Debt
#1
Check out this news article on CTV news. <!-- m --><a class="postlink" href="http://www.ctv.ca/CTVNews/TopStories/20110217/family-debt-110217/">http://www.ctv.ca/CTVNews/TopStories/20 ... bt-110217/</a><!-- m -->

Just a few months ago it was 147% debt to income ratio, now it's 150%. People are getting carried away with debt and are going to find themselves in a world of hurt.

Its time we be a bit smarter about what we are going into debt for and start saving up for things instead of being greedy, impatient and having that feeling of entitlement (Status).
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#2
Confusedcratch: This doesn't strike me as awful, considering the economic woes of the last few years? I mean, it includes mortgages and student loans. Off the top of my head, ALL my kids are carrying this kind of debt.

Right now, as long as folks are employed and can pay their bills on time and save a few dollars each month - they're doing OK. Maybe even great! And I don't know how it works in Canada - but the folks who got sucked into the "refi, refi, refi cycle" just before everything went to he!! - they're simply handing the keys of the over-mortgaged house to the bank and walking away.
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#3
Deb,

As Americans, who have been "trained" to be in debt, this doesn't seem like a big deal. But this is not how Canadians have been raised. This is a new thing.

One example is, many years ago I questioned Amway/Quixtar as to why my fellow Canadian IBOs didn't have the Amway Visa offered to them.

The reason given was that Canadians just don't use credit cards the way Americans do. So it would not be enough of an income-generator for the credit card company.

As this news story illustrates, things are a-changin'.
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#4
And when I say, "trained," I mean it.

Deb, think about when you were growing up. Think about how your grandparents, or your parents, bought homes and autos. How they paid for college--if they even went to college.

Remember when people bought cars with cash? Or if they financed, it was for a couple of years? Now there are five and seven year auto loans. And people have accepted this as "normal."

Standard mortgages were not for 30 years. Not even for 15. Again, we have been "trained" to accept 30-year loans AND, more crazily, lured in to refinancing, all in the name of a lower interest rate--even though you end up paying more in interest since with a new loan, your earlier payments are mostly interest. And refinancing over and over again--the banks make a lot if they can get you to refinance every 5-7 years.

Oh and credit cards...how the credit card companies have done all this research showing the those using credit cards spend 20% more than they would without using credit cards. So they share all this research with the merchants, who then push push push for more credit card use, and paying ridiculous 3% and transaction fees to these credit card companies.

And the outrageous tuition fees for college. Oh but how thoughtful of the lenders. All the different options they give kids and their parents to borrow, borrow, borrow. So the tuitions just goes up, up, and up, without anyone stepping back and going, "Wait a minute. I'm about to spend $200,000 for the next four years. And what exactly is that going to look like, after graduation? *If* I get a job, how much will I need to pay back every month? And what will I have left to live on?"

We Americans have been played for fools by the banks. As they rake in billions and billions of dollars. The days of the banks like in "It's A Wonderful Life," are gone. Sad
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#5
Hmmm... I'm just going with my gut instinct here - but i really doubt most Canadians save up enough cash to buy their homes? Or cars, for that matter.

I just did this (poor) math: Mr and Mrs Windsor buy a modest home for $100,000. Their payments are $536/mo @5% x 360 payments = $192,960.00 (Granted - that's why saving up for a house is good the less you fork over to a bank is a good idea!)

Mr and Mrs Saskatchewan need a new truck - they buy a Diesel Ford f-250 for $45,000 - granted, if they saved up for that purchase - God Bless 'em. I'm suspecting that got financed for 5 yrs minimum.

On the other hand - maybe they DO save up and buy with cash?? I could buy a NICE house with what I pay in insurance expenses every month :rant:
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#6
Bridgett Wrote:Deb, think about when you were growing up. Think about how your grandparents, or your parents, bought homes and autos.


Actually, I was raised to understand the principles of using OPM (other people's money) - which is just going to open a whole can 'o worms.

2 examples of what I'm saying

I buy EVERYTHING with a credit card. They give me money for doing that :thumbsup: Free money, for using theirs - what a concept!! (of course you have to pay your bill IN FULL EVERY MONTH)


Likewise. I have a Home Equity Loan that I use for cash infusions. I pay a very low interest rate on that - FAR less that what our investments are earning. So I guess *I* have a lot of debt, too Wink
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#7
Deb Wrote:
Bridgett Wrote:Deb, think about when you were growing up. Think about how your grandparents, or your parents, bought homes and autos.


Actually, I was raised to understand the principles of using OPM (other people's money) - which is just going to open a whole can 'o worms.

2 examples of what I'm saying

I buy EVERYTHING with a credit card. They give me money for doing that :thumbsup: Free money, for using theirs - what a concept!! (of course you have to pay your bill IN FULL EVERY MONTH)


Right. I do the same. But many folks don't. You (and I) are the exception. I remember in college, I applied and got a credit card (with zero source of income Rolleyes ). Then, my older and wiser Rolleyes sister said, "Let's break it in!"
To which I replied, "But I have no way to pay it back."
And her very mature Rolleyes comeback was, "So?"

Deb Wrote:Likewise. I have a Home Equity Loan that I use for cash infusions. I pay a very low interest rate on that - FAR less that what our investments are earning. So I guess *I* have a lot of debt, too Wink


Again, you are more savvy than 99% of Americans. Most people would have not have the discipline to follow this type of investment strategy.

You Deb, are the exception. Most people not like you. Smile
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#8
The whole thing about paying with your credit card and paying it off is great in principal but it's what most people cannot do. That includes my wife and I. It's how we ended up with 27K in credit card debt. I've had credit cards for a long time and it was only until I got around a better association that I actually took my credit card debt serious and paid it off. We no longer have credit card debt and manage it much better.

For Canada this 150% Debt to Income ratio is huge, the highest its ever been in Canada and its making news because people are not stopping the excessive spending. It went up from 148% in December to 150% this month. Just scary stuff.

I'm curious to see what happens to all the people who bought very high priced houses at the top of the boom in 2007 and when they re-mortgage in 2012 with the higher interest rates that are coming. Canadians will be walking away from a lot of houses.

Also the government here has removed 35 year mortgages, they are no longer available to help curb the debt issue most Canadians are facing.
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