13 ms·

Many Canadians are living on credit rather than staying within their means

74 points by geodel 9y ago

geodel 9y ago
I see the same pattern in so many nations. Marketers have triumphed all places where people have or don't even have any money to spend.
- opportune 9y ago
  Not only that. Rising wealth inequality and cheap credit is pricing the middle class completely out of asset ownership. Disposable income is staying constant while asset prices (and related things like rent) continue to rise. This isn't just a US phenomenon.
  - J-dawg 9y ago
    This is what leads to the "avocado toast" situation [0]. I'm conflicted on what to think about this. He comes across as arrogant, and made a very poor choice of item to illustrate his point, given how many avocado toasts you'd need to forgo to save a deposit for a house. It's also true that lack of affordable housing is mostly a political failure. But I look at young people in the UK and kind of see what he means. Home ownership (and any sort of real, sustained wealth) seems like such a distant prospect that people would rather just indulge themselves now. [0] https://www.theguardian.com/lifeandstyle/2017/may/15/australian-millionaire-millennials-avocado-toast-house https://www.theguardian.com/lifeandstyle/2017/may/15/austral...
    - creepydata 9y ago
      Avocado toast was meant to be both literal and a metaphor for a larger issue beyond just toast.
    - colomon 9y ago
      Back last month I got to thinking about this in terms of things my family didn't have in the 70s that we have right now. Cable TV, Internet, TiVo, cell phones, Netflix, routinely eating out ... I reckon I spend easily $600 a month on things I just didn't have growing up.
    - TheCoelacanth 9y ago
      Where the "avocado toast" narrative fails is that young people now are actually spending a smaller portion of their income on eating out than previous generations did at the same age. The categories they are spending more on are things like healthcare, housing and education.
  - throwaway99951 9y ago
    >Disposable income is staying constant while asset prices (and related things like rent) continue to rise. Wait, so the middle class doesn't own any of these rising priced assets, thus benefitting from the price increase? I don't think that's true.
hunterjrj 9y ago
Financial literacy should be a mandatory topic in a high school curriculum.
- digitalengineer 9y ago
  But then the students would realize how much in debt they will get by going to the university. No joke, see this unsustainable trend: https://en.wikipedia.org/wiki/Student_debt#/media/File:Student_loan_debt.png https://en.wikipedia.org/wiki/Student_debt#/media/File:Stude...
  - GhostVII 9y ago
    That is from the US, Canadian universities are much more affordable.
    - refurb 9y ago
      That doesn't seem to impact debt levels much. Average US student debt is $37K.[1] In Canada it's $26K.[2] I would have guessed it was much lower in Canada. [1]https://studentloanhero.com/student-loan-debt-statistics/ https://studentloanhero.com/student-loan-debt-statistics/ [2]http://www.ibtimes.com/student-debt-2016-canada-graduates-wont-have-repay-loans-until-their-income-hits-2439522 http://www.ibtimes.com/student-debt-2016-canada-graduates-wo...
      - GhostVII 9y ago
        26k seems pretty good to me, plus if you convert the 37k USD into CAD, it's more like 50k. If you are in a good program, I think 26k is perfectly fine, it's the students going into debt for programs that don't get them a job who are the issue.
        refurb 9y ago
        Why would you convert the currency? Canadians pay for things in CAD and Americans in USD.
Entangled 9y ago
The whole world's middle class is on the brink of ruin thanks to modern era politicians whose gluttony for easy money is devastating the foundations of sound economic principles: produce more than you can consume.
- frogfuzion 9y ago
  *whole developed world's middle class. Just a balancing out with developing nations right?
  - jefurii 9y ago
    Developing world wages wouldn't be so bad if we had correspondingly developing world prices.
  - the_af 9y ago
    The middle class is not doing so well in some developing nations either. In my own country it's been shrinking for years.
    - geodel 9y ago
      To add further in India top 5-8 per-cent population is described as 'middle class' by media. Because real middle class there looks like malnourished, emaciated masses. It hardly fits into narrative of young people doing modern jobs, have a motorized vehicles, eat out and go for movies every week.
- deleted 9y ago
  [deleted]
  - jefurii 9y ago
    True, many people are ignorant, but also we've been target of massive, decentralized, decades-long pysops campaigns (aka marketing and public relations) that have steered us in this direction. Update: edited for clarity.
- 9y ago
jessriedel 9y ago
The anecdote about one individual's credit problem the author uses to lead the article is particularly long and meandering. I can't fathom why anyone thinks this is an effective way to learn about anything.
- cjf4 9y ago
  Not to mention that it is a couple living in the most expensive part of Canada making pretty basic yet big impact financial mistakes.
jacquesm 9y ago
This should surprise absolutely nobody. Canada's middle class gets to bear the brunt of the costs of running the country, it would take a much larger population to be able to do so responsibly, on top of that your average Canadian spends far more on consumer goods than is probably wise given their income. In places where the future arrived a little early you can already see this, I've known people to burn up their furniture and inner walls of their house to stay warm in winter. Todays middle-class has a fair chance of ending up in the poor house or on the streets when the final bills arrive. Some parts of Canada make Northern Michigan look good by comparison. Just drive around Northern Ontario for a bit if you want to have an idea of what poverty in a first world country looks like.
- agmcleod 9y ago
  "This should surprise absolutely nobody" It surprises me, because I've never been up there. I do accept that we have issues, and that people have been getting hit by harsher bills, like Hydro recently. The article doesn't want to seem to load for me, but what is the source of cost issues in that part of the country? Cost of living vs what jobs pay out there? Or is it more deep than that? I primarily have been wanting to see an increase on taxes on the higher earning bracket. Also we should probably have more brackets on the high end 250k+ all paying the same tax rate doesn't make a whole lot of sense to me. Anyways, my hope is that we can use that to reduce costs of services this way. Not sure if it would solve the issues you speak of not.
  - thablackbull 9y ago
    > The article doesn't want to seem to load for me I had to wait a bit but it eventually loads. Not sure what is wrong with the website. > what is the source of cost issues in that part of the country? Cost of living vs what jobs pay out there? Or is it more deep than that? Article concludes frivolous spending coupled with negative life events: Loss of job, "ignore their tax bill while shelling out for rep hockey and baseball", relationship gone wrong. "Thanks to all the cheap credit, many of us can bridge our financial shortfalls for years before realizing we are on the brink of ruin."
- 9y ago
NOSHSHNACKERS 9y ago
2.50 for a starbucks coffee - Canadian dollars go far - its US$ 4.50 in my town
mabbo 9y ago
It's not surprising that people get into debts like the ones described in the article. Credit card companies want you to be terribly indebted to them. I had an uncle who suffered brain damage from an aneurism that left him unable to handle money- memory issues, disorganization, etc. He was never going to be able to pay back credit cards and my mother (his PoA and lawyer) informed the credit card companies of this. They sent the cards anyways. They wanted him to go into debt, hoping that his family would bail him out. There's more profit in taking advantage of people than there is in being a decent person. Unregulated free markets cannot account for that reality. We in Canada have some regulations, but clearly not strong enough ones to prevent this kind of predatory lending.
- geodel 9y ago
  Marketers and Politicians have told us that we are 'worth it'. So everything including laws just follow.
- sp332 9y ago
  In America we have https://www.optoutprescreen.com/?rf=t https://www.optoutprescreen.com/?rf=t Canada doesn't have something like this? Edit: I didn't realize it blocked people in other countries from even seeing it. Here's a snapshot: https://web.archive.org/web/20170603221522/https://www.optoutprescreen.com/?rf=t https://web.archive.org/web/20170603221522/https://www.optou...
  - mabbo 9y ago
    I don't know what we have, but I know that apparently, having a lawyer and power of attorney tell a credit card company to not send credit cards wasn't enough.
  - dmix 9y ago
    Visiting that site from Canada I get this message: > The OptOutPrescreen.com website is only accessible through ISP's (Internet Service Providers) located within the United States and its territories. Rarely see that on non-media sites. Can someone explain what it does?
jksmith 9y ago
Modern economies depend heavily on a middle class. Any currency not based on a fixed supply depends on the middle class to launder money for it.
- stephen_g 9y ago
  I don't think that really stacks up. A lot of the really interesting research into non-mainstream monetary theory (i.e post-Keynesian/modern monetary theory) is saying the opposite - that the size of the money supply is actually hugely important, and not having enough at certain times has caused as many problems as other times when there has been too much. The money supply really needs to be flexible to account for the amount of goods and services produced by the economy. Too much and you have inflation, too little and you get stagnation. So I don't believe that a currency based on a fixed supply of money would ever actually be workable long term (and unsurprisingly gold and other commodity backed currencies have never lasted).
  - jksmith 9y ago
    Not suggesting merits of either system. Just saying that if the supply is not based on some gold standard scheme, then for all intents currency is just paper when it's printed. It assumes value when paid in wages, loaned, etc. Effectively, it has to be laundered. The middle class is best at laundering because their ratio of earning power to debt to spending power. If the middle class shrinks, a money system that depends on it will lose value.
vinceguidry 9y ago
One generation builds wealth, the next does everything they can to tear it down. Seems like the way of the world. I stopped worrying about the middle class when I realized that they are the architects of their own ruin.
- chrisbennet 9y ago
  There is a difference be creating wealth and capturing it. The fellow who builds something creates wealth. The fellow who invests in assets generally does it to capture wealth i.e. make money off other peoples labor.
  - beaconstudios 9y ago
    and there's nothing wrong with that, if investing means that more people can build wealth for themselves. Starting a business ain't cheap.
- globuous 9y ago
  until their vote during the next election goes against your agenda.... You cannot not care about part of the population, even if you think it's their fault they're not doing better. Because the day they go to the streets to tear apart society as we know it, is when it's too late to care about them. Sad but true, history has shown this is how it works. Maybe it's extreme, but it's something to keep in mind. I had this very conversation with my grandpa the other day. He told me "well, you cannot care only about yourself, because you have to make sure other people/classes/whatever aren't so unhappy as to start a revolution."
- thatwebdude 9y ago
  LOL @ the classism here.
  - vinceguidry 9y ago
    I'm middle class myself, so I don't feel all that bad about it. You don't know how many of my family members I've seen fritter away their lives and fall into dependence on the ones with money. Black holes of neediness, these people are. I have very little sympathy for that idiocy. And even less for the decline of rugged individualism in favor of asking the government for handouts. The lower class never had any advantages to begin with so my apathy does not extend there.
Taylor_OD 9y ago
"Around Christmas, they decided to take the children to Mauritius to visit with family. That trip cost them $12,000, shaving their nest egg down to $9,000. Kervin wasn’t worried." Just starting the article but... It seems like this is a pretty big issue. I couldn't imagine taking a 12K vacation. Especially if it was going to bring the total savings for my family down to 9K. That's just poor financial planning.
- walshemj 9y ago
  Many people in the uk have no savings or less than £100 $9000 is quite a lot.
  - graeme 9y ago
    When unemployed?
    - beaconstudios 9y ago
      in the general employed public. The average UK citizen is actually really poor compared to Americans.
      - raesene6 9y ago
        Average or Median, it makes a big difference. US Average wealth is $300,000, Median Wealth is $44,000 (source http://money.cnn.com/2014/06/11/news/economy/middle-class-wealth/index.html http://money.cnn.com/2014/06/11/news/economy/middle-class-we...) The US is skewed very heavily by a small number of very rich people at the top For comparison UK median is £104,000 (Source https://www.ifs.org.uk/publications/8239 https://www.ifs.org.uk/publications/8239)
        deleted 9y ago
        [deleted]
      - graeme 9y ago
        Oh, I actually meant "do you consider that a lot of money to have when unemployed?". Because, I wouldn't. (Even though it's more than many have saved when they lose jobs)
makerightmoney 9y ago
good
geetfun 9y ago
There's good debt and then there's bad debt. Good debt is one where you use other people's money to build your own wealth in appreciating assets. Bad debt is where you borrow on credit to buy yourself a momentary satisfaction, like a trinket. Most people think they're richer than they actually are. Which is why it's so common for people to "spoil" themselves. Learning to live cheaply is a skill and takes a bit of pride swallowing as the people around you live more lavishly on less income. Unfortunately there a lot of people who are quite a bit overconfident about their financial state due to swollen housing prices.
- josephdviviano 9y ago
  I predict people taking out ostentatious lines of credit on their mortgages (esp. in GTA and Van) will lead to very high rates of default if the housing prices drop dramatically (~10-20 %).
- bluGill 9y ago
  It is hard to live within your means when you see everyone else around you get nice things. I know that when I retire (possibly early) I will be glad I saved all my life as I can afford more nice things when I have time. However there is the desire for now. Worse, nothing is guaranteed. I knew people who died young. All my savings will be wasted if it turns out I'm one of those who don't make it to retirement age. The best thing to do could be charge my credit cards to the max and enjoy life as best I can now - letting my estate be bankrupt. We have no way of knowing until after I die what I should have done.
  - bittercynic 9y ago
    Your savings wouldn't be wasted if you left them to a cause/person that you believe in.
  - J-dawg 9y ago
    I know exactly what you mean. I've been slowly moving towards a "Mr. Money Mustache" style of frugal living, but I still wonder whether I'm doing the "right" thing. Maybe I'm missing out on all sorts of opportunities to enjoy life and grow as a person. I do, however, look at friends who make significantly more than me and see that their lifestyle has grown proportionately with their income. Many of them could probably retire early if they embarked on 5-10 years of MMM-style extreme frugality, which to me seems like a missed opportunity.
deleted 9y ago
[deleted]
carsongross 9y ago
We need to bring back a long lost concept in economics: Usury
dgudkov 9y ago
The story looks to me like an example of family budget mismanagement full of red flags. Expensive trips, two kids in day care while 1 unemployed parent stays at home, two cars, and very expensive payday loans on top of it. Honestly, I have little sympathy here. PS. If there is a problem with middle class in Canada this story is not a good example of it.
- thablackbull 9y ago
  To be fair, it was never about a hollowing out. The link is, "Many Canadians are living on cheap credit rather than living within their means" and the title is, "Canada’s Middle Class Is on the Brink of Ruin". The whole purpose of the piece was pointing out the frivolous spending habits of the average person that leads to deep financial problems when a negative event happens (job loss, divorce, etc.) You were never to empathize with it; it's just saying people spend beyond their means.
- graeme 9y ago
  I know at least one supplier who lives like this financially. They and their spouse have above average incomes, but large debts, and constant spending on expensive vacations and house renovations. They have jobs, so they don't go over the edge. But it's basically one step removed from the more extreme situation highlighted in the article.
- nbanks 9y ago
  I have more sympathy for Jacqui, the single mom. She wasn't planning to divorce her husband and a $1200 basement seems reasonably thrifty for three people. Perhaps the new vehicles were extravagant, but she purchased that before her second divorce and couldn't save much by selling it to buy an old beater. In the end, her best hope would be a better paying job or moving somewhere with less expenses but a worse university for her daughter.
- prawn 9y ago
  The day care thing puzzled me. Surely either parent in between jobs could be at least 0.6 FTE home with the children? Is the father assuming that's not their role or being lazy about it? Schedule job interviews for the 1-2 days/week the kids are being cared for. I'd also be cautious about trying to live away from family and friends who you can rely on for spot support with childcare, emotional support, etc. I know it's not feasible for all, but that cost would add up.
ChuckMcM 9y ago
This is a scenario that plays out repeatedly. It always ends badly.
curioussavage 9y ago
So does Canada still have the highest household debt in the western world? Higher than their GDP? Do a search and all you see are articles downplaying it. Really shameful, looks like Canadian publications are just as shady as ours. Does this hurt the assumption that subsidized health care and college was supposed "fix" this?
- nathanvanfleet 9y ago
  Your last statement is kind of incoherent. I guess you are just trying to justify USA's lack of that. "Canada has a problem with credit, haha, looks like their... subsidized health-care didn't help them out of that one as they thought it would!"
  - refurb 9y ago
    Maybe I'm wrong, but I'm assuming the OP is referring to the common claim that American bankruptcy is so high because of medical costs. It would seem like even with healthcare for all, bankruptcy is still a problem for people.
gthtjtkt 9y ago
Seems to be down (giving me 503), hopefully this Google cache link works: https://webcache.googleusercontent.com/search?q=cache:7E6mLP92gQwJ:https://thewalrus.ca/canadas-middle-class-is-on-the-brink-of-ruin/+&cd=1&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:7E6mLP... Maybe this text-only version is better: http://webcache.googleusercontent.com/search?q=cache:7E6mLP92gQwJ:https://thewalrus.ca/canadas-middle-class-is-on-the-brink-of-ruin/&num=1&hl=en&gl=us&strip=1&vwsrc=0 http://webcache.googleusercontent.com/search?q=cache:7E6mLP9... mirror, archive (for ctrl-f)
ktzar 9y ago
I'm sorry, but people not having just a basic understanding of how debt works is not 'the system's problem. After reading the article I can identify a few things that would've raised a huge red alarm in my head if it was me: - Don't spend $12k in holidays right after you're fired and have a couple kids. - C-Sections are quite normal these days... It'd great that you want to be with your wife and the new babies... If you can afford it! Most people can't. - Using loans that have an interest of 590% APR... Sorry, you have to be quite ignorant to sign that. Even the worst credit cards have an interest that's a fraction of that. That's definitely not cheap credit. I know many Canadians... And people with that little financial knowledge is definitely not that common. And yes, most people take more debt than what they should, but the case portrayed in the article should give way to a very different headline "Couple chains badly financial decisions".
- sbarre 9y ago
  This ties back to something I've been saying for years: High School should include a basic course in financial education. Understanding budgeting, interest on loans & credit card debt, how a mortgage works, saving for retirement, etc... So that once you get into the real world, you aren't learning this stuff through trial and error.
  - ozmodiar 9y ago
    It's this a million times. As a Canadian I've talked to a staggering number of people who don't understand finances or basic financial instruments. At best they end up terrified of anything so much as a credit card, and at worst they end up like the family in this story, just grasping whatever ill advised financial resources are available to live the life they feel is right.
    - jacquesm 9y ago
      My person pet complot theory is that this is because if they would teach even the basics of proper financials to future household runners the system would not be able to profit so handsomely of the victims.
randomgyatwork 9y ago
As a Canadian making a decent wage, but not living outside my means, I guess this article explains why I feel like I'm being left behind. I had a coworker who got a condon and was paying 45% of his income for it, it made no sense. So I keep renting and wasting my money as people say, but at least I wouldn't go bankrupt if something bad happens.

74 points by geodel 9y ago

I see the same pattern in so many nations. Marketers have triumphed all places where people have or don't even have any money to spend.

opportune 9y ago
Not only that. Rising wealth inequality and cheap credit is pricing the middle class completely out of asset ownership. Disposable income is staying constant while asset prices (and related things like rent) continue to rise. This isn't just a US phenomenon.
- J-dawg 9y ago
  This is what leads to the "avocado toast" situation [0]. I'm conflicted on what to think about this. He comes across as arrogant, and made a very poor choice of item to illustrate his point, given how many avocado toasts you'd need to forgo to save a deposit for a house. It's also true that lack of affordable housing is mostly a political failure. But I look at young people in the UK and kind of see what he means. Home ownership (and any sort of real, sustained wealth) seems like such a distant prospect that people would rather just indulge themselves now. [0] https://www.theguardian.com/lifeandstyle/2017/may/15/australian-millionaire-millennials-avocado-toast-house https://www.theguardian.com/lifeandstyle/2017/may/15/austral...
  - creepydata 9y ago
    Avocado toast was meant to be both literal and a metaphor for a larger issue beyond just toast.
  - colomon 9y ago
    Back last month I got to thinking about this in terms of things my family didn't have in the 70s that we have right now. Cable TV, Internet, TiVo, cell phones, Netflix, routinely eating out ... I reckon I spend easily $600 a month on things I just didn't have growing up.
  - TheCoelacanth 9y ago
    Where the "avocado toast" narrative fails is that young people now are actually spending a smaller portion of their income on eating out than previous generations did at the same age. The categories they are spending more on are things like healthcare, housing and education.
- throwaway99951 9y ago
  >Disposable income is staying constant while asset prices (and related things like rent) continue to rise. Wait, so the middle class doesn't own any of these rising priced assets, thus benefitting from the price increase? I don't think that's true.

hunterjrj 9y ago

Financial literacy should be a mandatory topic in a high school curriculum.

digitalengineer 9y ago
But then the students would realize how much in debt they will get by going to the university. No joke, see this unsustainable trend: https://en.wikipedia.org/wiki/Student_debt#/media/File:Student_loan_debt.png https://en.wikipedia.org/wiki/Student_debt#/media/File:Stude...
- GhostVII 9y ago
  That is from the US, Canadian universities are much more affordable.
  - refurb 9y ago
    That doesn't seem to impact debt levels much. Average US student debt is $37K.[1] In Canada it's $26K.[2] I would have guessed it was much lower in Canada. [1]https://studentloanhero.com/student-loan-debt-statistics/ https://studentloanhero.com/student-loan-debt-statistics/ [2]http://www.ibtimes.com/student-debt-2016-canada-graduates-wont-have-repay-loans-until-their-income-hits-2439522 http://www.ibtimes.com/student-debt-2016-canada-graduates-wo...
    - GhostVII 9y ago
      26k seems pretty good to me, plus if you convert the 37k USD into CAD, it's more like 50k. If you are in a good program, I think 26k is perfectly fine, it's the students going into debt for programs that don't get them a job who are the issue.
      - refurb 9y ago
        Why would you convert the currency? Canadians pay for things in CAD and Americans in USD.

Entangled 9y ago

The whole world's middle class is on the brink of ruin thanks to modern era politicians whose gluttony for easy money is devastating the foundations of sound economic principles: produce more than you can consume.

frogfuzion 9y ago
*whole developed world's middle class. Just a balancing out with developing nations right?
- jefurii 9y ago
  Developing world wages wouldn't be so bad if we had correspondingly developing world prices.
- the_af 9y ago
  The middle class is not doing so well in some developing nations either. In my own country it's been shrinking for years.
  - geodel 9y ago
    To add further in India top 5-8 per-cent population is described as 'middle class' by media. Because real middle class there looks like malnourished, emaciated masses. It hardly fits into narrative of young people doing modern jobs, have a motorized vehicles, eat out and go for movies every week.
deleted 9y ago
[deleted]
- jefurii 9y ago
  True, many people are ignorant, but also we've been target of massive, decentralized, decades-long pysops campaigns (aka marketing and public relations) that have steered us in this direction. Update: edited for clarity.
9y ago

jessriedel 9y ago

The anecdote about one individual's credit problem the author uses to lead the article is particularly long and meandering. I can't fathom why anyone thinks this is an effective way to learn about anything.

cjf4 9y ago
Not to mention that it is a couple living in the most expensive part of Canada making pretty basic yet big impact financial mistakes.

jacquesm 9y ago

This should surprise absolutely nobody. Canada's middle class gets to bear the brunt of the costs of running the country, it would take a much larger population to be able to do so responsibly, on top of that your average Canadian spends far more on consumer goods than is probably wise given their income. In places where the future arrived a little early you can already see this, I've known people to burn up their furniture and inner walls of their house to stay warm in winter. Todays middle-class has a fair chance of ending up in the poor house or on the streets when the final bills arrive. Some parts of Canada make Northern Michigan look good by comparison. Just drive around Northern Ontario for a bit if you want to have an idea of what poverty in a first world country looks like.

agmcleod 9y ago
"This should surprise absolutely nobody" It surprises me, because I've never been up there. I do accept that we have issues, and that people have been getting hit by harsher bills, like Hydro recently. The article doesn't want to seem to load for me, but what is the source of cost issues in that part of the country? Cost of living vs what jobs pay out there? Or is it more deep than that? I primarily have been wanting to see an increase on taxes on the higher earning bracket. Also we should probably have more brackets on the high end 250k+ all paying the same tax rate doesn't make a whole lot of sense to me. Anyways, my hope is that we can use that to reduce costs of services this way. Not sure if it would solve the issues you speak of not.
- thablackbull 9y ago
  > The article doesn't want to seem to load for me I had to wait a bit but it eventually loads. Not sure what is wrong with the website. > what is the source of cost issues in that part of the country? Cost of living vs what jobs pay out there? Or is it more deep than that? Article concludes frivolous spending coupled with negative life events: Loss of job, "ignore their tax bill while shelling out for rep hockey and baseball", relationship gone wrong. "Thanks to all the cheap credit, many of us can bridge our financial shortfalls for years before realizing we are on the brink of ruin."
9y ago

NOSHSHNACKERS 9y ago

2.50 for a starbucks coffee - Canadian dollars go far - its US$ 4.50 in my town

mabbo 9y ago

It's not surprising that people get into debts like the ones described in the article. Credit card companies want you to be terribly indebted to them. I had an uncle who suffered brain damage from an aneurism that left him unable to handle money- memory issues, disorganization, etc. He was never going to be able to pay back credit cards and my mother (his PoA and lawyer) informed the credit card companies of this. They sent the cards anyways. They wanted him to go into debt, hoping that his family would bail him out. There's more profit in taking advantage of people than there is in being a decent person. Unregulated free markets cannot account for that reality. We in Canada have some regulations, but clearly not strong enough ones to prevent this kind of predatory lending.

geodel 9y ago
Marketers and Politicians have told us that we are 'worth it'. So everything including laws just follow.
sp332 9y ago
In America we have https://www.optoutprescreen.com/?rf=t https://www.optoutprescreen.com/?rf=t Canada doesn't have something like this? Edit: I didn't realize it blocked people in other countries from even seeing it. Here's a snapshot: https://web.archive.org/web/20170603221522/https://www.optoutprescreen.com/?rf=t https://web.archive.org/web/20170603221522/https://www.optou...
- mabbo 9y ago
  I don't know what we have, but I know that apparently, having a lawyer and power of attorney tell a credit card company to not send credit cards wasn't enough.
- dmix 9y ago
  Visiting that site from Canada I get this message: > The OptOutPrescreen.com website is only accessible through ISP's (Internet Service Providers) located within the United States and its territories. Rarely see that on non-media sites. Can someone explain what it does?

jksmith 9y ago

Modern economies depend heavily on a middle class. Any currency not based on a fixed supply depends on the middle class to launder money for it.

stephen_g 9y ago
I don't think that really stacks up. A lot of the really interesting research into non-mainstream monetary theory (i.e post-Keynesian/modern monetary theory) is saying the opposite - that the size of the money supply is actually hugely important, and not having enough at certain times has caused as many problems as other times when there has been too much. The money supply really needs to be flexible to account for the amount of goods and services produced by the economy. Too much and you have inflation, too little and you get stagnation. So I don't believe that a currency based on a fixed supply of money would ever actually be workable long term (and unsurprisingly gold and other commodity backed currencies have never lasted).
- jksmith 9y ago
  Not suggesting merits of either system. Just saying that if the supply is not based on some gold standard scheme, then for all intents currency is just paper when it's printed. It assumes value when paid in wages, loaned, etc. Effectively, it has to be laundered. The middle class is best at laundering because their ratio of earning power to debt to spending power. If the middle class shrinks, a money system that depends on it will lose value.

vinceguidry 9y ago

One generation builds wealth, the next does everything they can to tear it down. Seems like the way of the world. I stopped worrying about the middle class when I realized that they are the architects of their own ruin.

chrisbennet 9y ago
There is a difference be creating wealth and capturing it. The fellow who builds something creates wealth. The fellow who invests in assets generally does it to capture wealth i.e. make money off other peoples labor.
- beaconstudios 9y ago
  and there's nothing wrong with that, if investing means that more people can build wealth for themselves. Starting a business ain't cheap.
globuous 9y ago
until their vote during the next election goes against your agenda.... You cannot not care about part of the population, even if you think it's their fault they're not doing better. Because the day they go to the streets to tear apart society as we know it, is when it's too late to care about them. Sad but true, history has shown this is how it works. Maybe it's extreme, but it's something to keep in mind. I had this very conversation with my grandpa the other day. He told me "well, you cannot care only about yourself, because you have to make sure other people/classes/whatever aren't so unhappy as to start a revolution."
thatwebdude 9y ago
LOL @ the classism here.
- vinceguidry 9y ago
  I'm middle class myself, so I don't feel all that bad about it. You don't know how many of my family members I've seen fritter away their lives and fall into dependence on the ones with money. Black holes of neediness, these people are. I have very little sympathy for that idiocy. And even less for the decline of rugged individualism in favor of asking the government for handouts. The lower class never had any advantages to begin with so my apathy does not extend there.

Taylor_OD 9y ago

"Around Christmas, they decided to take the children to Mauritius to visit with family. That trip cost them $12,000, shaving their nest egg down to $9,000. Kervin wasn’t worried." Just starting the article but... It seems like this is a pretty big issue. I couldn't imagine taking a 12K vacation. Especially if it was going to bring the total savings for my family down to 9K. That's just poor financial planning.

walshemj 9y ago
Many people in the uk have no savings or less than £100 $9000 is quite a lot.
- graeme 9y ago
  When unemployed?
  - beaconstudios 9y ago
    in the general employed public. The average UK citizen is actually really poor compared to Americans.
    - raesene6 9y ago
      Average or Median, it makes a big difference. US Average wealth is $300,000, Median Wealth is $44,000 (source http://money.cnn.com/2014/06/11/news/economy/middle-class-wealth/index.html http://money.cnn.com/2014/06/11/news/economy/middle-class-we...) The US is skewed very heavily by a small number of very rich people at the top For comparison UK median is £104,000 (Source https://www.ifs.org.uk/publications/8239 https://www.ifs.org.uk/publications/8239)
      - deleted 9y ago
        [deleted]
    - graeme 9y ago
      Oh, I actually meant "do you consider that a lot of money to have when unemployed?". Because, I wouldn't. (Even though it's more than many have saved when they lose jobs)

makerightmoney 9y ago

good

geetfun 9y ago

There's good debt and then there's bad debt. Good debt is one where you use other people's money to build your own wealth in appreciating assets. Bad debt is where you borrow on credit to buy yourself a momentary satisfaction, like a trinket. Most people think they're richer than they actually are. Which is why it's so common for people to "spoil" themselves. Learning to live cheaply is a skill and takes a bit of pride swallowing as the people around you live more lavishly on less income. Unfortunately there a lot of people who are quite a bit overconfident about their financial state due to swollen housing prices.

josephdviviano 9y ago
I predict people taking out ostentatious lines of credit on their mortgages (esp. in GTA and Van) will lead to very high rates of default if the housing prices drop dramatically (~10-20 %).
bluGill 9y ago
It is hard to live within your means when you see everyone else around you get nice things. I know that when I retire (possibly early) I will be glad I saved all my life as I can afford more nice things when I have time. However there is the desire for now. Worse, nothing is guaranteed. I knew people who died young. All my savings will be wasted if it turns out I'm one of those who don't make it to retirement age. The best thing to do could be charge my credit cards to the max and enjoy life as best I can now - letting my estate be bankrupt. We have no way of knowing until after I die what I should have done.
- bittercynic 9y ago
  Your savings wouldn't be wasted if you left them to a cause/person that you believe in.
- J-dawg 9y ago
  I know exactly what you mean. I've been slowly moving towards a "Mr. Money Mustache" style of frugal living, but I still wonder whether I'm doing the "right" thing. Maybe I'm missing out on all sorts of opportunities to enjoy life and grow as a person. I do, however, look at friends who make significantly more than me and see that their lifestyle has grown proportionately with their income. Many of them could probably retire early if they embarked on 5-10 years of MMM-style extreme frugality, which to me seems like a missed opportunity.

deleted 9y ago

[deleted]

carsongross 9y ago

We need to bring back a long lost concept in economics: Usury

dgudkov 9y ago

The story looks to me like an example of family budget mismanagement full of red flags. Expensive trips, two kids in day care while 1 unemployed parent stays at home, two cars, and very expensive payday loans on top of it. Honestly, I have little sympathy here. PS. If there is a problem with middle class in Canada this story is not a good example of it.

thablackbull 9y ago
To be fair, it was never about a hollowing out. The link is, "Many Canadians are living on cheap credit rather than living within their means" and the title is, "Canada’s Middle Class Is on the Brink of Ruin". The whole purpose of the piece was pointing out the frivolous spending habits of the average person that leads to deep financial problems when a negative event happens (job loss, divorce, etc.) You were never to empathize with it; it's just saying people spend beyond their means.
graeme 9y ago
I know at least one supplier who lives like this financially. They and their spouse have above average incomes, but large debts, and constant spending on expensive vacations and house renovations. They have jobs, so they don't go over the edge. But it's basically one step removed from the more extreme situation highlighted in the article.
nbanks 9y ago
I have more sympathy for Jacqui, the single mom. She wasn't planning to divorce her husband and a $1200 basement seems reasonably thrifty for three people. Perhaps the new vehicles were extravagant, but she purchased that before her second divorce and couldn't save much by selling it to buy an old beater. In the end, her best hope would be a better paying job or moving somewhere with less expenses but a worse university for her daughter.
prawn 9y ago
The day care thing puzzled me. Surely either parent in between jobs could be at least 0.6 FTE home with the children? Is the father assuming that's not their role or being lazy about it? Schedule job interviews for the 1-2 days/week the kids are being cared for. I'd also be cautious about trying to live away from family and friends who you can rely on for spot support with childcare, emotional support, etc. I know it's not feasible for all, but that cost would add up.

ChuckMcM 9y ago

This is a scenario that plays out repeatedly. It always ends badly.

curioussavage 9y ago

So does Canada still have the highest household debt in the western world? Higher than their GDP? Do a search and all you see are articles downplaying it. Really shameful, looks like Canadian publications are just as shady as ours. Does this hurt the assumption that subsidized health care and college was supposed "fix" this?

nathanvanfleet 9y ago
Your last statement is kind of incoherent. I guess you are just trying to justify USA's lack of that. "Canada has a problem with credit, haha, looks like their... subsidized health-care didn't help them out of that one as they thought it would!"
- refurb 9y ago
  Maybe I'm wrong, but I'm assuming the OP is referring to the common claim that American bankruptcy is so high because of medical costs. It would seem like even with healthcare for all, bankruptcy is still a problem for people.

gthtjtkt 9y ago

Seems to be down (giving me 503), hopefully this Google cache link works: https://webcache.googleusercontent.com/search?q=cache:7E6mLP92gQwJ:https://thewalrus.ca/canadas-middle-class-is-on-the-brink-of-ruin/+&cd=1&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:7E6mLP... Maybe this text-only version is better: http://webcache.googleusercontent.com/search?q=cache:7E6mLP92gQwJ:https://thewalrus.ca/canadas-middle-class-is-on-the-brink-of-ruin/&num=1&hl=en&gl=us&strip=1&vwsrc=0 http://webcache.googleusercontent.com/search?q=cache:7E6mLP9... mirror, archive (for ctrl-f)

ktzar 9y ago

I'm sorry, but people not having just a basic understanding of how debt works is not 'the system's problem. After reading the article I can identify a few things that would've raised a huge red alarm in my head if it was me: - Don't spend $12k in holidays right after you're fired and have a couple kids. - C-Sections are quite normal these days... It'd great that you want to be with your wife and the new babies... If you can afford it! Most people can't. - Using loans that have an interest of 590% APR... Sorry, you have to be quite ignorant to sign that. Even the worst credit cards have an interest that's a fraction of that. That's definitely not cheap credit. I know many Canadians... And people with that little financial knowledge is definitely not that common. And yes, most people take more debt than what they should, but the case portrayed in the article should give way to a very different headline "Couple chains badly financial decisions".

sbarre 9y ago
This ties back to something I've been saying for years: High School should include a basic course in financial education. Understanding budgeting, interest on loans & credit card debt, how a mortgage works, saving for retirement, etc... So that once you get into the real world, you aren't learning this stuff through trial and error.
- ozmodiar 9y ago
  It's this a million times. As a Canadian I've talked to a staggering number of people who don't understand finances or basic financial instruments. At best they end up terrified of anything so much as a credit card, and at worst they end up like the family in this story, just grasping whatever ill advised financial resources are available to live the life they feel is right.
  - jacquesm 9y ago
    My person pet complot theory is that this is because if they would teach even the basics of proper financials to future household runners the system would not be able to profit so handsomely of the victims.

randomgyatwork 9y ago

As a Canadian making a decent wage, but not living outside my means, I guess this article explains why I feel like I'm being left behind. I had a coworker who got a condon and was paying 45% of his income for it, it made no sense. So I keep renting and wasting my money as people say, but at least I wouldn't go bankrupt if something bad happens.