Well, this news pretty much just made us want one less future child.
Simply put: More of us are spending more than we have. And the Canadian household debt burden reached a record high in the final quarter of 2014 as result.
According to The Globe and Mail, debt grew faster than disposable income in recent months for many Canadians, with the ratio of household credit-market debt reaching an all-time high of 163 per cent, according to Statistics Canada. This figure was up from 162.7 in the third quarter.
Meaning, households owed about $1.63 for every dollar of disposable income.
And while we’re not economists, we’re pretty sure the term for that would be ‘operating at a loss’.
According to Statistics Canada, Canadian households increased borrowing by 8.6 per cent (or $22.6 billion) in the last three months of 2014.
Debt burden is measured by comparing any mortgages, loans, and credit cards to disposable income. In the case of our fellow Canadians, the majority of the debt was found to come from mortgages.
In total, consumer credit card debt totaled a cool $519 billion, while mortgage debt totaled $1.184 billion.
While total household debt – which includes credit cards, lines of credit, mortgages, bank loans – adds up to $1.825 trillion.
You know what they say though, trillion is the new billion…
So what does that mean for the Canadian economy? Well, (again, we’re not economists) the combination of record-high debt levels, coupled with a perpetual housing boom and low interest rates definitely makes us a tad nervous.
The findings also reflect the changing state of the labour market, according to RBC. In contrast to our parents, we’re facing a workforce where less stable forms of employment are on the rise – like part-time, contract, freelance, and self-employment.
This, of course, is complete with dwindling benefits.
So, why do we keep increasing what we’re borrowing if we really can’t afford it?
We’re not exactly sure, but we are sure that we need to stop.
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