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Canadian household debt bigger than national output

  • ConcernedCanuk (849 posts)
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    Canadian household debt bigger than national output

    Canadian household debt bigger than national output
    Published time: 20 Sep, 2016 10:25
    Edited time: 20 Sep, 2016 12:31

    https://www.rt.com/business/359977-canada-household-debt-gdp/

    /snip/

    Total household credit debt reached $1.97 trillion, with $1.29 trillion in mortgages and $585.8 billion in credit cards, car loans and other personal loans.

    “As interest rates have remained at historic lows, the amount of mortgage principal paid by households has increased, steadily approaching the total amount of mortgage interest paid,” the agency said.

    Canada has seen the biggest increase in household debt relative to income of any major developed country since 2000. It has borrowed more as a country than it has produced.

    /snip/

    It was echoed by the Bank of Canada which has repeatedly warned high household debt could threaten the country’s financial stability.

    “Self-reinforcing expectations” are fueling both a price run-up and increasingly risky borrowing by some buyers, said Bank of Canada Governor Stephen Poloz. He said over 720,000 households could struggle to make debt payments during a downturn.

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    Wow! – I’m doing well then . . . 

    My home is paid for, and the only credit cards I have/use are PrePaid – I literally CANNOT go in debt.

    I watched too many of my friends buy expensive homes and vehicles when they had a good job, but financed to the hilt – and when the job disappeared, so did their assets, but debt remained. . . 

    S0 – when an unexpected inheritance came in around 4 years ago of @200k – I budgeted 100k for a home (found one for 85k) and tucked around 40k in savings, spent some on upgrades, vehicles like plow, riding mower, generator etc – budgeted most of the remainder to live on while pensions came in (just this year –  ) – even had enough to put on a complete new metal roof this year. Cash.

    When one has payments up the ying-yang – your whole life can get uprooted in an instant . . .  

    CC

    Grey, Shlabotnik, Downwinder like this
    Why is it when we get older, we can remember the tiniest details from our youth, but not where we put our reading glasses 30 seconds ago?

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  • arikara (871 posts)
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    1. I feel so sorry for people stuck in the credit card and high mortgage cycle

    Been there, done that. When I realized how much I was spending on interest monthly, for absolutely nothing except enriching the banksters I cashed in most of my few RRSP’s and paid them off. The money I saved on paying interest more than made up for the money I lost by cashing them in. And that money probably would have been lost in the crash anyhow.

    That was 15 years ago and since then I’ve never run a balance or paid a cent of interest other than the mortgage which we also paid off early. We don’t have much money in the bank, or big pensions but no financial worries either because of no debt. I can afford to work part time 2 or 3 days a week and actually have a life beyond working for the man.

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