Good News: Consumer Debt at Record Highs

By | 12/15/2011

New report by the feds shows Canadians now have a debt to income ratio of 153%. Meaning for every $1 someone makes after tax, he or she has $1.53 of debt. We have never seen it this high before. We are now officially more indebted than both the US, and our British friends across the pond. Look at us! We’re finally setting a trend.

The report also mentions our net worth is dropping. Average Canadian households are 2.1% poorer than the previous quarter. Lower net worth, and deeper in debt. What’s the good news? Well even though personal finances are getting worse, our national wealth as a country, which includes corporations, still grew by $88 billion!

Image from: en.wikipedia.org/wiki/File:Smartcard2.png

This is why it’s so important to invest in companies (either through stocks or bonds) and prosper with the part of the country that’s actually growing. Businesses are doing great. They have lots of cash in the bank, and can raise money very cheaply and easily. So instead of buying something perishable for Christmas this year, I’m going to buy myself $5,000 worth of companies (stocks/bonds) and get paid a nice income while I wait. In the long run this will probably be one of the best Christmas presents I’ll ever give myself. Consumption makes you poor, but becoming a partial owner (shareholder) of a growing company that makes its money from other people who practices consumption, makes you rich. There is no lack of consumers right now. Holiday shoppers broke records this year. Unexpected high volumes in sales. Cheap stock valuations. What a great investing opportunity. I’m thinking of doing another swing trade soon. Looking at Goldcorp, or Silver Wheaton. But since I don’t have much in savings, I’ll have to borrow some money from the bank again. Yup, that means going deeper into debt. But debt isn’t always a bad thing. I’ll explain that in another post.

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