Debt A Four Letter Word

 

This is a re-post From September 18. It is still current and I feel since Santa Clause is arriving soon and there is so many advertisement to buy and consume, I thought this re-post on debt was justified. Also a new report came out last week Canadian Households lead the world in term of debt

 

“Debt” A four letter word

My first Word of the week was Debt. I choose that word because it has the most direct impact on financial independents. There is good debt and bad debt, unfortunately most households have a lot of the bad consumer debt.
Canadians have never owed as much as they do now. Debt continues to grow at 3 times inflation and is rising at four percent year over year. The latest numbers from Statistic Canada indicate that household debt now stands at 167.8 per cent of disposable income, a record high. This suggests that, on average, Canadians owe $1.68 for every $1 of disposable income. Statistics Canada.

Another new survey by the Canadian payroll association suggests almost half of workers are living pay cheque to pay cheque due to soaring spending and debt levels. The poll found that 47 per cent of respondents said it would be difficult to meet their financial obligations if their pay cheque was delayed by even a single week. The survey, which polled 4,766 Canadian employees, also found that 35 per cent said they feel overwhelmed by their level of debt. For the first time, more respondents found mortgages the most difficult debt to pay down, with 32 per cent of respondents selecting this option compared to 23 per cent who cited credit card debt.

Some economist feel that household debt is okay as net worth has risen with the debt level. Other economist see a bigger problem as the very wealthy and investors have added to their net worth, where lower and middle income earners have fallen behind. It’s not just Canadian households debt that is high, there is the federal and provincial debt. When we do get a recession both provincial and national debt will explode higher. Check out the national and provincial debt clock.

The Canadian national debt clock shows, as a country what we owe, your share, debt per day, and per hour. It changes so fast I will give you the link here National Debt Clock 

The provincial debt clock shows what your province owes as well as your share Provincial Debt Clock

When we combine household, provincial, and federal debt, Canadians have a lot of a four letter word. “DEBT”

“Savings are a gift to the future, Debt is a burden on it”.

Ernest Hemingway Quote  “How did you go bankrupt?
Two ways. Gradually, then suddenly.”

Just For Fun !! World Debt Clock US Debt Clock

Comments

  1. It sounds a little like the housing bubble we experienced in the US in 2008. Home prices kept rising and lenders kept lending more to first time buyers and home owners refinancing their mortgages. When the recession hit and people lost their jobs, they couldn’t make payments and it all started to spiral down. I’m not sure what to conclude from the household situation in Canada.

    On a different note, the debt loads of governments in the developed economy’s do bother me a lot. How can our governments continue to live beyond their means with no plans to correct the situation? Tom

    • I am not sure what to conclude either with the housing market in Canada. The government has put in new regulation,taxes,and stress test for new mortgages but it always scares me when governments get involved. I agree at some point government debt has to matter . I guess the question is when ?

  2. I’m disgusted by the amount of debt people are comfortable carrying. It makes me have palpitations sometimes. The real estate market is insane. I still have mortgage debt but it is manageable and can pay it off. I think that if I had mortgage debt that was unmanageable I wouldn’t be able to sleep at night.

    • I am with you 100%. I couldn’t sleep if I owed what the average household owed. Even if most of it is mortgage debt . It’s still debt. I think a lot of people and the economy will be hurting if interest rates go up.

    • I am not sure when debt becomes a problem maybe when the economy softens ? Thanks for Stopping By always appreciate the comments.

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