Okay this article made me mad. Are they NUTS?
Too much debt is what got America in the mess that it’s in and we’re supposed to follow suit?
In the article, on one hand, they say the amount of debt Canadians are carrying is not such a big deal and with the very next breath they say Canadians are approaching the debt levels that Americans were at right before the crash in 2008. I repeat. Canadians are approaching the debt levels that Americans were at right before the crash in 2008 We saw how well that worked out for them.
Interest rates at present are very, very low. Average government/provincial bond rates are closer to 5%. Look at your debt. If government bond rose to their historic average, that means any debt you have will rise as well.
Ask yourself, “With my income, would I be able to service a 3% increase in my mortgage, my car lease, my home equity line of credit?”
In order for you to pay a 3% increase, you need to look at your tax rate to see what that would really cost you in after tax dollars. For me to service an additional 3% on a $100,000 loan which would mean an additional $3,000 in interest payment due, and that would be around $4,290 of additional income I would need to earn before taxes. That’s just on $100,000. Look at your debt load. Do the math. Figure out how much more you will have to pay if/when interest rates rise. Can you do it?
Add to that the fact that the Bank of Canada governor, Mark Carney, just stated that we are losing $30 billion in exports to the US annually. And then goes on to say that it is likely that the U.S. will never return to the glory days of old. I agree him on that. I do not see a way out. The US spends over $4 billion more than it takes in EVERY DAY! Anybody out there ever seen some compounding charts. It’s not going to be pretty. Add in medicare, and aging population that is expecting S.S. to be there when they retire. It’s not looking pretty.
And that’s just the U.S., our biggest trade partner. Don’t even get me started on the Eurozone crisis. That is a time bomb just waiting for the right spark. There is no easy way out of that mess.
Um… So, the US economy sucks, Europe is ready to explode and when it does, its going to make the 2008 derivative debacle look like an Easter party.
Yeah, and all that…isn’t going to have a trickle down effect here in Canada?
Give me a break!
So, don’t tell us that it’s okay for our debt levels to be rising to these dangerous levels! What a misleading, dangerous article.
Everybody, please, get your financial house in order. Do whatever you can to pay down your debt. Don’t be lulled into complacency.
And if I’m wrong?
Well, hey, there is nothing wrong with having money set aside for a rainy day and being out of debt!
Posted by Meg Tilly on Sunday, January 22, 2012 in Chewing the Fat