Younger Canadians Debt

[Bonam]

There is little the individual can do about any of that and they are the subject of this topic.

Individuals can do everything right and be frugal and know how to manage their finances and make a good salary and still not be anywhere close to reasonably affording a house. If they do decide to buy one, they'll be getting a loan for 10-20x their annual income, far outside what previous generations thought of as an upper limit of affordability. All the rest of the costs an individual faces are not particularly onerous, in my opinion. For example, all my non-housing expenses add up to ~20% of my after tax income.

People talk about student loans but that's mainly culture/media leakage from the US. Tuition costs in Canada are not unreasonable and student debt loads are not unmanageable. They are typically 10-100 smaller dollar amounts of debt than those associated with purchasing a house.

In Canada's major cities, housing costs are by a huge margin the paramount driver of debt, financial difficulty, and the general "squeeze of the middle-class lifestyle" that people talk about. And, this problem is far from unsolvable. All it would take is a bit of political will to do it. Not talking about this topic while discussing "younger Canadian's debt" is like ignoring the 500 lb gorilla in the room.

Edited December 22, 2015 by Bonam

[Wilber]

Individuals can do everything right and be frugal and know how to manage their finances and make a good salary and still not be anywhere close to reasonably affording a house. If they do decide to buy one, they'll be getting a loan for 10-20x their annual income, far outside what previous generations thought of as an upper limit of affordability. All the rest of the costs an individual faces are not particularly onerous, in my opinion. For example, all my non-housing expenses add up to ~20% of my after tax income.

People talk about student loans but that's mainly culture/media leakage from the US. Tuition costs in Canada are not unreasonable and student debt loads are not unmanageable. They are typically 10-100 smaller dollar amounts of debt than those associated with purchasing a house.

In Canada's major cities, housing costs are by a huge margin the paramount driver of debt, financial difficulty, and the general "squeeze of the middle-class lifestyle" that people talk about. And, this problem is far from unsolvable. All it would take is a bit of political will to do it. Not talking about this topic while discussing "younger Canadian's debt" is like ignoring the 500 lb gorilla in the room.

Isn't that what I said? There is little the individual can do about it. Maybe JT will fix it.

[Bonam]

Maybe JT will fix it.

Doubt it.

[Moonlight Graham]

Younger people are used to a high standard of living now. They're used to living in their parent's nice house driving a nice automobile and flying somewhere nice on vacation once a year (or more). My parents never traveled outside Canada or the US until they were retired. They didn't have many luxuries growing up. At Christmas they got a doll or sled, not a PS4. A lot of them expect to have a similar lifestyle starting out, which is impossible, their parents worked decades to built that kind of standard of living

I've known a lot of young people who have racked up some really stupid debt, like charging 20k worth of crap on their credit cards over a few years that they didn't have so they can take vacations and whatnot. Outrageous.

Our economy is artificially inflated, increasingly depending on credit card debt, mortgages, and federal debt spending to ensure growth. That's should be very, very troubling to us. Our economy is essentially being maintained based on money that we don't have, but it has to catch up one day.

[Bonam]

Younger people are used to a high standard of living now. They're used to living in their parent's nice house driving a nice automobile and flying somewhere nice on vacation once a year (or more). My parents never traveled outside Canada or the US until they were retired. They didn't have many luxuries growing up. At Christmas they got a doll or sled, not a PS4. A lot of them expect to have a similar lifestyle starting out, which is impossible, their parents worked decades to built that kind of standard of living

I'd like to see some stats supporting this statement.

I've known a lot of young people who have racked up some really stupid debt, like charging 20k worth of crap on their credit cards over a few years that they didn't have so they can take vacations and whatnot. Outrageous.

That's just stupid.

Personally, I repaid my student loans within 1 year of graduation, have never paid a cent in credit card interest, and save/invest about 50% of my after tax income. And in a year or two I'll probably spend every single dollar I ever saved, as a down payment for a house.

[Ike Softner]

Younger people are used to a high standard of living now. They're used to living in their parent's nice house driving a nice automobile and flying somewhere nice on vacation once a year (or more). My parents never traveled outside Canada or the US until they were retired. They didn't have many luxuries growing up. At Christmas they got a doll or sled, not a PS4. A lot of them expect to have a similar lifestyle starting out, which is impossible, their parents worked decades to built that kind of standard of living

I've known a lot of young people who have racked up some really stupid debt, like charging 20k worth of crap on their credit cards over a few years that they didn't have so they can take vacations and whatnot. Outrageous.

Our economy is artificially inflated, increasingly depending on credit card debt, mortgages, and federal debt spending to ensure growth. That's should be very, very troubling to us. Our economy is essentially being maintained based on money that we don't have, but it has to catch up one day.

Banks have created money out of thin air for over a century. Nothing will happen. The world will continue to spin.

[Wilber]

In 1993 I was in Brazil when they were going to a new currency. Both old bills and new bills were in circulation. A new bill had the same value as an old bill with three more zeros. That's what can happen when you just keep printing money.

[Topaz]

Well, I guess we will see if that true and how long the US can hold up with a 12+ trillion debt and keeps printing. Besides, anyone in debt has to have a lot of stress trying to pay it off before the interest rates go up against any loans or mortgages.

[Shady]

I don't recall singing the praises of the new government or the new deficit.

It just grates that the generation who had the best of everything thanks to massive borrowing from the public purse is now griping that their taxes are too high while they demand more money be spent to reduce wait-times for hip and knee replacements so that they can get back to Freedom-55ing on the golf courses.

-k

Exactly. It's a transfer of wealth from the younger and working to the older and retired.

[eyeball]

That's how the program was sold to our generation. It's too late in the day to change it now don't you think? I know I do but the only real alternative, tax the rich, is verboten so we're kinda stuck with what we've got which is tax the young. Sorry but it is what it is. I didn't make the rules, I'm stuck with them too.

I'm at the back end of the boomers myself and I'm not looking forward to the day when there are so few of us left that we'll be easier to write off and left behind by resentful and likely impoverished generations that follow.

I'm sure the wealth will still be there to tax but you'll be more focused on beating down the poor especially poor old people that caused all the problems.

[TimG]

That's how the program was sold to our generation. It's too late in the day to change it now don't you think?

No. The generation expecting pensions did not ensure they were adequately funded. They should bear a large part of the cost of fixing the issues.

I know I do but the only real alternative, tax the rich

There are't enough 'rich' people and if you do tax them they tend make choices that reduce their income. To only real alternative is to cut back on benefits, increase taxes on everyone and cut services. None of it is pretty but the idea that one group in society who should pay nothing for the mess they created is a non-starter. Edited December 27, 2015 by TimG

[Wilber]

No. The generation expecting pensions did not ensure they were adequately funded. They should bear a large part of the cost of fixing the issues.

When it comes to private plans, they will. If their plans aren't funded, their pensions will be reduced accordingly. Government has to bear a large part of that responsibility for not allowing plans to be more than 10% over funded, so when the markets hit the skids in 08, there wasn't enough cushion to take up the slack. Employees couldn't have contributed more to their plans if they wanted to and because they had a registered plan, they were only allowed to make very small or no RRSP contributions. Government also doesn't require companies to make any contributions to a plan until it becomes underfunded. The majority of private plans were fully funded by employee contributions until the 2008 meltdown and many of them have come back as markets improved.

People like to bash private pension plans but in fact, they take a great deal of pressure off the public system.

[Smoke]

Still waiting for someone to illustrate what "the best of everything" means as Kimmy pointed out.