If you are playing with debt in 2016, you have to hope that everything remains stable -- your job, your health, your interest costs, even your relationship. However, based on my experience, if you are in the at-risk category, the odds are against you.
Many Canadians are opening up their January credit card statements, reeling from the holiday hangover and newly acquired debt they racked up last month. It sure adds up quickly: gifts, some travel, a few nice dinners over the holidays. What would happen if credit card interest rates doubled? How many of us would fall behind in our credit card payments? It sounds horrible but rest assured it is unlikely. But it is far more likely to happen with our mortgage rates. Could you afford your home in 2016 if interest rates rise?
Newly appointed Finance Minister Bill Morneau grabbed lots of headlines last week with the announcement that the Liberal government was imposing more stringent down payment requirements for buying a home. The move is meant to take the air out of the still-hot housing markets of Toronto and Vancouver, and it may well do that.
Canada is second only to Greece in terms of growth of household debt, relative to income, since the Great Recession. Our debt-to-income soared to record heights in September to a debt-to-income ratio of 164.6 per cent. We owe $1.65 for every dollar we earn. Simply put, we're stretched incredibly thin.
Perhaps all we really need is an ability to follow a proper budget. You may have one already but if it's not informing your financial decisions, then it's worthless. The sooner you admit that, the better.
Canadians have many reasons to celebrate as their nation turns 148 years old tomorrow. They can even feel a bit of pride in an area that normally provides a healthy dose of shame in the headlines: personal finance. Let's take a look at a list of Canadian financial accomplishments along with lessons we can use to help us become the True North, Strong and Debt-Free.
On July 1, 2015 the long awaited legislation regulating debt settlement services in Ontario comes into force. There are three main features of this new legislation that will impact Ontario consumers, with a ripple effect across the country. The biggest potential benefit to consumers will be the moratorium on up-front fees charged for no real service provided.
Debt has been in the news a lot lately. The major news outlets in Canada are paying attention to our record-high household debt levels and are doing some fantastic reporting about the effects of oil prices, housing, health, divorce, and all the other factors that can damage a family's bottom line. Yet amid this rabble of expert voices and real Canadian tales of debt crisis, there was one lone dissenter.
There are some serious concerns about household debt in Canada. But as families put the final touches on their Thanksgiving plans, I thought it would a great time to point out some things that are good about personal finances in Canada. Here are four bits of personal finance news we should be thankful for.
This month, Canadian students finish exams and begin hunting for summer jobs. A student working the counter at Taco Bell for minimum wage would have to work eight hours a day, seven days week, for almost the entire summer to cover tuition, never mind the cost of specialized or technical degrees. Students have a responsibility to work and pay for at least some of their education. Also a responsibility, when choosing their college or university program, to think about whether they are choosing a field of study where there is a real demand for jobs.
With low interest rates our average debt service ratio is at record lows. In 1990 Canadians used over 11 per cent of their disposable income to pay interest on their debt; today we only need 7 per cent of our income to pay interest. All is good. Or is it?
Have we become a society addicted to debt? Based on some recent surveys, I would have to conclude that the answer is yes. Debt has become an acceptable fact of life in our society. Can you live without borrowed money? If not, you may be living on borrowed time.
The financial press in Canada has been identifying our deficient economic productivity for several years now. In 2012, the Financial Post ran a column entitled "Canada's productivity gap is looking worse than ever. There may be opportunities to influence our growing debt problems in the country through programs comparable to those used to stimulate our economy's productivity. If tax credits and other incentive programs can be formulated to help stimulate our productivity gap, are there similar policies that could find ways to help those looking to start their own business, create jobs and directly impact the economy and productivity?
Is college or university a waste of money? For some people it is, for others it is a great investment. The point is that you should crunch the numbers and carefully consider your decision up front, so many years from now you are not looking back wondering how you will ever pay off that massive student loan.
Canada's new top central banker is no Mark Carney. That became clear on Wednesday, when Stephen Poloz, lauded the Canadian consumer for carrying the country through the global economic crisis of recent years. His comments so far suggest he isn't too worried about Canada's burgeoning consumer debt burden -- and that's a problem.
The banks aren't going to innovative. It wasn't Blockbuster that disrupted the movie rental business. It wasn't the record companies that revolutionized the music industry's business model. If we're going to find a solution, we need more startups introducing compelling alternatives.