Many Canadians within $200 of being unable to pay bills

[InRich]

Anyone see this?!?! I'm in awe!

http://www.ctvnews.ca/business/many-canadians-within-200-of-being-unable-to-pay-bills-poll-1.2779545

Thoughts!?!? lets hear em

[r3ccOs]

I'm sure glad this is in the car forum and that you obviously would never have to worry about being in this situation

[dj_rice]

Was this thread created to boost your ego?

[ZenOps]

I'm amazed that people publically admit to it nowadays. Back in the day, you kept your finances private much like your favorite sex position.

Trump made it fashionable to be eyeballs deep in debt - and be proud of it.

Which IMO is the second sign of the financial apocalypse.

[r3ccOs]

Originally posted by ZenOps
I'm amazed that people publically admit to it nowadays. Back in the day, you kept your finances private much like your favorite sex position.

Trump made it fashionable to be eyeballs deep in debt - and be proud of it.

Which IMO is the second sign of the financial apocalypse.

its different for a business entity to borrow to make capital investments to offset revenues and corporate income taxes, even if it comes out at a wash or even purposely for a loss, as long as you either protect or grow your asset worth.

this article is really about people who #yolo #newsupercars4life who push their TDSR well beyond whats survivable.

simply put... in this recession, all my rig, driling, engineering neighbors with their fancy 1 ton trucks or matching his and hers M series (or packaged) BMWs are putting their houses for sale.

whereas you really aren't seeing houses for sale in affluent areas in the city where people may have a toy in the garage, but drive 5+ year old volvos.

[InRich]

Originally posted by r3ccOs
I'm sure glad this is in the car forum and that you obviously would never have to worry about being in this situation

eeep sorry, MODS PLZ MOVE to where ever its supposed to be. my bad.


Originally posted by dj_rice
Was this thread created to boost your ego?

no... wtf. havn't you heard. I'm InDEBT. My entire life is HELOC.

anyways I'm just curious about your opinions. cause.... well. if this is seriously true, Canadians are in some SERIOUS TROUBLE! I'm a little worried actually after reading it... I mean how can it be true... seriously, wtf.

I'm thinking maybe they poll'ed people that weren't the norm. At least I'm hoping so.

[InRich]

Originally posted by r3ccOs


its different for a business entity to borrow to make capital investments to offset revenues and corporate income taxes, even if it comes out at a wash or even purposely for a loss, as long as you either protect or grow your asset worth.

this article is really about people who #yolo #newsupercars4life who push their TDSR well beyond whats survivable.

simply put... in this recession, all my rig, driling, engineering neighbors with their fancy 1 ton trucks or matching his and hers M series (or packaged) BMWs are putting their houses for sale.

whereas you really aren't seeing houses for sale in affluent areas in the city where people may have a toy in the garage, but drive 5+ year old volvos.

wow. thats the smartest thing I ever heard you say. and so true! I started this thread cause I wanted to hear opinions just like these.

I heard a while back talking to some of my business friends, when there's blood on the street, some people gonna get seriously rich.

[ZenOps]

The more disturbing stat is that 1/4 are already not making enough to cover their debt, which seems to be correct.

163% debt to income ratio is the official stat for Canada back in 2014. So I can imagine its even more so now.

But look on the bright side, at least you don't owe $53 million US like Kanye.

[r3ccOs]

Originally posted by InRich


wow. thats the smartest thing I ever heard you say. and so true! I started this thread cause I wanted to hear opinions just like these.

I heard a while back talking to some of my business friends, when there's blood on the street, some people gonna get seriously rich.

only if you can

what I'm describing is this:
http://www.kijiji.ca/v-cars-trucks/calgary/2015-gmc-denali-2500-crew-cab/1140897864?enableSearchNavigationFlag=true

#yolodenaliHDwhilelivinginaduplex

fact is... in the 90's it was attainable for independent individuals acquire plays from divestitures, but these days its a whole different game

no matter how much you heloc, you aint' picking up Nexen's long lake

[Maxt]

Originally posted by r3ccOs


only if you can

what I'm describing is this:
http://www.kijiji.ca/v-cars-trucks/calgary/2015-gmc-denali-2500-crew-cab/1140897864?enableSearchNavigationFlag=true

#yolodenaliHDwhilelivinginaduplex

fact is... in the 90's it was attainable for independent individuals acquire plays from divestitures, but these days its a whole different game

no matter how much you heloc, you aint' picking up Nexen's long lake
It might be for sale because those trucks drive like the steering linkages are made of wet spaghetti...:nut: Yah he's probably broke to.

[Twin_Cam_Turbo]

I am starting a new job with a much lower may scale and will probably be close to this every month, however when I factor in my rent income I will still be saving $700-1000 per month comfortably.

[RealJimmyJames]

Why would you pay your bills in the first place? I'm pretty sure you can just ignore those.

[Sugarphreak]

...

[birdman86]

Originally posted by r3ccOs


only if you can

what I'm describing is this:
http://www.kijiji.ca/v-cars-trucks/calgary/2015-gmc-denali-2500-crew-cab/1140897864?enableSearchNavigationFlag=true

#yolodenaliHDwhilelivinginaduplex

fact is... in the 90's it was attainable for independent individuals acquire plays from divestitures, but these days its a whole different game

no matter how much you heloc, you aint' picking up Nexen's long lake

"looking for some1 to take over payments"

yup, this guys screwed. probably 8 year financing too.

[lilmira]

I'm within 6 dollars to be retired every week.

[firebane]

I am some months definitely one of these people. It became really tough when I had my budget all laid out and actually was making some improvements but then my company decided to change pay schedules dates and now I've had to play catch on a bunch of things.

People take it for granted that everyone makes a shit ton of money and some of us do not. Beyond has a higher percentage of people who make good coin but that doesn't mean everyone around here does... some of us do struggle.

[SmAcKpOo]

I just don't understand how people can't be logical and rational when it comes to their finances.

[Twin_Cam_Turbo]

Originally posted by SmAcKpOo
I just don't understand how people can't be logical and rational when it comes to their finances.

They say if you weren't brought up knowing the value of money that it plays a huge part of your financials in your adult life.

Maybe that's part of it.

[firebane]

Originally posted by SmAcKpOo
I just don't understand how people can't be logical and rational when it comes to their finances.

Some things are taught, some are learned, and others are learned by trial and error.

If you don't have a good role model that is good with money how are you to know how to be good with money?

My girlfriend is a good example of this. She went out and financed a $12,000 car and was unhappy with it so she went and financed another $12,000 car and returned the first. Her once $12,000 car loan was now $24,000 and on top of that they sucked her into buying a $2,000 warranty program.

Her mom and dad was just like "Yup do it!" and now she regrets every minute of it because monthly she pays close to $900 for her car between payments and insurance.

[SmAcKpOo]

How did she not analyze that decision rationally and realize what a mistake it was?

I am genuinely curious. How people come to different decisions is fascinating.

[ickyflex]

Originally posted by SmAcKpOo
How did she not analyze that decision rationally and realize what a mistake it was?

I am genuinely curious. How people come to different decisions is fascinating.

In the same way people someone who makes 100g's can afford to purchase an LV purse and someone who is 16 blows their entire pay check to get one.

[r3ccOs]

Originally posted by ickyflex


In the same way people someone who makes 100g's can afford to purchase an LV purse and someone who is 16 blows their entire pay check to get one.

in the "Day" before all these brands introduced common and diffusion line products, someone even making 100k really "shouldn't" be able to afford these boutique products.

meanwhile if you're asian, apparently owning something monogrammed is the only way to get respect from your family that lives in a 3rd world country.

[masoncgy]

I absolutely do not know how people survive at all, other than live in serious amounts of debt and pretend that they don't, because I know very few people who actually admit that they are living beyond their means... everything is always 'all good'.

I make a good living with a small mortgage, no car payments and very little credit debt. I am super tight with money and I feel like I barely scrape by.

I couldn't imagine living somewhere like Van, Calgary, Toronto and trying to raise a couple of kids with the cost of living being as it is.

[D'z Nutz]

Originally posted by RealJimmyJames
Why would you pay your bills in the first place? I'm pretty sure you can just ignore those.

No joke, my friend's sister thought her mortgage payments were optional and you didn't have to pay them if you didn't want to. She's a bit of a basket case, but c'mon.

[Rocket1k78]

Originally posted by r3ccOs


only if you can

what I'm describing is this:
http://www.kijiji.ca/v-cars-trucks/calgary/2015-gmc-denali-2500-crew-cab/1140897864?enableSearchNavigationFlag=true

#yolodenaliHDwhilelivinginaduplex

fact is... in the 90's it was attainable for independent individuals acquire plays from divestitures, but these days its a whole different game

no matter how much you heloc, you aint' picking up Nexen's long lake

Thats a prime example of how the game is changed now, borrow borrow borrow to impress. https://youtu.be/ga8o9eepj5s

[bjstare]

I pity the people who weren't taught to be fiscally responsible, and am frustrated with the parents who raise children, despite having fundamental shortcomings such as inability to manage finances.

It really sucks for people like myself, who are responsible (no car payment, no credit debt, easily manageable mortgage when I choose to re-enter the real estate market). I think people in my situation will wind up picking up the tab (indirectly) for all the idiots out there who are, or will be, defaulting on debt.

[eglove]

Originally posted by D'z Nutz


No joke, my friend's sister thought her mortgage payments were optional and you didn't have to pay them if you didn't want to. She's a bit of a basket case, but c'mon.

Sounds like my really good friends ex-girlfriend

[revelations]

Originally posted by masoncgy
I absolutely do not know how people survive at all, other than live in serious amounts of debt and pretend that they don't, because I know very few people who actually admit that they are living beyond their means... everything is always 'all good'.

I make a good living with a small mortgage, no car payments and very little credit debt. I am super tight with money and I feel like I barely scrape by.

I couldn't imagine living somewhere like Van, Calgary, Toronto and trying to raise a couple of kids with the cost of living being as it is.

Ladysmith (and VI ) are not *that* cheap places to live when compared to AB. The price of gas, ICBC, ferries, taxes, etc. all add up to a significant portion when compared to AB with privatized insurance and NO PST.

Vancouver though, is on another planet - so in comparison, VI appears like a bargain!

[revelations]

Originally posted by r3ccOs


only if you can

what I'm describing is this:
http://www.kijiji.ca/v-cars-trucks/calgary/2015-gmc-denali-2500-crew-cab/1140897864?enableSearchNavigationFlag=true

#yolodenaliHDwhilelivinginaduplex



Wow, why would I want that truck when I can get a new one? (hes not posting his asking price either - prob realized hes lost an immediate 20%)

[Mitsu3000gt]

Tons of people live beyond their means and have poor money management skills - how is this news?

[Buster]

It makes me realize how ultra-conservative my wife and I have been over the years.

[Feruk]

Originally posted by Mitsu3000gt
Tons of people live beyond their means and have poor money management skills - how is this news?
It's "financial news". It's no different than say if oil was to hit a 15 year low and go down 0.01% every day for a week after that. Every single day, you'd have a "huge bombshell of financial news" as oil "hits 15 year low" over and over again. Or how every month we hear that "housing is down XX percent." Yes, but that's from a year ago, not a month ago. It can rise month over month, but that's not newsworthy.

Those two examples and this story have one thing in common; taking something that is bloody obvious and trying to sensationalize it.

[Seth1968]

It seems to me that significantly increasing cost of living far exceeds employees meager 2% yearly pay raise. And that's if you get a raise at all, as some have had to take a pay cut.

If that is indeed the case, then most people will will get poorer and poorer.

[firebane]

Originally posted by Seth1968
It seems to me that significantly increasing cost of living far exceeds employees meager 2% yearly pay raise. And that's if you get a raise at all, as some have had to take a pay cut.

If that is indeed the case, then most people will will get poorer and poorer.

IF you even get a raise.

Company I work for decided against pay raises this year just like a lot of other places due to the economy.

It may only end up being 2-3% but still.

[pheoxs]

Originally posted by firebane


IF you even get a raise.

Company I work for decided against pay raises this year just like a lot of other places due to the economy.

It may only end up being 2-3% but still.

Same, few % pay cut + inflation and everything going up because the dollar dropping and it definitely is a set back. Hoping I can find another roommate in the near future.

[Pacman]

Originally posted by firebane


My girlfriend is a good example of this. She went out and financed a $12,000 car and was unhappy with it so she went and financed another $12,000 car and returned the first. Her once $12,000 car loan was now $24,000 and on top of that they sucked her into buying a $2,000 warranty program.


If she returned the first car then why does she now have a $24,000 loan? Did the dealer screw her on the first car and pay pennies on the dollar when she returned it?

[Xtrema]

Originally posted by Seth1968
It seems to me that significantly increasing cost of living far exceeds employees meager 2% yearly pay raise. And that's if you get a raise at all, as some have had to take a pay cut.

If that is indeed the case, then most people will will get poorer and poorer.

Bingo.

It's a world wide trend. A lot of big city people are priced out of a home. Cost of living increase doesn't coincide with wage increase.
The right will say, just go find a better job and keep on cutting cost by automation and off shoring.

The left will say minimum pay and union while most of them are grossly overpaid.

The answer is always somewhere in the middle.

The next wave will be education cost that also out paced standard inflation. In the 60s and 70s, you graduate and usually can pay off your student loan in a few year and start home ownership, now it's more like crippling debt on student loan alone and noobs are not getting paid any better than a decade ago.

[Swank]

Originally posted by SmAcKpOo
I just don't understand how people can't be logical and rational when it comes to their finances.
Ego

[revelations]

Originally posted by Pacman


If she returned the first car then why does she now have a $24,000 loan? Did the dealer screw her on the first car and pay pennies on the dollar when she returned it?

She probably spent the trade-in cash value on something OTHER than paying back the original loan..... lose/lose/lose (lose on trade in, lose on loan second payment, lose on high interest rate of both)

[M.alex]

Originally posted by revelations


She probably spent the trade-in cash value on something OTHER than paying back the original loan..... lose/lose/lose (lose on trade in, lose on loan second payment, lose on high interest rate of both)

that makes no sense at all - surely nobody would be that stupid :confused:

[firebane]

Originally posted by Pacman


If she returned the first car then why does she now have a $24,000 loan? Did the dealer screw her on the first car and pay pennies on the dollar when she returned it?

She still owed on the first loan so they added the old loan to the new loan.

Is it stupidity? At the time she would have not said so but now at this point in her life with a bit of education she would never do it again.

But hindsight is always 20/20

[carson blocks]

Originally posted by M.alex


that makes no sense at all - surely nobody would be that stupid :confused:

People ARE that stupid. I've personally known people to use Carfinco as a lender (usually at small car lots), and Carfinco has one finance rate - 29.5%, or with fees, it works out to 32.5%. People like instant gratification, think they 'deserve' a better car than they can afford, and have no ability to understand long term consequences.

[mr2mike]

Originally posted by firebane


She still owed on the first loan so they added the old loan to the new loan.

Is it stupidity? At the time she would have not said so but now at this point in her life with a bit of education she would never do it again.

But hindsight is always 20/20

Don't get married. Her debt then becomes your debt too.

cjblair said it, the responsible are going to be on the hook for all this in the end... sadly.

[Seth1968]

Originally posted by Xtrema




The next wave will be education cost that also out paced standard inflation. In the 60s and 70s, you graduate and usually can pay off your student loan in a few year and start home ownership, now it's more like crippling debt on student loan alone and noobs are not getting paid any better than a decade ago.

In the 40's to 70's, 1 basic income could easily support a modest home, car, trips to the lake, and above all, feeding the 12 kids:)

Now? Well, you get it.

What's the term(s) used to describe the comparison?, and have you ever heard of any politician expressing such?

[Seth1968]

Originally posted by mr2mike


Don't get married. Her debt then becomes your debt too.


"A prenuptial?:cry:You don't really love me":banghead:

[firebane]

Originally posted by mr2mike


Don't get married. Her debt then becomes your debt too.

cjblair said it, the responsible are going to be on the hook for all this in the end... sadly.

Luckily I got her ass involved with Money Mentors and she's paying off all her old debt.

She'll be debt free in about 2 years.

[Kloubek]

I hate debt. Like... detest it.

Back in the day, debt was something I couldn't pay off with any level of expediency and the interest hurt bad, so I became super thrifty with my money, and maintained that level of cheapness for over a decade. It's the reason I bought my first place at 21 without any help from anyone, and is the reason I was able to build a reasonably nice house 7 years ago while not making a heck of a lot at my previous employer. Doing what I did kept my head above water, and I'd live through all the comments from friends and girlfriends about me being cheap again if it meant I was able to keep from going into debt.

Now that I'm making pretty decent coin, I've eased up a bit but still rarely buy anything particularly frivolous. But the main thing is: Besides our mortgage, we are 100% debt free.

The main issue, as I see it, is that people don't want to do what I did. They don't want to be thrifty. They want to keep up with the Joneses and appear to everyone that they are successful, or they want what they want now without caring about the repercussions. So really, I'm not surprised at this information whatsoever, and I don't have any sympathy either.

Live within your means.

[bspot]

Originally posted by r3ccOs
whereas you really aren't seeing houses for sale in affluent areas in the city where people may have a toy in the garage, but drive 5+ year old volvos.

What if you sold your toy a few years ago and still haven't replaced it and drive a 9 year old Volvo?

I used to be the opposite of cheap. I had a car payment bigger than my mortgage payment and had zero spending restraint.

I'm sure glad that changed years ago. With a new kid, a wife that makes almost nothing even when she is working, and constantly worrying about if you'll keep your job, it's bad enough. I can't image the panic if I knew I'd be out of my house within a few months if I was laid off.

[max_boost]

Schadenfreude. :thumbsup:

[Seth1968]

Originally posted by Kloubek
Besides our mortgage, we are 100% debt free.

Except, (like most), you seem to think that a mortgage debt is necessary, fair, and benign. I ask, when all is said and done, how much did you actually pay for your house, and how much profit did the bank make off your back?

[Kloubek]

Originally posted by Seth1968


Except, (like most), you seem to think that a mortgage debt is necessary, fair, and benign. I ask, when all is said and done, how much did you actually pay for your house, and how much profit did the bank make off your back?

It's a fair point, of course.

Not necessary to divulge all the figures but suffice it to say that the bank did make good money off of us. On the other hand, we now have some 350 grand in equity in the home; something we would not have had if we rented.

So then I ask you: What is the alternative what would have yielded me greater gains besides getting a mortgage? (Besides living in a shithole in the NE for another 15 years; something I was not prepared to do any longer)

[max_boost]

Originally posted by Kloubek


It's a fair point, of course.

Not necessary to divulge all the figures but suffice it to say that the bank did make good money off of us. On the other hand, we now have some 350 grand in equity in the home; something we would not have had if we rented.

So then I ask you: What is the alternative what would have yielded me greater gains besides getting a mortgage? (Besides living in a shithole in the NE for another 15 years; something I was not prepared to do any longer)

Instead of moving out in 2005 I should have stayed at home and just kept buying Apple stock haha

[Kloubek]

Originally posted by max_boost


Instead of moving out in 2005 I should have stayed at home and just kept buying Apple stock haha

Well, that first part is a good point in itself. (Of course, Apple would have been wonderful, but the stock market is always a crap shoot).

I think a lot of people can't wait to move out of the house, yet are not being forced to. As soon as I came of age, my father insisted I start paying rent, so I might as well have moved out. (And I did). But if one is able to continue without living expenses, even a minor income can add up real quick. So for those who are fortunate to live in a home where their parents are ok with them living there even after school, it is foolish not to take advantage of that.

[Feruk]

Originally posted by carson blocks
I've personally known people to use Carfinco as a lender
Terrible for dumb people, but Carfinco was a great stock. True wealth redistribution between the stupid (the users) and the smart (the stock owners).

[max_boost]

Originally posted by Kloubek


Well, that first part is a good point in itself. (Of course, Apple would have been wonderful, but the stock market is always a crap shoot).

I think a lot of people can't wait to move out of the house, yet are not being forced to. As soon as I came of age, my father insisted I start paying rent, so I might as well have moved out. (And I did). But if one is able to continue without living expenses, even a minor income can add up real quick. So for those who are fortunate to live in a home where their parents are ok with them living there even after school, it is foolish not to take advantage of that.

For sure. Beyond simply likes to buzz kill. The ones with vision are also the masters of hindsight haha

Anyway those of you who only have a mortgage and assuming that mortgage isn't ridiculous, are on the right track. Everyone else let them declare bankruptcy and self destruct. :whipped:

[TomcoPDR]

Originally posted by max_boost


Instead of moving out in 2005 I should have stayed at home and just kept buying Apple stock haha

Is the reward of them tasty apples worth the opportunity costs of cherries?

[Seth1968]

Originally posted by Seth1968


Except, (like most), you seem to think that a mortgage debt is necessary, fair, and benign. I ask, when all is said and done, how much did you actually pay for your house, and how much profit did the bank make off your back?



Originally posted by Kloubek


It's a fair point, of course.

Not necessary to divulge all the figures but suffice it to say that the bank did make good money off of us. On the other hand, we now have some 350 grand in equity in the home; something we would not have had if we rented.

So then I ask you: What is the alternative what would have yielded me greater gains besides getting a mortgage? (Besides living in a shithole in the NE for another 15 years; something I was not prepared to do any longer)

It's not a "fair point". It is the TRUTHFUL point that I have already made about "mortgages".

Your idea of home equity is meaninglessness, as the amount of profit that you think has been made, is neutralized (or most often lessened), by the outrageous increase in the cost of living in comparison to wage increases (OR EVEN WORSE).

The marth of it all only leads to the rich getting richer, and the middle class becoming impoverished.

[KrisYYC]

Originally posted by Mitsu3000gt
Tons of people live beyond their means and have poor money management skills - how is this news?

I think "cheap" credit has made it much worse today vs 20 or 30 years ago though.

Growing up in the 80's and 90's I recall people being much more practical with their spending decisions. Most of my friends were middle class and I don't think any of our parents bought a brand new car let alone young people just starting out. Modest, practical used cars were the norm. Same with home purchases, clothing etc.

A 22 year old receptionist with a $250 haircut, $300 jeans and a $600 purse driving a brand new leased 3 series BMW was pretty much unheard of back then. Maybe not in LA...

[masoncgy]

Originally posted by KrisYYC


I think "cheap" credit has made it much worse today vs 20 or 30 years ago though.

Growing up in the 80's and 90's I recall people being much more practical with their spending decisions. Most of my friends were middle class and I don't think any of our parents bought a brand new car let alone young people just starting out. Modest, practical used cars were the norm. Same with home purchases, clothing etc.

A 22 year old receptionist with a $250 haircut, $300 jeans and a $600 purse driving a brand new leased 3 series BMW was pretty much unheard of back then. Maybe not in LA...

Cheap credit is what's fueling all of this... especially the housing market. Live large, everyone!

[Seth1968]

Originally posted by KrisYYC
A 22 year old receptionist with a $250 haircut, $300 jeans and a $600 purse driving a brand new leased 3 series BMW was pretty much unheard of back then. Maybe not in LA...

and those $300.00 jeans are deliberately worn out:rofl:

it doesn't get any dumber than that.

[revelations]

Originally posted by M.alex


that makes no sense at all - surely nobody would be that stupid :confused:

Haha, youd be amazed at WHAT PERCENTAGE OF THE POPULATION THINK LIKE THIS.

My brother is an investment/insurance adviser. This one example, he was planning on Heloc some money out of a clients paid-off house towards the couples' retirement (as they had none). The couple, instead of investing (as directed) the money for about 20 years (which would have gotten them comfortably retired) thought they won the lotto instead and spent their entire Heloc (100,000$?) on crap instead.

[Marsh]

This isn't very surprising to me. Honestly, I think most canadians were in this situation (especially in Calgary) the last couple of years. With income streams falling, or stopping all together, now it has become an issue. I really don't have much sympathy for people who don't understand personal finance.

[Xtrema]

Originally posted by KrisYYC
A 22 year old receptionist with a $250 haircut, $300 jeans and a $600 purse driving a brand new leased 3 series BMW was pretty much unheard of back then. Maybe not in LA...

That just mean she just has a side biz.

[revelations]

Originally posted by Seth1968


Except, (like most), you seem to think that a mortgage debt is necessary, fair, and benign. I ask, when all is said and done, how much did you actually pay for your house, and how much profit did the bank make off your back?

Understand appreciating vs. depreciating assets. You can work on a late model car and it wont appreciate anything of real value while some homes can be increased by 20-30% in value, with 10% invested into renos.

Not to mention land appreciation.

[revelations]

Originally posted by Seth1968
The marth of it all only leads to the rich getting richer, and the middle class becoming impoverished.

Not trying to be mean here, but didnt you spend several thousand dollars last year repairing a used vehicle - which you would have saved had you just picked up another used model of the same vintage? :confused:

If so, you just pointed out why the poor (and some lower-income middle class) stay that way.

Death by a thousand small debits.

[J.M.]

:rofl:^

[Kloubek]

Originally posted by Seth1968
It's not a "fair point". It is the TRUTHFUL point that I have already made about "mortgages".

Your idea of home equity is meaninglessness, as the amount of profit that you think has been made, is neutralized (or most often lessened), by the outrageous increase in the cost of living in comparison to wage increases (OR EVEN WORSE).

The marth of it all only leads to the rich getting richer, and the middle class becoming impoverished.

Wait. What?

Firstly, cost of living increases are going to happen regardless of whether you are a homeowner or not. So that point is moot. What isn't, however, is the fact that you buy an asset at a certain price and you pay a fixed amount per month on it. Yet (ideally) your wage will go up over time... therefore making those payments easier and easier to make.

Yes, it is truthful that the bank has taken a good portion of my money. There's no disputing that, and I went into home ownership with eyes wide open with that realization.

However, it's also truthful that without the bank, I wouldn't have a mortgage and therefore wouldn't have a house.

My idea of equity is meaningless? How's that exactly? I'd say, on average, my mortgage payments plus taxes have been a noticeably lower than what I would have paid in rent. So how exactly do you figure that paying MORE for rent (because you have to live somewhere), but not having 340k in assets is a good idea? Please answer my question what the better alternative is. What investment do you have that both saved you money over the years, as well as allows you to sell it with a 1/3 million profit?

[bjstare]

Originally posted by revelations


Understand appreciating vs. depreciating assets. You can work on a late model car and it wont appreciate anything of real value while some homes can be increased by 20-30% in value, with 10% invested into renos.

Not to mention land appreciation.

The only appreciation in residential real estate is land appreciation - the building itself will always go down in value until it's bulldozed for a new one. (not trying to argue against the value in taking on mortgage debt for a house, I'll never rent again)

[sabad66]

Originally posted by Kloubek


Wait. What?

Firstly, cost of living increases are going to happen regardless of whether you are a homeowner or not. So that point is moot. What isn't, however, is the fact that you buy an asset at a certain price and you pay a fixed amount per month on it. Yet (ideally) your wage will go up over time... therefore making those payments easier and easier to make.

Yes, it is truthful that the bank has taken a good portion of my money. There's no disputing that, and I went into home ownership with eyes wide open with that realization.

However, it's also truthful that without the bank, I wouldn't have a mortgage and therefore wouldn't have a house.

My idea of equity is meaningless? How's that exactly? I'd say, on average, my mortgage payments plus taxes have been a noticeably lower than what I would have paid in rent. So how exactly do you figure that paying MORE for rent (because you have to live somewhere), but not having 340k in assets is a good idea? Please answer my question what the better alternative is. What investment do you have that both saved you money over the years, as well as allows you to sell it with a 1/3 million profit?
you're getting seth'd. don't feed the troll

[r3ccOs]

I've smith maneuvered and ended up still ahead regardless of the downturn... carrying equity in your mortgage is important, but real-estate over time really only keeps up with inflation alone.

thats alot of money not doing anything more than sitting in a GIC

[Kloubek]

Originally posted by r3ccOs
I've smith maneuvered and ended up still ahead regardless of the downturn... carrying equity in your mortgage is important, but real-estate over time really only keeps up with inflation alone.

Not taking into consideration booming economies such as Calgary's over the past decade, I imagine that's actually probably pretty accurate. But again, I'd rather stay level (on average) with inflation, as opposed to simply kissing my money away on rent and seeing nothing I can sell in the end.

But the one factor that isn't considered in your statement: Your wage will probably also go up with inflation. Yet with a mortgage, you're paying it in the same actual dollars as when you purchased. So while everyone else has their rents jacked up over time (to match inflation), my mortgage payment remain the same. That $1400 payment now is going to seem like a $1000 payment in 10 years. (No, I didn't do the math)

[Xtrema]

Originally posted by r3ccOs
I've smith maneuvered and ended up still ahead regardless of the downturn... carrying equity in your mortgage is important, but real-estate over time really only keeps up with inflation alone.

thats alot of money not doing anything more than sitting in a GIC

Majority of Calgary's increase is due to low interest rate and migration. We have got back into normal growth since 2009. Basically just enough to cover the cost of upkeep of dwelling (taxes and may be a bit for reno).

I really wish we have a robust market like TO and Van to a degree.

[revelations]

Originally posted by cjblair


The only appreciation in residential real estate is land appreciation - the building itself will always go down in value until it's bulldozed for a new one. (not trying to argue against the value in taking on mortgage debt for a house, I'll never rent again)

I mentioned renovations which, if done right, can make a noticeable increase in overall property value.

Shitty home with shit landscaping will always make money over decades, but the quick money is to be made with a little bit of effort.

[r3ccOs]

Originally posted by Kloubek


Not taking into consideration booming economies such as Calgary's over the past decade, I imagine that's actually probably pretty accurate. But again, I'd rather stay level (on average) with inflation, as opposed to simply kissing my money away on rent and seeing nothing I can sell in the end.

But the one factor that isn't considered in your statement: Your wage will probably also go up with inflation. Yet with a mortgage, you're paying it in the same actual dollars as when you purchased. So while everyone else has their rents jacked up over time (to match inflation), my mortgage payment remain the same. That $1400 payment now is going to seem like a $1000 payment in 10 years. (No, I didn't do the math)

wait till mortgage rates are adjusted appropiately

[Amysicle]

.

[zipdoa]

This information is no surprise to anyone who's earned a living selling cars.

[Seth1968]

Originally posted by zipdoa
This information is no surprise to anyone who's earned a living selling cars.

'This information is no surprise to anyone who's earned a living selling anything."

Fixed, or something. There's probably a smiley to go with that.

[Kloubek]

Originally posted by r3ccOs


wait till mortgage rates are adjusted appropiately

And you bring up a good point. I think rates could double with me still coming out ahead. But certainly, if they went up to double digits the picture becomes far less rosy. And when I say having a mortgage is a no-brainer investment, it really depends on interest rates being reasonable. It also depends on not having a divorce and having to split it, and not having it located in a city that is dying, etc. But then, there are many potential negative factors to ANY investment one was to make. God knows - my investments in oil wasn't the sharpest decision I've made.

Still waiting for your explanation of better allocation of living funds than a mortgage, Seth. You seemed pretty adamant to supply your opinion - now you have me intrigued as to why you feel that way.

[Redlined_8000]

I think everyone had a friend or two that has made retarded financial decisions... it's just so easy to get in debt, interest is the devil lol. I have 2 friends that just bought new cars. Did they need them? Nope. Were their original cars paid off? Nope. Lol. Just adding loans on top of loans. Lots of good advice in this thread however. Definitely live within your means.

[max_boost]

It's a race to the bottom lol interest rates aren't gonna go to double digits lol

[bjstare]

Originally posted by revelations


I mentioned renovations which, if done right, can make a noticeable increase in overall property value.

Shitty home with shit landscaping will always make money over decades, but the quick money is to be made with a little bit of effort.

Ah, I missed that. You're right, the right renos do wonders for resale value.

[Kloubek]

Originally posted by max_boost
It's a race to the bottom lol interest rates aren't gonna go to double digits lol

No time soon, no. But I'm sure our parents who had to struggle through 20%+ prime rates in the early 80's would have something to say about being careful. While somewhat of a historical anomaly, there appears to have been 17-18 years straight of double digits. Our current rates are also an anomaly, with 5% prime rates seemingly the historical norm:

http://www.ratehub.ca/prime-mortgage-rate-history

[mr2mike]

Originally posted by r3ccOs


wait till mortgage rates are adjusted appropiately

I don't see how they can in the short term, anymore. It would collapse the markets at this point and a total melt down.
I thought they would raise rates a few years ago but Calgary was in a bubble and it would have collapsed the rest of Canada.

[Prail]

Rates will never - ever hit double digits again.

Houses only cost $60-100k back when rates were well into the double digits.

Something of that nature would literally annihilate the real estate market.

A modest $350k mortage at 3% runs about $1,650/month.

If that jumped to 10% we are talking $3,100/month.

[HuMz]

I don't understand why a mandatory finance course isn't a requirement in high school.

[zipdoa]

Originally posted by HuMz
I don't understand why a mandatory finance course isn't a requirement in high school.

To a certain degree, it is. Career and Life Management was mandatory when I graduated from Churchill in 06. The course was pretty rudimentary but is probably one of the more useful experiences I had in school.

Nowadays, I feel like the intent is to provide enough information to get you interested and spending, but not enough to understand the 'big picture' of finance. I wonder what would happen if everyone suddenly gained complete fiscal responsibility?

[Buster]

It is totally incorrect that people are less wealthy now, than they were in previous generations. The entire developed world is very, very rich.

Divide the number of labour hours per unit of food.
Divide labour hours by access to information and/or technology
Divide labour hours by life expectancy
Divide labour hours by average square footage of home
Divide labour hours by average cost of consumer/luxury goods normalized

We're WAAAY richer than previous generations.

As for housing: it's an expense. always has been, always will be. To make money in RE beyond inflation, you need to a) participate in a speculative bubble or b) lever yourself.

Both of those involve risk.

When you realize that a house is just an expense, you can also consider your home equity as an asset just like any other, and your home equity as a share of your overall asset base can be part of that calculation. It's why renting in perpetuity is a reasonably mathematical decision - and home ownership is really a decision to prioritize lifestyle or consumer desires over the pure mathematical decision.

People who are keen on their primary residence as an investment tend to forget that their equity is highly leveraged and at risk, and that their equity has an opportunity cost associated with it.

But, owning a house is like having kids - in many ways both decisions are financially irrational and dominated by emotion.

[Buster]

Oh, and interest rates will probably never normalize in our lifetimes.

Policy makers are all-in on the wealth effect of housing. It's a poor policy, as we would all be in much better shape if rates were higher, and asset prices were subsequently lower.

But now that we have gone down this rabbit hole, it will be very hard for the central bankers and other policy makers to normalize things in a rapid fashion. It's an interesting situation for Calgary: we have huge deflationary pressures on housing (despite what our local real estate boards try to tell us), we have cheap money, and we have bubbles in other parts of the country which need to be deflated slowly over time.

So in Calgary right now, we have cheap (ish) asset prices, and our rates are still protected.

Of course, governments can lose control of their currencies, which is disastrous, and frankly I see that as the greater risk to the average Canadian than policy makers trying to wack us. But then we are talking about making sure our Bug Out Bags are prepped.

[mazdavirgin]

Originally posted by Prail
Rates will never - ever hit double digits again.

Houses only cost $60-100k back when rates were well into the double digits.

Something of that nature would literally annihilate the real estate market.

A modest $350k mortage at 3% runs about $1,650/month.

If that jumped to 10% we are talking $3,100/month.

So... What do you think happened in the 80's to 90's? Interest rates are not some magic thing that the government can keep lower to save people from stupid decisions they have made. Lending rates will be increasing in lock step with the US rate increases as they have historically done and we can definitely expect a return to the historical average of ~7%. Not to mention the government doesn't have much control over fixed rates in the first place. The bond markets determine these rates.

We will see higher rates and likely be in the 10% range at some point in the next 10 years or so. People are free to bury their heads in the sand though...

[89coupe]

A list of world bank interest rates and historicals.

http://www.tradingeconomics.com/country-list/interest-rate

[Cos]

.

[suntan]

QE's a bitch. With 40 year gov't bonds being issued, we're a few years away from high interest rates. But man, when that bubble bursts, it will be awful.

Hell Europe's selling negative interest rate bonds.

[suntan]

Originally posted by Cos


A few of you are talking like mortgage rates are a tool of the government to grow/shrink housing. Mortgage rates are an effect of other economic phenomenon, not the cause of it.

Do I see interest rates going to 10%? Not really without some strange hyper inflation. However can I see the reason they may go to 10 or 20%? Yes. If inflation is running rampant, the government has no choice but to increase the BoC interest rate as a way to combat it.

As buster mentioned, right now they are at a quagmire, if you increase them you kill the golden goose which is real estate however if you leave them then inflation continues to grow. Which is already a concern. This is all the effect of QE. Since QE money goes to lenders, the only way growth happens is with lending.

[revelations]

Originally posted by suntan
QE's a bitch. With 40 year gov't bonds being issued, we're a few years away from high interest rates. But man, when that bubble bursts, it will be awful.

Hell Europe's selling negative interest rate bonds.


I feel that the US will follow the road of Japan - thus QE 4-24 and NIRP

So, many years of (false) upside AND time to prepare/position for those who KNOW that it will start heading downhill in 5-10 years perhaps. In other words, the writing is on the wall as far as where the markets and finances are heading on a larger time scale.

In the end, (15 years?) things will prevail like they did in Germany in the early 90s with their tough austerity measures after reunification.

[suntan]

Yup, QE can go on forever.

[frizzlefry]

Originally posted by HuMz
I don't understand why a mandatory finance course isn't a requirement in high school.

I remember my "CALM" (career and life management course) was a joke in 94. "List the goals for your career and draw a diagram of your future home". Meanwhile my grade avg was getting its ass handed to it by mandatory science and math courses I would never need.

They need to offer courses that fulfill the math/sciences requirements for a diploma but teach anyone who does not want to be an engineer something useful.

"how the fucking economy works 101." Get detailed. Include the maths that I pay my investment guy to work out for me.

[A790]

During my CALM class I started a business. I learned about taxes, payroll, and entrepreneurship.

My little business in CALM made $210 in 3 days. However, some douche stole all the cash when we were dumb and left it on the table in the classroom. Lesson learned.

We also had to do budgets for life, moving out, etc. It was pretty detailed.

I don't relate to what you guys are saying. I walked out of high school with a pretty decent understanding of how to budget, pay bills, plan for the future... you get the idea.

***

RE: people being within $200 of financial problems, it doesn't surprise me when the national savings rate is 3.6%.

http://www.theglobeandmail.com/report-on-business/economy/household-saving-rate-nears-five-year-low-as-financial-risks-increase/article23274104/

[J.M.]

I don't even remember anything from my CALM class haha. I did take a financial management class in grade 11 though. It helped me understand the value of money a lot more.

[Mibz]

Originally posted by J.M.
I don't even remember anything from my CALM class haha. Yeah, I don't remember much of high school, but I remember even less of CALM.

[Xtrema]

I only remember one chick had to walk out of CALM during sex ed. Parent doesn't allow it or something.

She's super embarrassed.