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But I really think @KaeJS and @nathan79 are being fooled by the loans. Many people are very deep in debt; or didn't you see all the headlines about Canadian debt ratios? We have some of the craziest personal debt numbers in the entire world.

It's all loans. Mortgages, car loans, lines of credit, HELOCs, payday loans, credit cards.
Fooled? Naw... I fully realize that a lot of it is "fake", but there's also a lot of "real" wealth sloshing around. I say "real" because much of it is still imaginary. It's all basically a product of QE and low interest rates, but wealth is what wealth does.

The first time I heard the headlines 10 years ago I was shocked: "Half of Canadians just $200 away from insolvency!". Wow, I thought, this thing is going to blow up! Then they start repeating the same headline every few months for years and years, but somehow nothing ever happens. The reckoning is always right around the corner. Just like the real estate crash that's been brewing since 2005.

That's when you begin to understand that the government is basically supporting this whole mess. If this housing/debt bubble ever bursts, it's going to be Armageddon. I'm sure they'll introduce interest-free government loans, bring back 40 year mortgages, and whatever else it takes.

Let's also make a distinction between types of debt. The wealthy (asset owners) acquire debt to increase their assets, generally at very favourable interest rates. Everyone else (the people without assets), acquire debt to increase their liabilities by purchasing vehicles and other depreciable consumer goods. Even if they wanted to invest in assets, no one is going to loan them money at a favourable interest rate.
 

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Discussion Starter · #142 ·
I find it hard to believe that everyone is just carrying debt. Even if they are, how do they keep up with it? How do they even get approved?

I saw another G Wagon this morning, not the same one. This one was black. I believe there is money out there. It's just not in my pocket. I have a hard time believing that everyone is just rocking loans.

The issue is that it is becoming increasingly (actually, impossible) to get ahead if you do not own real estate. For the people that didn't own RE, or didn't own enough of it, what is the solution to this now? How are these people going to play catch up?

Even if you own a starter home. How will people ever upgrade to a bigger home? The problem is huge. Not only have house prices increased, but rent has also increased. Inflation is here. There is interest to pay on these mortgages and I'm not sure people think about how much extra a house actually costs after interest. Wages are low and stagnant.

Of course, I agree with the whole "move to a less desirable area if you want something cheaper", but that doesn't change the current economic climate in hot cities. It still doesn't change the fact that people have money in those cities.

But yes, hard work is not rewarded anymore. Wealth seems to be accumulated mostly through luck these days (RE, crypto, meme stonkz, lottery, inheritance).

I don't really have a basis for this post and I realize it is scattered. It's more of my thoughts as they came to me rather than a cohesive, well-thought out post.
 

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I saw another G Wagon this morning, not the same one. This one was black. I believe there is money out there. It's just not in my pocket. I have a hard time believing that everyone is just rocking loans.
According to this website, you must already be part of the top 1% for your age group.


And since the top 1% in their 40s are multimillionaires, I guess they can afford all what you see. To me, top 1% is still a lot of people. For every 100 people you cross during a day, you should statistically stumble upon one being part of that top 1%.

Hell, I don't even know a hundred people and yet I know many who are part of the top 1%.

When I was a kid, I knew someone whose dad was in the top 1%. Sick parties, I can tell you...

My spouse has 4 sisters and at least 2 of them are in the top 1%. And she has a friend in the top 1%.

My ex was in the top 1%.

How did those 5 got in the top 1%?
  • Business owner
  • Business owner
  • High paying job
  • Very very high paying job
  • Luck
 

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I find it hard to believe that everyone is just carrying debt. Even if they are, how do they keep up with it? How do they even get approved?

I saw another G Wagon this morning, not the same one. This one was black. I believe there is money out there. It's just not in my pocket. I have a hard time believing that everyone is just rocking loans.

The issue is that it is becoming increasingly (actually, impossible) to get ahead if you do not own real estate. For the people that didn't own RE, or didn't own enough of it, what is the solution to this now? How are these people going to play catch up?

Even if you own a starter home. How will people ever upgrade to a bigger home? The problem is huge. Not only have house prices increased, but rent has also increased. Inflation is here. There is interest to pay on these mortgages and I'm not sure people think about how much extra a house actually costs after interest. Wages are low and stagnant.

Of course, I agree with the whole "move to a less desirable area if you want something cheaper", but that doesn't change the current economic climate in hot cities. It still doesn't change the fact that people have money in those cities.

But yes, hard work is not rewarded anymore. Wealth seems to be accumulated mostly through luck these days (RE, crypto, meme stonkz, lottery, inheritance).

I don't really have a basis for this post and I realize it is scattered. It's more of my thoughts as they came to me rather than a cohesive, well-thought out post.
When I was younger I used to consider my house as part of my financial net worth. Maybe even obsess over it. Now closer to retirement I never consider the financial value of the house, I only see it as lowering my cost of living - by locking in a virtual rent payment as the sum of property taxes, maintenance and insurance - call it 1k per month which will help me in retirement. It is only through working, saving, investing and getting rid of debt that I finally feel well off and it was (is) a 25-year journey. I think it is wrong to say hard work is not rewarded. Maybe others appear to have won the lottery with a well-time house purchase but that may not tell the whole story until they sell it or are generating real positive cash flow from renting. Unfortunately, there are no shortcuts for most of us (even boomers). Stay the course and you will get ahead with or without real estate
 

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I just don't understand how people afford things.

I always see people driving $50k+ cars and have nice detached houses. How does that happen?

I even saw a dude who was MAYBE 40 years old driving a G-Wagon today. How?

There are so many Corvettes on the road, too... And those are minimum like $75k.

I just don't understand.
I think its pretty common to feel this way for people who care enough about their networth. Thread I created before about 10 years ago shows my similar thoughts. We had a higher networth than you but we were a couple and both in the top 2% of earners. Our earning power has dropped considerably (we are making less than we did in our original thread 9 years ago), however, our perspectives have changed quite drastically.

I know many 0.01% who are legitimately wealthy (networths in the 8 digits). I also live in a fairly affluent area of my city where I am guessing there are lot of 1% income. I see expensive cars and houses all the time. We have the cheapest house out of almost everyone we know. We pulled our kids out of private school when they were young because it was crazy how much the kids have.

Here's what I have come to realize. A lot of these very high incomes, some yes, they are doctors/specialist, lawyers, (both parents) business owners, executives, etc. They can legitimately afford their lifestyles. Don't compare to them because you didn't choose their occupation. For those that seem to be 'average' like us in terms of two professions making really decent incomes, you have those that seem to be doing a lot better than you, but they don't have much in savings or investments, but have alot of toys. My neighbor their kid in private school, a boat, a big *** trailer with truck to tow. They were just telling us about how hard it is with the making all the payments, and that their kid better get scholarships because they don't have any savings. However, they have provided all the 'memories' for the kid. This seems to be the same with a lot of people we know that have beautiful massive houses with similar jobs as us, and large mortgages and payments on expensive vehicle.. A young coworker sold her BMW X5 for cheap because she couldn't afford the payments (she makes 1/2 of what I do and is single).

My observation there is a small pocket of people that really can afford all of their stuff and have it all materially. There is a group of people that make choices to be more material at the expense of savings, they instead of using their money to invest, they do it on what I call expensive lifestyle choices. They are able to get the material things due to the ability to have payments or at the cost of not having any savings for the future. Then there is a group that is just living the high life they cannot afford.

There are the people that you are probably noticing because they seem to have all of the toys. What you probably miss are the people like me (and you). I have one of the smallest, most run down houses on our block and with our the group of people we associate with. We have a crappy 7 year old Nissan Versa (no comment on my spouses truck), we have no overly luxurious/expensive items so would bring no attention to ourselves. What people don't know is we have multiple properties all paid for (except rentals), two fully funded education funds, and enough investments that we could have weather anything (see my previous thread). But you would never compare yourself me because you wouldn't want to on material items.

Keep in mind unless you are in that category of having super high incomes, most people have to make the choices. A funny story with my frugal family member. He was an executive and a found at his company. He is worth mid 8 digits. He prides himself on being frugal and down right cheap. On a company team building ski day, he intentionally used my old skis from the 90's to show it wasn't the equipment that made you good, but the person behind it. One day, the office was running around trying to tow the car in the exec's spot. It was my family member, he took his other car - an almost 20 year old honda accord. Everyone thought it was the interns or something. Nope, the intern drove a BMW. When people asked him why he didn't just get X or spend more. He always replied, 'Is it better to pretend to be able to afford everything, or better to actually have enough money to afford everything'



According to this website, you must already be part of the top 1% for your age group.


And since the top 1% in their 40s are multimillionaires, I guess they can afford all what you see. To me, top 1% is still a lot of people. For every 100 people you cross during a day, you should statistically stumble upon one being part of that top 1%.

Hell, I don't even know a hundred people and yet I know many who are part of the top 1%.

When I was a kid, I knew someone whose dad was in the top 1%. Sick parties, I can tell you...

My spouse has 4 sisters and at least 2 of them are in the top 1%. And she has a friend in the top 1%.

My ex was in the top 1%.

How did those 5 got in the top 1%?
  • Business owner
  • Business owner
  • High paying job
  • Very very high paying job
  • Luck
Chances are there are 1% around that you don't even know they are the 1%. Its quite a misconception on what a 1% looks like.
 

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My biggest regret is selling the stuff I bought with debt 30 or more years ago. That "stuff" is worth a fortune today.
 

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The issue is that it is becoming increasingly (actually, impossible) to get ahead if you do not own real estate. For the people that didn't own RE, or didn't own enough of it, what is the solution to this now? How are these people going to play catch up?

Even if you own a starter home. How will people ever upgrade to a bigger home? The problem is huge. Not only have house prices increased, but rent has also increased. Inflation is here. There is interest to pay on these mortgages and I'm not sure people think about how much extra a house actually costs after interest. Wages are low and stagnant.
Our net worth was a bit lower than yours at the same age. We're at 1.5M now with an average age of 41.5. We have owned homes that entire time and I can tell you that the real estate had almost no bearing on where we are now. Definitely not 1%, but healthy incomes (when I was working).

You don't know the story of the G-wagons, etc. A lot of it could be generational wealth. In some cultures (parts of asia), the kid gets all the parents wealth at a certain age and have to house and care for the parents. That explains the expensive cars and the big house.

Being so focused on the wealth and status of others is not healthy. It's like gravity, you can't control it so why worry.
 

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Yes, yes and yes.
I have a hard time with financial balance.

To be honest, I'm feeling really paralyzed in life right now. I feel stuck in my condo which costs $2700 a month. There are very few cheaper options that aren't basement suites at this point. The Victoria market is brutal. I'm a government employee and that eats up probably about 60% of my take home.

Buying right now is at best, a high risk move, AND and possibly more importantly I don't think I could get a mortgage for a house I would actually want... Plus it's hard for me to imagine living here for the next 20 years....

I don't know what to do.
 

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I think its pretty common to feel this way for people who care enough about their networth. Thread I created before about 10 years ago shows my similar thoughts. We had a higher networth than you but we were a couple and both in the top 2% of earners. Our earning power has dropped considerably (we are making less than we did in our original thread 9 years ago), however, our perspectives have changed quite drastically.

I know many 0.01% who are legitimately wealthy (networths in the 8 digits). I also live in a fairly affluent area of my city where I am guessing there are lot of 1% income. I see expensive cars and houses all the time. We have the cheapest house out of almost everyone we know. We pulled our kids out of private school when they were young because it was crazy how much the kids have.

Here's what I have come to realize. A lot of these very high incomes, some yes, they are doctors/specialist, lawyers, (both parents) business owners, executives, etc. They can legitimately afford their lifestyles. Don't compare to them because you didn't choose their occupation. For those that seem to be 'average' like us in terms of two professions making really decent incomes, you have those that seem to be doing a lot better than you, but they don't have much in savings or investments, but have alot of toys. My neighbor their kid in private school, a boat, a big *** trailer with truck to tow. They were just telling us about how hard it is with the making all the payments, and that their kid better get scholarships because they don't have any savings. However, they have provided all the 'memories' for the kid. This seems to be the same with a lot of people we know that have beautiful massive houses with similar jobs as us, and large mortgages and payments on expensive vehicle.. A young coworker sold her BMW X5 for cheap because she couldn't afford the payments (she makes 1/2 of what I do and is single).

My observation there is a small pocket of people that really can afford all of their stuff and have it all materially. There is a group of people that make choices to be more material at the expense of savings, they instead of using their money to invest, they do it on what I call expensive lifestyle choices. They are able to get the material things due to the ability to have payments or at the cost of not having any savings for the future. Then there is a group that is just living the high life they cannot afford.

There are the people that you are probably noticing because they seem to have all of the toys. What you probably miss are the people like me (and you). I have one of the smallest, most run down houses on our block and with our the group of people we associate with. We have a crappy 7 year old Nissan Versa (no comment on my spouses truck), we have no overly luxurious/expensive items so would bring no attention to ourselves. What people don't know is we have multiple properties all paid for (except rentals), two fully funded education funds, and enough investments that we could have weather anything (see my previous thread). But you would never compare yourself me because you wouldn't want to on material items.

Keep in mind unless you are in that category of having super high incomes, most people have to make the choices. A funny story with my frugal family member. He was an executive and a found at his company. He is worth mid 8 digits. He prides himself on being frugal and down right cheap. On a company team building ski day, he intentionally used my old skis from the 90's to show it wasn't the equipment that made you good, but the person behind it. One day, the office was running around trying to tow the car in the exec's spot. It was my family member, he took his other car - an almost 20 year old honda accord. Everyone thought it was the interns or something. Nope, the intern drove a BMW. When people asked him why he didn't just get X or spend more. He always replied, 'Is it better to pretend to be able to afford everything, or better to actually have enough money to afford everything'
I agree 1000%.
 

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Also, a wise saying I really like: Comparison is the thief of joy.
THIS! I learned long ago when you start comparing your self to others, you will be unhappy. There will always those who look like they have more or are doing more. When you learned to appreciate what you have, that's when you are happier.
 

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My biggest regret is not becoming a teacher.
Amazing pay and benefits.
I considered it. I did tutoring in HS and had several teachers tell me I should pursue a career. I earn more than now than I would have as a teacher, but I have a more stressful job and less time off (only 21 vacation days per year sniff will be 26 in a couple years). The real reason I didn't is that I don't really like snot-nosed teenagers. I didn't even when I was one! Honestly, managing 20-somethines can feel like parenting sometimes. That's enough for me.
 

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THIS! I learned long ago when you start comparing your self to others, you will be unhappy. There will always those who look like they have more or are doing more. When you learned to appreciate what you have, that's when you are happier.
"Compare yourself to who you were yesterday, not to who someone else is today."
 

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Comparisons are just to prove a point. I don't think KaeJS said he wants a G-Wagon (maybe he does, maybe he doesn't). He's just wondering how people can afford it. The point is how difficult it is for regular people to get ahead today. Everything is based on a dual income and/or taking huge amounts of debt. If you're single, you're probably stuck in a 1-bed condo unless you earn 6-figures or got into the market years ago. The lower middle class who don't already own are basically shut out, while the middle class is rapidly being priced out. Gen-Z may be the first generation where the majority will never own a home. The upper middle class are buying the same houses that my parents raised me in as a lower middle class family in the 80's and 90's. Oh, but they're renovated... big deal. It's still the same house on the same size lot.

I don't need to live downtown or have high-end finishes in my home. I don't need a new car. I've never owned a car newer than 10 years old in my life. I rarely travel. A modest house on a bit of land doesn't seem like a huge ask. I don't care if it was built in the 60's and has shag carpeting. I don't even mind being an hour outside of the city.

What seems ridiculous though, is the suggestion that everyone should just move to a small town. Not everyone wants to be completely isolated from their friends and family, especially single people. It might work better for married couples, assuming they can find jobs.
 

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You shouldn't get to move ahead just for existing. That's an entitlement attitude. Getting ahead should be a lot of work, or else everyone could do it and then you wouldn't be getting ahead. I have friends that have all kinds of recommendations on movies, tv shows, documentaries to watch since that's what they do from 8-midnight every night. I can never find the time as I'm editing clients' photos, fulfilling orders, checking out new products, and researching stocks and markets.
 

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Maybe "get ahead" was a bad choice of words, but "keep up" sounds even worse. I guess you can thank the Jones's for that. So... if you can't expect to keep up -- let alone get ahead -- by putting in an honest day's work, saving, investing wisely, and living below your means... then I'm not sure what's left. Fall behind more slowly? I thought that as Canadians we aspired to be better than that.
 

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One thing we don't talk about enough is how real estate investors in Canada eat up the supply of homes, often by using debt (made possible by low interest rates). These are people who own several homes, NOT because they need a place to live, but because they want investment "returns".

Instead of getting those returns in stocks, bonds or GICs, they borrow money and pile into real estate, driving up the prices of everyone's homes and also removing houses from the available supply:

 

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The real reason I didn't is that I don't really like snot-nosed teenagers. I didn't even when I was one! Honestly, managing 20-somethines can feel like parenting sometimes. That's enough for me.
I think people overlook that. I'm wondering if one of the effects of COVID and home-schooling, parents will be more appreciative of what teachers have to go through.
 
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