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Weekend Reading – Household debt, giving back and more edition

Well, we all knew it I guess.  Now we have some new stats to prove it.  

Canadians have set a new record for household debt.

Our household debt burden has surpassed levels of both the United States and the United Kingdom. 

Should Canadians be worried?  Are you worried?

In the Globe and Mail article I read, the concern is that any sudden negative event – such as a jump in unemployment, falling house prices or rising interest rates – could put many thousands of families in financial stress.   Falling house prices in particular, I don’t care about so much because personally, we’re not looking to sell and we have to live somewhere.  Unemployment, that’s another story.  I am worried about that and for that reason,  my wife and I are working to reduce our debt should anything bad happen.   On that note, the worrying, at least $200 per month, in addition to our regular mortgage payment, is going towards paying down our mortgage debt.  That’s a good start for us. We hope to increase that by another $200 per month early in 2012, when our line of credit (LOC) is paid off.  

Back to the article – “the ratio of debt to personal disposable income hit a high of 152.98 per cent in the third quarter from 150.57 per cent in the prior three months, Statscan said Tuesday.”  “The report comes as Bank of Canada Governor Mark Carney is again sounding the alarm over swelling household debt. “Our greatest domestic risk relates to household finances,” the central banker said in a CBC radio interview.”

Note to Mark Carney – if you’re THAT worried about consumer debt, maybe you should increase rates, just a bit.  Just a thought….

Until rates rise, the “easy money” will continue and you can’t blame folks for taking it. 

In other news this week, I want to give kudos to Dan Bortolotti from Canadian Couch Potato who informed us about a perfect plan for the holidays.  Literally.  In the spirit of holiday giving, Justin Bender, portfolio manager with PWL Capital in Toronto, approached Dan with an offer for Canadian Couch Potato readers. As part of Justin’s charitable giving program, Justin is offering to help up to four DIY investors design and set up a passive ETF portfolio in exchange for a donation to the Centre for Addiction and Mental Health (CAMH).  An outstanding initiative!  Everyone wins, especially the CAMH.

In the spirit of the holidays, better to give than to recieve, no doubt Dan and Justin have this spirit mastered.  Well done gentlemen!

If you’re like us, you’ve been busy getting things in order for the holidays over the last week.   Finishing Christmas shopping, wrapping gifts and getting ready to entertain family and friends.  It’s a special time of year, so hopefully there’s some fun that goes along with your stress!

If you have some time this weekend, I encourage you to check out the following articles from the blogosphere. 

Next week, I hope to post an update and the final chapter in our 2011 personal finance and investing goals.  I think we rocked.   Stay tuned for that post and you can let me know your thoughts!

Until next week, stay safe, be happy and stay healthy!

Mich from Beating The Index wonders if there is a dividend cut coming for NAL energy

Boomer & Echo offered some advice about servicing your vehicle.

Canadian Capitalist did another fine job of sounding the alarms to investors about high MERs in a post entitled Feeling the MER blues?  Vote with your wallet.

Larry MacDonald gave us an update on what’s happening in the Euro Union

Miss T from Praire EcoThrifter encouraged us to take our lunches to work to save money. 

My University Money discussed pension envy. 

Passive Income Earner wondered if you’re ready to buy in Canada’s lifeco. sector?   I am, still, with my position in SLF DRIPping in my TFSA.

Youngandthrifty told us how to save some money on Christmas gifts this year.  Her big tip?  Make your own gifts, including homemade Baileys!   Yum.

Susan Brunner gave an overview of all the real estate stocks she tracks.  She was also nice enough to mention my post about what I thought were the top Canadian REITs.  Thanks Susan!

Big Cajun Man was a tad annoyed TFSA limits for 2012 didn’t rise.  Don’t worry BCM, you’re not alone – I want TFSA limits to rise as well!

DGI told us how to invest like a billionaire.  A good article but wow, I’ll take being a millionaire first!

Michael James on Money discussed black swan events and the dangers of leverage.  I have a mortgage, that’s enough leverage for me :)

The Loonie Bin told us that Fortis increased their dividend!   I love it, another raise for the portfolio!

Preet Banerjee was on The National again this week.  On Tuesday’s program, Preet told Canadians who he thought was the most impressive financial leader of 2011 (Mark Carney), the most disappointing financial leader of 2011 (Silvia Berlusconi), country he’d like to run (Luxembourg) (really?) and what he “got right” in 2011 – the need to save yourself and pay down debt.   He also provided readers with an update on his site’s top bid, as part of the Bloggers for Charity initiative.

Andrew Hallam was gushing but also very modest about the crazy success of his book Millionaire Teacher.  He was nice enough to mention my blog in his thank you list.  You’re most welcome Andrew!   Continued success!

TFB informed us how a guy potentially lost $10K while selling his website and how to put your blog up for sale.

Kevin from Invest It Wisely was kind enough to mention my blog in his recent post entitled the 3 Stages of Financial Freedom.   I wish I was in stage 3 but I’m working on it!

Dividend Mantra is a buying machine.   Check out what he bought here.

Million Dollar Journey’s net worth continues to climb and climb.   Well done FrugalTrader!   He’s going to be a millionaire within the next couple of years.   He might have to rename his blog then ;)  

Jim Yih from Retire Happy Blog said investors need to pay attention to their investment fees.  Absolutely!

Dividend Monk said while investing is important in life, investing in your health tops the list.  Check out Matt’s thorough article where he suggests:  eliminating highly processed foods, eating more fish, buying organic fruits and veggies, and much more.

Although Krystal Yee made some great points in her article When Renting is Better than Home Ownership, overall I had to disagree.  Short-term, renting works for many Canadians for many reasons.   Long-term, renting is not getting you into the ownership game and ownership is where wealth is built. 

SPF dove deeper into donations for charities.

If you haven’t read his great article that appeared in Canadian MoneySaver, check out Dividend Ninja’s post that asked what happened to income trusts? – Part 2.

Just like every driver thinks they are better than average, I bet the same can be said for every investor and our friend the Dividend Guy told us so too!

Financial Uproar asked why women refuse to marry down? 

BankNerd said BMO InvestorLine has announced the launch of its new Gold Deposit and Delivery Program. The new Gold Deposit and Delivery Program is a unique feature that offers a simple and cost effective way for BMO InvestorLine clients to buy and hold physical gold in their portfolios.   Cool news, but not for me.

Mr. Cheap who had a post on Money Smarts Blog offered some last minute (cheap) Christmas gifts for folks.

Filed in: Weekend Reading

23 Responses to "Weekend Reading – Household debt, giving back and more edition"

  1. Echo says:

    I’m in the same boat as you; chipping away at the mortgage debt. Just added an extra $100 per month starting next month, and on track to pay it off in 15 years.

    Thanks for the mention!

  2. As long as you are not annoyed WITH me, then it’s all good…. Frigging indexing! Thanks for the inclusion

  3. Thanks for the mention, Mark. Here’s to many more dividend increases in 2012!

  4. No Mr Carney, don’t listen to MOA! keep the interest rate as is or our dollar will become more expensive putting our manufacturing sector under stress.

    Speaking of mortgage debt, I slashed my mortgage by 50% in 3.5 years, which means there’s a big chance I will be mortgage free in 2015! I can’t wait!

    Thanks for the mention :)

  5. JA says:

    I wrote about the same thing today (http://whotookyourmoney.blogspot.com/2011/12/flawed-system.html).

    Everyone wants someone else to take the tough decisions. The banks want the govt to tighten lending rules. The govt wants you to be smart about your borrowing while at the same time they open the flood gates an literally let the money flow.

  6. MOA I’m just reading up on Crushing Debt by David Trahair, for yet another book giveaway :)

    This is a really great read. Anyway what Trahair points out is the Canadian Banks do not want to have interest rates increased, and as a result neither does Carney. With the level of Candian debt primarily in Mortages, Credit Cards, and Lines of Credit, each interest rate hike will result in consumer defaults. The higher the rate goes the more defualts there will be. This could really affect the bottom line of the Canadian Banks, since their debt-to-equity ratios are already very high.

    btw another stellar weekly lineup!

    Cheers
    The Dividend Ninja

    • Crushing Debt, I’ve heard that’s a great book. I’m looking forward to your review Ninja!

      Would a 50 basis point hike really hurt anyone though? Our rates have been at the bottom for SO long?!

      I’m not saying hike them to 18%, I’m talking some sense of normalcy. Am I crazy?

      Glad you could stop by man.

      Have a great weekend!

  7. Somehow managed to persuade my boyfriend into adding an extra $100 per accelerated biweekly mortgage payment to our mortgage (lets hope he doesn’t change his mind anytime soon).

    Hopefully that relieves some of my concerns about household debt :( (agree, it’s worrisome!)

    Thanks for the mention :)

  8. Thanks for the mention. I agree that the household debt is worrisome, but it’s tough to raise interest rates right now. Any raise in rates would lead to our dollar skyrocketing vs the USD and that would be terrible for Canadian businesses.

    I love having bought rural, I’m hoping (and planning) to be mortgage and debt free by 2018/2019, so right around when I turn 30!

    • 30? With a paid off home?? Wow.

      I’ll be 50 in another 12 years, that’s our goal.

      I’m trying though!

      Yeah, household debt is worrisome. I know I worry about it for us. I’m really trying to strike a balance between saving now, paying down debt now and having fun for today. It’s a triangular thing, in my mind. I will be writing a post about that in the New Year.

      Thanks for your support of the blog, I appreciate it ;)

  9. MOA,

    Thanks for including me. Much appreciated!

    Looking forward to seeing how your 2011 goals turned out. You were on pretty good track when you last updated us! Seems to me like you’re on track for the long-term.

    I’m definitely a buying machine. I’ll be ready for another big round of buying in early January. Can’t wait! Hopefully Santa will deliver me some stock market deals.

    Best wishes. Have a great weekend!

    • You’re welcome DM!

      Yeah, I think we did OK on your investing goals for 2011. We could have done better, but then again, we could have done worse :)

      I look forward to your next purchase!

      Cheers,
      Mark

  10. Thanks for the inclusion, Mark!

  11. Elemag says:

    Today I was listening to the Roy Green Show on AM 770 and was asking myself if things have gone too far with the Household debt of Canadians. Yes, I do get your point about raising interest rates. However, how many people focus on paying down their mortgage faster and getting out of debt altogether. Every time I go to the mall or any store it’s all about spend, spend, buy, buy! I think Mark Carney understands what is right to do but it’s darn hard to do it. If he starts rocking the boat all the people with no life jackets will drown. In the mean time I take advantage of the low interest rate environment to pay my mortgage faster and use every dollar saved to build a safety cushion of cash and invest in blue chip dividend paying stocks. Currently we put in $400 extra to our mortgage each month, next year I am aiming at $500 +. Patience and persistence. I take one day and one goal at a time! Oh, yes and avoid going to the malls as much as I can ; )

    • @Elemag,

      I can’t wait to be out of debt, but I gotta live life as well.

      No doubt Mark Carney understands what is right, but his hands are tied I think. I guess I complain a bit about this low interest rate environment since it totally punishes savers. I’m fortunate to have a good paying job, but I’m also a saver. My investments (bonds) are earning next to nothing in this rate climate but those bonds are nonetheless parachutes for me. Can’t have it all…

      Putting $400 extra to our mortgage each month, is GREAT! Once our LOC is paid off, hopefully in Feb. 2012, I hope to be putting $500/month on the mortgage just like you.

      And yes, stay out of those malls! ;)

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