Rising personal debt levels.. but how about rising asset levels?

net worthEver notice how all economic news is bad?  Seriously, when was the last time you heard Canadians were doing well, financially?   Even when we came out of the October 2008 U.S. sub-prime mortgage crisis (notice I’m very specific about the cause of that recession) with flying colours, we kept seeing the same negative messages about how lucky we were to come out of this as strong as we did.

But here we are, 5 years later (hard to believe it’s been 5 years) and all we keep hearing and reading is how the economy is fragile… the housing bubble is coming… personal debt levels are at record highs…  housing affordability index has increased (this measures how much of your income is used for housing)…   This all sounds terrible and depressing.. maybe we should sell everything, move to another country and herd sheep?

Ok, I’m getting a little silly, but the point’s been made.   So now let me share some other news…  Here’s an article in The National Post that talks about the missing stats… This article echos my thoughts about personal debt level and how it’s being blown out of proportion.  I want to share the details with you as I think it’s really worth spending a few minutes to fill your mind with some good news!

Personal Debt levels are at record highs…  $1.75trillion.  Yes, it’s true.. but how about our net worth… oh, that’s right, this is at a record high, too. $9trillion.  That’s $207,000 per capita.. or 5 times as much as our debt… Isn’t that an important stat?  How come we aren’t hearing that number thrown out there?

It seems Canadians aren’t being given enough credit for their investment and borrowing decisions.   Look, isn’t it better to borrow money when interest rates are at record lows?  Shouldn’t you take advantage of the record low rates?   Of course.. but the pessimists would have you think that Canadians borrow and spend like a Federal politician’s personal expense account … Hey, I haven’t seen anyone spend $10,000 for a one night stay at a hotel!!   Relax, Canadians are spending wisely.

The article struck a nerve with me because I am constantly being asked for my professional advice on how much debt is too much.  Is it a good time to buy a house…  or how should we best manager our debts…  these are good questions…  The answers are different for all of us… and the good news is that the questions are being asked..! That’s the one thing we can’t seem to gauge.  Over the past 2 decades, Canadians care more about how they manage their debts and their assets.   We want to get ahead and do well financially.

I say, congratulations Canada!   Keep it going!  Winter is coming but don’t get talked into financial hibernation.   That sort of thinking won’t get you anywhere.

Your best interest is my only interest.

As always, I welcome your comments, calls and questions.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

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