Franks Happy Place posted:

The Globe and Mail, via Ben Rabidoux:

"Loans of six years or longer make up about 69 per cent of the Canadian auto loan market, said Jeff Schuster, senior vice-president of forecasting for consulting firm of LMC Automotive. That compares with 57 per cent in the spring of 2012."

etalian posted:

I hope at least the 1 percenter commercial will be remembered:
https://www.youtube.com/watch?v=sRIB1lk0N-c

sbaldrick posted:

Who the gently caress thought that commercial was a good idea?

Franks Happy Place posted:

The Globe and Mail, via Ben Rabidoux:

"Loans of six years or longer make up about 69 per cent of the Canadian auto loan market, said Jeff Schuster, senior vice-president of forecasting for consulting firm of LMC Automotive. That compares with 57 per cent in the spring of 2012."

flashman posted:

When you look at household debt levels I think it's a dangerous assumption to make that people are opting for these long term car payments so they can invest the cost of the car rather than because it's the only way to make their brand new car payment manageable with the mountain of other debt they are carrying. It's fine if you do it for the right reasons but don't ascribe that level of financial acumen to everyone.

Lexicon posted:

If, as in @cowofwar's case, they truly do offer a better deal with the 0% financing, fine, but I'd be marching into the dealership manager's office with an NPV calculation pretty quickly if I were in that position (to zero effect, I'm sure).

Franks Happy Place posted:

Yeah, I suspect that if the math doesn't end in your favour when you offer to pay cash, you aren't negotiating hard enough.

Lexicon posted:

That's probably true, but it wouldn't surprise me if the profit maximizing strategy gets muddled somewhere between the quants at the finance arm and the bros in the dealership. The car business is, after all, utterly dysfunctional.

Franks Happy Place posted:

True, but then just don't buy a new car like an idiot.

flashman posted:

Thats why we should only let in the rich ones...

quote:

Canada Mortgage and Housing Corp. says Canadian housing prices have been higher than U.S. prices in real terms since 2006, an indication that the market here may be overvalued.

Lexicon posted:

You should be concerned as a Canadian citizen and taxpayer, but not necessarily as a customer. It's not like they're taking on any risk – the CMHC is happily covering that.

Lexicon posted:

The car business is, after all, utterly dysfunctional.

Antifreeze Head posted:

If anyone is interested in just how hosed up the car business can be, have a listen to This American Life - 129 Cars

They send half a dozen reporters to a Jeep dealership in upstate New York and they follow the staff as they try to hit their October 2013 sales target to get a bonus from the manufacturer.

Antifreeze Head posted:

If anyone is interested in just how hosed up the car business can be, have a listen to This American Life - 129 Cars

They send half a dozen reporters to a Jeep dealership in upstate New York and they follow the staff as they try to hit their October 2013 sales target to get a bonus from the manufacturer.

quote:

TORONTO - When it comes to debt and spending, there are mistakes and then there are Mistakes. Small luxury purchases won’t necessarily derail your long-term financial goals, but consistently living beyond your means, amassing consumer and credit card debt, and not saving for retirement could cripple someone for years to come.

This year, the debt-to-income ratio in Canada clocked in at 1.63. Meaning for every $1 earned, Canadians owed banks, credit-card companies, auto dealerships and other lenders $1.63 in debt.

In some ways, the recession was almost too short, said Scott Hannah, CEO of the Credit Counselling Society (CCS), “because it didn’t really change our behaviours.”

During the recession, the amount of debt Americans were carrying was at 167 per cent – today, said Hannah, that number is down to 140 per cent.

“We’ve gone the opposite way,” said Hannah. “We’re within a few percentage points of what the U.S. was at during the collapse.”

A recent survey from the CCS showed that while the majority of Canadians (66 per cent) consider themselves highly financially literate, many continue to make financial mistakes.

Spending more than you make, amassing consumer debt

Canadians have become increasingly comfortable with debt. In some cases, this is out of necessity – once the bills are paid, if there is nothing left from a pay cheque, groceries and other necessities get charged to a credit card.

But in other cases, consumers are spending more than they make chasing the desire to have the latest and greatest of everything.

“Living beyond our means is a one-way street to out-of-control debt,” said Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada. “If you’re spending more than you earn, that means you’re leaning on credit and the interest charges that come with it.”

In a recent survey for Consolidated Credit, 35 per cent of Canadians said their largest source of consumer debt was impulse shopping.

Many of those surveyed said they had hit rock bottom when they weren’t able to make their mortgage or rent payments. “You shouldn’t have to hit rock-bottom before you decide to make a change,” said Schwartz.

The majority of those surveyed (71 per cent), said that learning to live within their means was the most valuable lesson they have learned.

… and carrying that balance on your credit cards

The CCS survey found that 64 per cent of Canadians who frequently carry credit card balances claim to be highly financially literate. “It doesn’t make any sense,” said Hannah.

Consolidated Credit stresses the importance of paying more than the minimum payments on your credit card bills. “Paying the minimum will prolong your pay period and add interest to the cost of your purchase,” the organization said.

If you have multiple credit card debts, start by paying off the card with the highest interest rate.

Buying too much car

Hannah said the amount of auto loans doled out is growing faster than any other type of loan in Canada because of new financing models.

Ten years ago, car loans typically maxed out at four years. “Then they crept up to five years,” said Hannah. Today, it’s pretty common to see seven- and eight-year car loans. And this is creating liability for consumers.

“They get a brand new car with an eight-year loan, trade in that car after four years, so the loan gets rolled into a new one – and now the loan is worth substantially more than the car itself,” he said.

Often consumers are motivated by the desire to own a brand new, shiny car, like the one in their neighbour’s driveway. But, “all of those nice cars you see, most people don’t own them,” said Hannah. “The bank does.”

Before taking on a car loan, experts suggest you sit down and take a close look at your expenses — see how much you can actually afford, including the cost of gas, loan payments, insurance and maintenance.

Hannah said the sweet spot for buying a car is when it’s four years old and sell it before it is 10 years old. If you’re buying a brand new car, you would need to keep it for around 10 years to make up for how dramatically it will depreciate in value.

Buying too much house

Whereas older generations managed with a single-car garage and two bathrooms, buyers today are lured by the two-car garage and three+ bathroom home for their family.

The difference, said Hannah, is that the older generations were able to pay their mortgages off. “Now people are retiring still holding mortgage debt,” he said.

“It’s common practice now that home purchasers ask ‘how much can I get’ as opposed to ‘how much can I manage,” said Hannah.

Meanwhile, the mortgage lender is asking, ‘how much money can we lend this person without taking on risk?’ Which doesn’t mean the borrower can actually manage that large of a mortgage.

If you’re thinking of buying a home, Hannah recommends doing a six-month trial period first. Determine how much the mortgage payment would be, add in other costs such as taxes and maintenance. If the extra costs are $800 a month, for example, try living for six months taking that $800 out of your pay to see if you can manage. You might find that you can’t — you can’t put money into your savings, into your debt repayments and into other things like travel plans or gifts.

Not having a budget or debt game plan

The first step to getting your finances on track is to think of your family like a business, said Hannah. The first rule of business? “You can’t spend more than comes into the household,” he said.

According to Consolidated Credit, the average Canadian family owes an average of $20,759 in debt – without factoring in mortgage debt.

Consolidated Credit recommends collecting three months worth of pay statements, credit card bills, bank statements and utility bills. Don’t forget to add in other expenses such as gasoline, groceries and items you paid cash for.

Look at the numbers and see if you are in a spending deficit or surplus.

There are a number of free tools and apps that can help you create a budget, like the free budgeting app from Consolidated Credit, or Mint.com.

“Budgets shouldn’t be seen as restrictive,” said Schwartz. “They can be liberating – they put you in control of your finances so you’ll never have to worry about hitting rock bottom.”

Not saving for retirement

Hannah said that too few Canadians are saving for retirement, and many aren’t saving enough. “Saving 10 per cent isn’t sufficient these days,” he said. “At minimum, you should set aside 15 per cent [of what you earn], because rates of return are so low these days.”

A recent poll from BMO Nesbitt Burns found that Canadians between the ages of 45 and 64 are falling behind on their savings plans. The average amount those polled want to have saved for retirement is $818,000 — but the amount they had actually saved was just $258,000.

One of the major reasons why Canadians say they aren’t saving for retirement is because they simply can’t afford it. Numerous surveys from Canada’s big banks show that Canadians aren’t making RRSP contributions because of car payments and debt repayment.

Experts recommend setting up automatic withdrawal plans, so retirement savings automatically come off your pay cheque on a regular basis.

An annual RRSP contribution of $2,000 would mean saving $167 a month — or less than $6 a day.

Hannah also recommends taking advantage of free money when you can, such as RRSP matching programs at your place of employment.

Cultural Imperial posted:

http://globalnews.ca/news/1674660/the-biggest-money-mistakes-canadians-make/


This crash is gonna be ~*awesome*~

I don't think I'll have enough sperm to jack off commensurate with the number of ruined lives

Cultural Imperial posted:

I thought they were up to 164%

Cultural Imperial posted:

According to Consolidated Credit, the average Canadian family owes an average of $20,759 in debt – without factoring in mortgage debt.

Lexicon posted:

.

edit: Now is it that the average family owes an average of $20k or the average family with debt owes an average of $20k?

Lexicon posted:

This is stunning, if true. I look around me in BC and I see a lot of what appears to be the trappings of success: nice cars, homes, vacations, etc. I find it very hard to internalize the reality that most of it is illusory, and built on lies and debt.

edit: Now is it that the average family owes an average of $20k or the average family with debt owes an average of $20k?

Lexicon posted:

This is stunning, if true. I look around me in BC and I see a lot of what appears to be the trappings of success: nice cars, homes, vacations, etc. I find it very hard to internalize the reality that most of it is illusory, and built on lies and debt.

quote:

Meanwhile, household net worth rose 2.3 per cent in the second quarter, to a record $8.1-trillion (or $227,000 per person), driven primarily by a continued rise in real estate values

Lexicon posted:

This is stunning, if true. I look around me in BC and I see a lot of what appears to be the trappings of success: nice cars, homes, vacations, etc. I find it very hard to internalize the reality that most of it is illusory, and built on lies and debt.

edit: Now is it that the average family owes an average of $20k or the average family with debt owes an average of $20k?

melon cat posted:

And that's the funny thing about the average Canadian household- a lot of it is illusory. That sweet new ride your neighbour got? Yeah, it's either leased or secured by a $30,000 car loan. Those fancy renovations that they're doing to their large-lot house? It's covered by their home equity credit line. Even the high-income earners are leveraged up to their eyeballs, and the moment they pay their biweekly mortgage and free up some equity, they immediately borrow it under their HELOC. I've even done several credit applications for people who wanted a credit line so they could go on a vacation. And there's thousands of people who transfer their credit card balances to other banks under promo 1.99% balance transfers offers, then play a game of "credit card debt hot potato" and just hop between whichever banks offer them low balance transfer rates.

It's very rare that people in Canada pay for big purchases in cash.

Fun little side-note: A lot of people aren't aware that if you pay interest-only on a maxed-out credit line for an extended period of time, your bank can re-assess our interest rate and increase it. Sure, interest-only is your credit line's minimum obligation, but to a bank this type of habit makes you a higher risk borrower. I've seen LOCs go from Prime + 3% to prime + 6%, because of this. And when they do, there's a 100% chance that the client will call the bank freaking the gently caress out about their new rate.

Cultural Imperial posted:

Well that makes me feel better about being yelled at for riding on my road bike by a soccer mom in a tesla.

This city is at loving peak rear end in a top hat.

Cultural Imperial posted:

http://globalnews.ca/news/1674660/the-biggest-money-mistakes-canadians-make/


This crash is gonna be ~*awesome*~

I don't think I'll have enough sperm to jack off commensurate with the number of ruined lives

PT6A posted:

The thing that stands out to me about that article: why in gently caress's name would you want more than two bathrooms unless you've procreated way more than you ought to have? Frankly, every bathroom I have is a bathroom I need to clean, so having just the one is about as great as it gets.

Buskas posted:

I try to stay positive and have met some really nice people since I moved here but in general, yeah, gently caress Vancouverites.

Jumpingmanjim posted:

Jumpingmanjim posted:

quote:

It’s no secret that family fights over wills can be vicious.

Someone dies and an unholy war erupts over who gets how much of the estate. It might be adult children contesting their late parent's wishes, doing battle with a step-parent or challenging each other to claim a bigger piece of the financial pie.

There's more at stake now than ever before. According to a study by BMO Investorline published this year, we are about to witness the biggest inter-generational transfer of wealth in Canadian history, from those born in the 1930s and '40s to the baby boomers.

About one trillion dollars will change hands in this country over the next two decades, and lawyers are already witnessing the fallout.

“We are seeing a significant increase in cases coming to the courts, but also coming around dining room tables,” said Laura Tamblyn Watts, a senior fellow at the Canadian Centre for Elder Law in British Columbia, in an interview with Michael Enright on CBC Radio's The Sunday Edition.

Jan Goddard, a Toronto lawyer with expertise in trustFixe, added that Canada’s recent economic prosperity means that people in their 80s and 90s have more wealth to leave to the next generation.

“In a city like Toronto, where real estate has increased in value astronomically over the last few decades, you have people who historically would have been of very modest means, who now have assets that are worth up to a million dollars just in their house alone,” Goddard said.

Tamblyn Watts said that their children – the baby boomers – are "the most indebted generation that Canada has ever had," and that they often feel entitled to the spoils, counting on a generous inheritance to help pay their debts and meet their financial goals.

“We’re seeing a tension between their parents… the saving generation, and their children, who are coming into retirement in debt.”

Complicating factors

The fact that the older generation is living longer is further complicating matters.

Boomers are realizing that when it comes to eldercare costs for their parents, “their inheritance is paying for it,” said Goddard.

The situation becomes even more fraught when concerns arise about the mental competence of an aging parent.

Goddard said the onset of dementia "can be a catalyst for all kinds of events within a family that precede the death of a parent,” such as getting mom or dad to make new powers of attorney or moving assets around by setting up joint bank accounts.

Some people take steps to secure a good financial position for themselves while their parents are still alive, even trying to have assets gifted or transferred to them so they no longer form part of the estate.

“Elder abuse is a huge piece here," said Tamblyn Watts. "It’s not just that people may themselves have diminishing capacity, they may have diminishing social capacity.

"So if you have the unsuccessful son in the basement who’s influencing mom, cutting off the mail, cutting off the telephone calls, not taking her to see family or her Bridge club or her faith organization, increasingly, that person is becoming more and more isolated. So the only voice you hear is the voice who’s telling you your family doesn’t care about you."

Some adult children ask for an advance on their inheritance. This might be a significant loan to help buy a house or a request that the parent invest in a fledgling business that may later fail.

Tamblyn Watts said that all too often, these loans are not documented and the recipient may later reframe them as gifts.

Goddard said that when clients ask for her advice on this – that is, should I give my kids the money now, since they'll be getting it later anyway? — she will try to talk them out of it.

“If I have my druthers, none of my clients are giving any of their money to their kids before they die,” she said.

'The Wild West' of estate law

In most of Canada, there are limited grounds to contest a will. Anyone who is a dependent of an estate or perceives they are a dependent can challenge the document if they believe they have not been provided for adequately.

However, the situation is different in British Columbia, a province some lawyers consider “the Wild West” in this area because of additional laws that come into play.

In March of this year, the B.C. government consolidated four pieces of relevant legislation into the Wills, Estates and Succession Act.

"Some people call it the 'How to Vary a Will Act,'" said Tamblyn Watts. “B.C. has a bit more of a libertarian side to it… and tends to be on the cutting edge of the law.” The effect has been that British Columbians have more avenues to contest a will than other Canadians.

Problems can also arise when there are conflicting documents. A bank may present a power of attorney form to a client, to give an adult child the ability to pay bills. However, the form signed at the lawyer’s office may give that power to a different person.

“The banks don’t like powers of attorney that they haven’t drawn up, and in my respectful opinion, banks should not be wandering into these waters,” said Tamblyn Watts.

All of these complications can have the effect of destroying relationships, leading to families of "people who will probably never speak to each other again when the matter is finally resolved, whether that’s at court or through negotiation or mediation,” said Goddard.

Problems are most likely to crop up when people die without leaving behind a valid will that is up to date.

“I always say, April’s the time you have to look at your taxes — you might as well look at your wills and powers of attorney at the same time," said Tamblyn Watts. "It’s death and taxes, and they’re both inevitable."