“I am a boomer. I am appalled at some of the financial situations that my contemporaries have gotten themselves into. I can’t stand it, it is all around me.”

“I am a boomer. I am appalled at some of the financial situations that my contemporaries have gotten themselves into. They have borrowed against their homes while saying “that’s just a line of credit, the house is paid for”. They have counted on the run up in real estate without selling and now owe more on the house than when they bought it TWENTY years ago! When renewing their mortgages they roll in their latest credit card debt. Then they keep the amortization high so the payments are as low as possible. These people owe hundreds of thousands of dollars and now are having health issues, divorces, and want to retire. How can you do all that and not have a thought as to paying off your debt? Time is not on their side.
When the lender they started with is cautious and turns them down, they go elsewhere, get the loan and a promise of more if needed and then bad mouth their first lender. They never miss a chance to go somewhere warm for a month and love the casino and the lottery. Their cars are new, Friends, family, acquaintances, I can’t stand it, it is all around me.”

camper at VREAA 8 Mar 2013 11:05am

… and then prices start to descend, and the whole debt expansion process goes into reverse (as is occurring just about… now). Ghastly implications for the individuals involved; not good for the group, either.
– vreaa

46 responses to ““I am a boomer. I am appalled at some of the financial situations that my contemporaries have gotten themselves into. I can’t stand it, it is all around me.”

  1. There is a saying about when the tide goes out, you get to see who is swimming naked… In a way it is criminal that the banks allowed these people to do this… canadian banks are the most prudent as you know…

    My parents are in the same boat. I tried to tell them to open their eyes about what is going on… blind by the good times i guess… This province is so screwed, it isn’t only the boomers…

    • I don’t have much to add, its just wow. If this kind of thinking is really widespread…simple yet profound little anecdote.

  2. Got a ride home the other day from a co-worker he started telling me about his condo. Paid 150k probley ten years ago ows 200k now 64 years old. He said the banks always offer mony because of equity.

    • What he meant to say was that the banks always give just enough chain to the dog so he can see freedom through the crack in the gate but he can never quite go there.

      Doesn’t everyone understand how modern slavery works yet? Simple as 1,2,3. You start by handing out free carrots and finish with daily beatings. I guess nobody out there has ever owned a Donkey so they pretty much don’t get the simplicity of the theory.

      I am surprised at the stupidity of the general public most days.

      • Real Estate Tsunami

        I lived on a farm as a kid and was in charge of the donkey.
        Best experience I ever had.
        Nothing beats real life experience.
        All Economists should get a donkey instead of a dog. 🙂

      • Too true. Anyone who owned a Donkey as a kid has a very decent chance at getting short listed for boiler room positions at the big banks. You don’t even need a degree….just a good idea of how to move herds and use a whip judiciously. I don’t think they even offer the top jobs unless you have real farm experience. All other contenders are just fluff in the breeze. Can’t herd geese never mind making a Donkey work for a carrot.

    • Cyril Tourneur

      Gawd! How is that even possible?

  3. They probably have deferred their property taxes also

  4. Ever see the commercial from Capital Direct? The cool little jingle? I can’t help but think that will be on a documentary years from now looking back at this fiasco and wondering, what were we thinking?

    • Back during our time in the Excited States, those little “jingles” were all over the radio. When I hear the same advertising here, it’s just one more bit of evidence that were on the same path, just following a few years behind.

    • Real Estate Tsunami

      Alpine Credits has these idiotic commercials, too.
      Mostly on CKNW.
      Their mortgage rates are insane.

  5. Speaking of Boomers mired in AppallingFinancial ‘Situations’… your TransAtlantic MondayMorningZen… and Quote ‘OTheDay, DearReaders…

    “I don’t come cheap… if I turn a greenfield into a housing estate and I’m earning the developer two or three million, then I ain’t doing it for peanuts.” – Councillor Graham Brown, Conservative, East Devon

    [UK Telegraph] – Councillors for hire who give firms planning advice

    …”Councillors across the country are offering themselves for hire to property developers who are hoping to take advantage of relaxed planning laws which come into effect within weeks, a Daily Telegraph investigation reveals on Monday.

    Local government politicians are trading on their inside knowledge of the planning system to receive fees of up to £20,000 for advice on how to get developments approved, it can be disclosed.”…

    http://tinyurl.com/cy7uxyk

    [NoteToEd: Just between the two of us… it’s as bad and quite likely far worse here. Or, to hijack a phrase from the Blitz, it’s very much a case of “Business As Usual”.]

  6. My single parent literally broke her back doing a hard labour job and went on disability. She lives within her means and is a surprisingly happy person. She is not a boomer 🙂

    My MIL grew up in priviledge. Spent most summers at the family cottage and turned down an all paid education at Swedish College for Women. She inherited the family money and spends it going on cruises multiple times a year. She bemoans her hard tough life and insists she “earned it”. She did not pay for her son’s education – *I* did! The child of a single, uneducated woman paid for her son’s education while she went off on cruises! And she sees absolutely nothing wrong with this picture.

    People are so out of touch with reality. Or maybe reality changed on us and we are the fools?

  7. I see the same stupidity in my age group (30+). Everybody deep in debt – homes, appliances, cars, lattes – all financed with debt.
    And they all think how smart they are. Many seem to think of borrowing as free income.
    I can’t stand it, it is all around me.

    • No kidding. Some of my doctor colleagues spend like there’s no tomorrow. I know an anesthesiologist, who easily clears 1/2 a mil a year who is on the verge of bankruptcy because of a divorce, overextending himself on real estate, and taking needless vacations, buying expensive cars, etc.

      There was a link in TGM today about how the truly wealth live–very frugally. As in modest cars, small houses (Warren Buffet famously still lives in the same home in Nebraska that he bought in the 50s for 31K), clipping coupons, not buying designer clothes, etc. Of course, people will say to me, then what’s the point of hoarding all the cash. My point is, not that we hoard all the cash, but that we spend only when it’s necessary. If we want to take a vacation, we better damn well make sure we are not going into debt doing it and that we can afford it. We don’t waste our money on frivilous things: A packed sandwich tastes just as good as a sandwich bought for 10 bucks, except it costs 1/10 as much. A 3 dollar a day latte is a rip off.

    • I came across a great little article at Casey Research yesterday. It was written by a guy named Vedran Vuk and he discusses the problems with living on a single income.

      Borrowing is part of the equation of course. His point though was to dissect the reasons families could survive on a single income in the 1950’s but two incomes are insufficient in our current times.

      The answer is simple but profound.

      We live beyond our means and have expectations inappropriate to what life should be handing us. Vedran correctly notes that it is not a problem with incomes that face us daily but rather a problem with the expense side of the equation.

      He notes how home sizes are much larger these days, commutes more extensive, autos more prevalent, technology being intrusive and many other factors that consume our wallets from day to day. Did people have such bad lives living in small homes, walking to work and living without I-Pads in days gone past?

      What few seem to consider is that despite persistent inflation since the early 60’s and the obvious loss of buying power in our dollars since then that we actually have a lot more of them in our pockets (dollars) these days. We are richer in absolute numbers of dollars but poorer in how much each paper note can acquire in goods and services.

      The answer to debt seems simple from his perspective. Live within your means……cut out the surplus expenses that have burdened so many with the advent of technology….live in smaller homes……and don’t drive so damn much.

      How complicated is that?

      Maybe some people deep in debt should inquire more deeply into how those in poorer countries manage better on tiny daily budgets and still manage to save more than the typical American or Canadian before running to the debt counsellor to ask them about the obvious.

      You spend too damn much of your income…..give it a rest!

      Living on Two Paychecks or Too Many Expectations?
      http://www.financialsense.com/contributors/vedran-vuk/two-paychecks-too-many-expectations

      • I am sure this is very true in some financial strata. But I would say that some of us in the cheap seats are living in small places, eschewing cars and transit in favor of bicycles, don’t eat out … homemade clothes and haircuts, too. What’s a vacation, again? Our furniture is second hand. The only thing we have plenty of is computers, and that’s as IT professionals – most of what we have has come as people upgrade.
        And we still don’t have that much in the bank by Garth’s standards, with a slightly more than median income. Most of our money goes to past schooling (student loans) and future schooling (RESPs so our kids don’t have to have student loans), and the kids each have an extracurricular activity. We’re savers but … well, let’s say we don’t plan on retiring until we’re broken. It’s the kids, man. We’d be much richer without kids.

      • Real Estate Tsunami

        Of course, it’s not how much you are making, it’s how much you are spending.

      • It is preposterous to some that those living on thin dimes in very poor nations have more money in the bank than people in Canada earning 6 figures incomes. Preposterous yet true. The complete idiocy that people with high incomes are stretched to the breaking point and facing bankruptcy due to poor decisions with credit while much poorer people happily contend with families of five of six children is simply impossible to convey.

        And yet it is happening every single day. Go figure.

      • So true. Take for example, a TV. No, cable TV. A lot of people don’t even know they can cut the cord and just buy a HD antenna online and hook it up and get about 15 HD channels (in Vancouver) that are better quality than the cable/satellite stuff. And who needs 90+ channels? We save SO MUCH money each month doing this. And saving that 90 bucks a month translates to over 1000 bucks a year which is money that could be invested that could grow quite quickly. Buying a coffee a day for 3 bucks x 5 days a week that’s 15 bucks a week x 50 that’s 750 bucks a year! Add on the eating out daily for lunch with the crew: 10 bucks a lunch on average x 5 days a week x 50 weeks a year (assuming two weeks vacation), that’s 2500 bucks a year. Here, I’ve saved you over 4000 bucks a year just on “bad habits”. Put this in your TFSA and watch the money grow instead. Unfortunately, people think their lives are so enriched because of today’s consumerism when in fact, my life is not more detrimental because I don’t get to watch the latest Canucks game or some late night cable channel, or a lack of eating out or drinking lattes. Try doing this and you’ll quickly realize you won’t miss it. Instead, we spent the hours doing what I did in my childhood–playing board games, going out, jogging, biking, etc.

      • EinsatzgruppenVancouver

        Well, c’mon, from the end of WW2 to about 1970, you saw pretty much everbody’s income double. Whether or not you were a high school teacher or a janitor or a lawyer or an auto plant worker, you saw your income double in that time.

        From the early 1970s to now, there have been basically no real (inflation adjusted) income gains for the bottom 80% or so of the population.

        My grandparents had a better standard of living than their parents. And my parents had a better standard of living than their parents. But my generation (born in the 70s) and younger will generally not do better than their parents did, by whatever economic measure you prefer.

        Hell, when my father was my age, he could buy a house, support 2 kids, on the salary of a federal civil servant. (DFO) Find me anybody doing that today in Canada.

        So yeah, we expected a gradual rising standard of living, because it went on for 3 or 4 generations or more. It was _expected_ by anybody making long term decisions, and now the results of nobody caring about income gains is that a house in vancouver costs 10 or 12X median annual income instead of 3 or 4X like it did in 1973.

  8. And, now TD is in on the fun:

    Headline: The value of your house may remain flat for 10 years: TD Bank

    “A TD Bank research report is warning that Canada’s real estate bonanza has come to an end and predicts home prices will be essentially flat for the next decade. The TD report forecasts average house prices will move lower over the next few years before modestly rebounding after 2015. But even with the rebound, TD predicts that home price increases will only rise about two per cent annually — essentially keeping pace with inflation.”

    http://www.ctvnews.ca/canada/the-value-of-your-house-may-remain-flat-for-10-years-td-bank-1.1190770

    Of course these folks can’t forecast their way out of a 747 hanger, so I’m not really taking their 2015-and-beyond ideas all that seriously.

    The interesting thing is that they are warning of slowness ahead too. So many people (as per the above blogged example) are so heavily invested in an increasingly illiquid asset that their net worth will go one way while those who have the liquidity to invest in the “more traditional” vehicles (e.g., stocks, mutual funds, etc.) will move the other way.

    Prudence pays off.

  9. Carioca Canuck

    When I was the sales manager at a local import delaership last year I disctincly remember a certain application for “zero percent” interest rate and a “zero down” 84 month term on a new SUV.

    A 65 year old male making $175K in a “tenured” position at one of our “institutions of higher education (heh)…….he had been ther 25 years………he owned a home worth $500K with a mortgage of $450K and he had lived there for 30 years. He had about $35K of credit card debt and another car with a $20K loan on it that he was $5K upside down on.

    He got declined. I was shocked [sarcasm]…..they must have had somone “new” on the credit approval desk that day…….ROFL !!

    You see a lot of that nowadays…….people are so screwed it is unbelievable.

    • Ralph Cramdown

      I finally bailed out of Carfinco stock last month. They’re making great money financing people almost as badly off as the professor, but it’s the kind of stock I’d rather sell a few quarters too early than one minute too late.

      I have an uncle who sold cars all his life. Took in a chainsaw on trade once.

      • Carioca Canuck

        CARFINCO……29.50% “and” a GPS trackable ignition immobilizer installed at your expense, to help them if you’re late on that payment……heh.

    • The education that is coming will be a hard one for too many people.

      • Real Estate Tsunami

        The education will be costly and painful, but that is the only way that the lessons will be learned and applied.

      • We are talking about whips and Donkeys still…………………right?

  10. We must move in different circles. Gen-X friend recently told me they had just made their last mortgage payment.

  11. One humorous Alpine Credits ad ran ( in a southern Larry the Cable Guy voice ) ” I’d like a pick up truck , beer and cigarettes too.” (jingle) Making your home equity work for you , Alpine Credits. Sickening !

  12. Many of my friends parents and my own lived on the westside (Dunbar , Kerrisdale etc, some even in Shaugnessey), where usually only 1 parent, the father worked. Many were not high paying jobs either(by today’s standards). One friend lived on Angus drive – father was a principal. My father was a UBC prof and my mother was stay at home. The big thing back in the 60’s was the house prices. The homes cost anywhere from 50 – 80K ! Then look at the salaries back then. It was probably realistic to be able to afford that back then. Today? nope

    Brian – I thought anesthesiologists in BC were the lowest paid in Canada? I thought they only made 150K?

    • Real Estate Tsunami

      “anesthesiologists”. in the olden days, we called him the Chloroform Guy.
      Much easier on the tonque.

  13. still owes 450K on a 500K property that he’s lived in for 30 years and he’s 65! What an idiot – and he’s teaching our children

  14. Let’s learn from this post. It is better to ready ourselves financially for our retirement.

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