Remember when consumers enthusiastically went on a spending spree in the early stages of the pandemic, helped along by zero percent interest and a bunch of stimulus cheques? It appears that their enthusiasm is waning now that the bills are coming due.
At the height of the Covid-19 pandemic, with his job as a delivery driver bringing plenty of overtime and the cost to borrow at record lows, James Kebe went on a spending spree. He leased a boat and an all-terrain vehicle, and when his bank offered him a bigger line of credit, he maxed it out.
Then interest rates started rising at their fastest pace in generations. And because Kebe’s line of credit had a floating rate, his monthly payments soared, too. The cost of his debt has now outpaced his take-home pay by C$900 ($660) a month, leaving him with little choice but to enter a form of creditor protection that will see his toys repossessed…
The interest rates of the late 70’s and early 80’s did a fair amount of damage to the economy but I think that the damage that the 0% rate is going to do is going to be far worse.
Suck it up millennials ,… After 40 years of relative poverty, I bought my first house back 1973. The interest rate was 12.5%. We could only afford to buy a very modest home … with rates that high. We didn’t whine and complain, we (wife and I) worked long and hard to pay it off and we did. Later on we bought a nicer home in a nicer place with much better % rates. We didn’t expect or want anything from government or anyone else. We are from the generation of people whose parents were not wealthy, so we had to save up our own money. Canada was a better country when that was the norm. Now we are a nation of spoiled bitches.
During the recent pandemic, we did nothing much different. We took ZERO jabs and we avoided crowds and didn’t wear the useless masks …. along with some vitamin supplements and good diet we came out just fine. We don’t have myocarditis, droopy faces, unusual pain or sudden death.
AND WE DON’T OWE ANY MONEY.
Reminds me of the day years back when we were in the bank, talking with our new “financial advisor”, a young lady in her 20’s. So she opens up our file on her computer screen, looks at it for a bit, then pauses. She looks again, as if something’s not quite right, the she looks up at us and says, in a bewildered tone “You have no debt.”
We looked back at her and nodded.
“You have no debts at all!”
Uh huh.
I’ll never forget her next line, delivered in tones of awe: “I’ve never seen anyone with no debt.”
It’s because we live modestly: an old mobile home on a small lot in a small town, and our vehicles are an ’08 Tacoma and an ’03 Sienna. Between my company pension, CPP, and OAS, we can live a modest, quiet life.
Chris…
I TOTALLY agree with you on that.
How many Canadians bought a home 500k+ on 1.6 or just under 2% with minimal down payment.
My wife and I are splitting up, she has title on the Condo.
I asked her…whats YOUR PLAN..??
115K owing on a mortgage at 1.9% due in 18 months
She’s making $1100 monthly payments.
Answer..?? “I’ll figure it out”
I replied, theres no figuring anything out – there is simply COLD HARD REALITY.
…so what is your plan.??
A: You’re not going to get a raise to 150k from 65
B: Your mortgage payment will likely dbl.
Still replies with the I’ll figure it out”
Ok then….I’m outa here Apr 1 – and not looking back at all.
A delivery driver who leases a boat and buys an ATV on credit is an idiot, but then again so is the person who lent them the money to do it. Luckily they’ll both lose.
Rats, you took the words right out of my mouth.
I remember the same thing going on with the 2008 mortgages, when people mortgaged themselves to the hilt to buy Mcmansions.
That fell out, and caused a ripple effect on the lumber and engineered wood products market.
lol..you think the lenders are going to lose out in Liberal crony oligopoly land ?
Nah. Only profits are privatized.
The same banksters who seized truckers bank accounts for him will squeeze Jr’s. tiny gonads now to take on the losses.
Bankers never lose. They pass their losses onto the folks who are fiscally responsible.
And collect big bonuses for doing so
Oh yeah? How many layoffs have you seen at the banks? Yes, the delivery driver is an idiot. But the bankers? No. They are playing a rigged game.
I knew at the time the covid spending was not going to end well.
Here we are. The bills are coming due…
I know a few people that maxed out their credit line buying toys and making upgrades to their homes that they now can’t break even on. One is 71 and he can’t retire.
Our line of credit with CIBC, which we don’t use, is at 10%. That would add up quite quickly for some folks. Does anyone know what the spread is between ‘savings accounts’ and what the banks are charging in interest?
1.4%
https://www.cibc.com/en/personal-banking/bank-accounts/savings-accounts.html
Hmmm…be some cheap boats out there soon.
I’ve been looking for Porsches and Ferraris, but so far the prices keep going up. It’s like they’re racing to the cliff.
Got a pal of mine who repairs exotics who says there ain’t nothing funnier than seeing a euro car owner who’s way out of his pay grade, or credit maxed, go through his repair estimate. One had to excuse himself in the middle of a talk about a clutch, timing chain and turbo job on an Audi…presumably to go throw up in the washroom. Some of these customers wind up on a 24% interest title loan to cover a five digit bill. I’m thinking public transit will get busier soon.
Even funnier…the mechanic’s lien gets paid before the bank does when the customer’s finances finally implode.
Steve
The used vehicle market in Canada has gone utterly Ballistic.
I was “fortunate” enough” to find an 03 GMC 2500HD 6.0L in reasonable driving condition (def needed some work), with 278 on the clock for 7K. Have put in about 5k since purchasing: Calipers/Rotors/Pads, Pitman arm, Front Shocks, Proper Tow mirrors, ABS sensors, parking brake and a bunch of small stuff – trim.
But anything with no rust..?? & similar age is 20K+….& trucks are in huge demand, particularly Diesel…. (and as such, diesel also in demand by THIEVES as I found out here a month ago when my 06 D’max was stolen from YYC airport).
Much of the used available product in the market is going to the US I’m told
Early on in 2020, I talked with a friend of mine in Kelowna, BC. She told me that her 18 year old son and his buddies were getting $1000 cheques from the government every week or two. Why? Because they were of working age. They used the money to buy expensive bottles of wine and video games.
Many at the time didn’t think anything was wrong with this.
So … we’ve had defacto UBI … right? And now we get to see just how many years we can sustain a system of Free Money! … 2-years? 3-years? Yeah … let’s hear from that AWESOME creative “high tech” thinker Andrew Yang again … about giving everyone FREE Money
I wonder if Deep Thinker, Yang anticipated the deepening gulf between the rich and the poor … which is about to get even deeper
The era of free stuff from the state certainly includes money as interest rates are the cost of money. The policies aimed at encouraging spending and borrowing were always a means of stimulating economic activity in the near term at the cost of future activity. That future is now upon us as the separation of the Ants and Grasshoppers will become more apparent. And when it comes to sovereign debt, you ain’t seen nothin yet! If the US raised rates to 10% which is “moderate” compared to the early Eighties, taxes alone couldn’t cover their debt servicing costs let alone fund any programs. Get used to inflation, big time! Fed to the rescue. We’re almost as bad. We’ll likely see interest rates drop within a year or two. Western governments are in a box that they can’t get out of. We’re about to discover the real cost of free stuff from the ghost of Christmas past (debt).
So he clears 900 a month and got a boat and an ATV? Who are we blaming this on now. He’s an idiot that learned a lesson.
Try reading it again… slowly.
https://youtu.be/8q-H63gn2w4
Nailed it.
“Neither a borrower nor a lender be”. Unless you’re a bank that is lending under fractional reserve rules and the government will bail you out. In that case you’ll never suffer from your stupidity, the taxpayers will.
Funny how people react during a panic.
Found myself purchasing small ,easily transported and very useful items..As these outbreaks of mass hysteria have never ended well before.
Taking on debt,never crossed my mind.
Applying for “free money that would need paid back later”,struck me a patently absurd.
Naturally all the freeloaders will never be obliged to pay anything back,so those of us whom are frugal,will pay..
As we are paying now,with the Justine Buck shrinking in exchange value at a daily rate,our saving become worth less at an accelerated rate..
Thank You Dear Leader,of the Parasitic Overload.
When does the West separate their affairs from these fools and bandits?
For we ought to know by now,who is going to get the bar tab..
Shut up and Obey.
Why, yes … surely we can come up with thieves and bandits of our own.
Politicians can behave and even do some good occasionally, but that wears off after the first reelection.
This guy sounds irresponsible.
Just like his government.