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Balancing Books

By Michelle Martin
Published May 13, 2010

Just been balancing some books - and some books.

"How did you go bankrupt?"

"Two ways. Gradually, then suddenly."

-- Ernest Hemingway, The Sun Also Rises

A new report by the Certified General Accountants Association of Canada shows household debt in the country kept rising through the recession and peaked in December at $1.41 trillion.

That's $41,740 on average per Canadian, or debt-to-income ratio of 144 per cent - the worst among 20 advanced countries in the Organization for Economic Co-Operation and Development."

-- The Hamilton Spectator, May 12, 2010

"My other piece of advice, Copperfield," said Mr. Micawber, "you know. Annual income, twenty pounds; annual expenditure, nineteen nineteen six; result, happiness. Annual income, twenty pounds; annual expenditure twenty pounds ought and six; result, misery."

-- Charles Dickens, David Copperfield

"This report is another indication of Canadians' readiness to consume today and pay later," said association president Anthony Ariganello.

"The concern is do they understand the full cost of paying later?"

The Bank of Canada has also voiced similar concerns, with governor Mark Carney having repeatedly advised Canadians to ensure they will be able to meet their mortgage commitments once rates increase. Ottawa has put that cautionary principle into effect by stiffening the means test chartered banks must apply when issuing open-ended mortgages.

Most Canadians don't yet share that concern. The accountants' survey found that almost 60 per cent of Canadians whose debt had increased still felt they could manage it or take on more obligations.

But the accountants said many households could find themselves in difficulty when interest rates, as expected, begin to rise.

-- CBC, May 11, 2010

The Kellynch property was good, but not equal to Sir Walter's apprehension of the state required in its possessor...It had not been possible for him to spend less; he had done nothing but what Sir Walter Elliot was imperiously called on to do; but blameless as he was, he was not only growing dreadfully in debt, but was hearing of it so often, that it became vain to attempt concealing it longer..."

-- Jane Austen, Persuasion

In addition, Gerhardt said, even basic necessities such as food, shelter, and water are obtained based on perceived coolness, with people opting to purchase expensive Thai or Ethiopian takeout food, spend more than they can afford on homes with granite countertops, and drink bottled water for no other reason than to impress others.

-- The Onion, March 23, 2010

Michelle Martin lives in Hamilton where she and her husband are watching their 10 children fly the nest, one by one. She has been published in both the Hamilton Spectator and Raise the Hammer, as well as in the online edition of the National Post and, more recently, in the Canadian Urban Transit Association's Urban Mobility Forum. Michelle is coordinator of the Community Access to Transportation program. She was formerly on the writing/copy editing team of the original Crown Point hub paper, The Point. However, the opinions she expresses in Raise the Hammer are her own. She sometimes tweets @deltawestmom

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[ - ]

By moylek (registered) - website | Posted May 13, 2010 at 22:18:48

:) ....

... but also :(

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[ - ]

By Meredith (registered) - website | Posted May 14, 2010 at 00:15:39

truth.

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[ - ]

By A Smith (anonymous) | Posted May 14, 2010 at 19:50:46

Apparently, the Bank of Canada doesn't think that home price increases of over 7% per year is inflationary...

http://blog.american.com/wp-content/uploads/2010/02/housingcanada.jpg

It's just a matter of time before this Ponzi scheme unravels. My advice, sell your house before it loses 40% of it's value. If you think this is crazy talk, ask yourself how home prices can keep rising when incomes are not keeping pace...

http://runningofthebulls.typepad.com/.a/6a00d83451986b69e20120a959d15f970b-450wi

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