BUMS - PeachParts Mercedes-Benz Forum

Lance Allison · #1 09-03-2019, 07:36 PM

Quote:

Originally Posted by barry12345

I think I have to be more careful when visiting larger cities. At separating people in real need. It is all too possible to just miss a paycheck or two and people could land up on the streets there. So the many people begging today may contain a larger percentage of real hardship cases.

The cost of shelter is becoming far too high a percentage of their working incomes. At least in many larger Canadian cities. The younger families have no probability of buying a home without their parents help. You need 200K down in Toronto to get a decent mortgage rate. A million dollars does not buy that much there currently. Pretty much the same scenario in Vancouver as well if it is not worse.

Otherwise even if they were to qualify for a mortgage. They would probably find the high property taxes based on the valuation crippling. A real estate market correction is not going to help as the prices have gone far too high there. .

I also do not think this has occurred because of supply and demand. I really think the real estate companies selling have had a lot to do with it. In fact I am starting to see situations where some working people are little more than indentured slaves.

My uneducated guess is the financial sector of our society in Canada. Bears a lot of responsibility for the current state of many things as well. Credit is far,far, too easy.

As a person was mentioning the other day. They are older with good credit. Yet low income and low assets. Still how is it that they can buy a sixty thousand dollar pickup? Making the payments would turn their life upside down. He had a point and far too many are doing exactly that.

In what guys my age call the old days the financial community would not take the risk. They also cared a little about both parties. Without obvious means to support a reasonable lifestyle carrying that loan. You did not get it.

Now it is based simply on your credit rating it seems. They have no interest in how the situation will impact the customer. What is really also disturbing is people do not seem to consider the cost of items. Just how much the payment will be.

I really believe an exodus from the larger cities in Canada is overdue. At least the average people would stand a better chance. I can see a real increase of homeless people in our major cities all too soon. If this inflation we are having here in Canada does not moderate. Actually things seem to be on the verge of being almost out of control to some extent already.

I suspect that if the economy here is now consumer based primarily. At some point there may be very serious problems. As a result.

I do not think America is seeing much inflation yet. Hopefully it will not occur to the extent we have been seeing in Canada. So far there is absolutely no reason to suspect it is going to slow down. For some time I thought market demand would decline. Instead what seems to be occurring is just more debt loading. The percentage of people that are underwater in Canada is steadily increasing.

Begging was a fact of life in the `1930s. I suspect we will see it grow again. Even by those that have employment.

I worked with people who had some whacked out priorities financially. One particular instance still stumps me. Husband and wife both worked with me in what has largely been considered a very stable and secure Fortune 50 company. They have been with the company 20-ish years, have no children and each make low-mid $100k's. So not a lot of extra play money, but comfortable enough to not have to live week to week (or shouldn't have to).

They HAD to buy a house in a new neighborhood where many of our executives also built in. A very nice house indeed... 7000 sq ft, 5 bed, 7 bath, yada yada.

When I was invited for dinner one night, I noticed they had almost no furniture or decor in the house except the kitchen, dining room, and living room. They had a huge great room probably 30'x50' completely empty except for an entertainment center and TV. I later learned they RENT furniture as needed for entertainment and what not. Very bizarre to me.

Having that address/neighborhood name meant so much to them, they way overspent and clearly couldn't enjoy a house like that to full potential.

We were talking cars one day and the wife wanted a new Escalade when the latest body style first came out (2015?) They didn't qualify for a lease for whatever reason, I'm guessing credit. She still got her Escalade, but on an 84 month note and zero down. To me, that's crazy. Impossible to avoid being upside down on those terms.

Fast forward a few years. The company's top brass changed and so did their business model. Many jobs were outsourced and many mid-levels were moved from our corporate headquarters to one of the hubs. This couple was given the choice to move to a hub or get RIF'd with a severance package (reduction in-force). Around the same time, a car manufacturing plant was shuddered and a major healthcare entity moved. That left the town with really nothing except a whole bunch of college kids. Of course this led to real estate taking a huge tumble. They chose to take a gamble, list their house for sale, and move.

Zero savings and not enough time to have any equity in the house. It was on the market for about 2 years and was price cut several times. Still never sold. I just recently saw it listed as a bank foreclosure.

All that said, I agree. Credit has been way to easy to obtain, especially for those already grossly overextended with checkered payment histories. For a mortgage, the traditional 20% down and 36% max total debt to income ratios are so relaxed today. And until I was talking cars with my friend with the Escalade, I didn't realize an 84 month car loan was even a thing.

I realize this is a rather extreme situation, but I am seeing this more and more. This couple has since separated and I have to think their financial nightmare was a driving force into their troubles.

Using credit definitely has its place, but needs to be used wisely and with caution. Just because a mortgage broker or banker SAYS you can spend X, it doesn't necessarily mean you should. Same applies to the F&I guy at the car dealer. They want you to spend as much as you possibly can so he can fatten up his wallet.

Yes I'm old fashioned with my thinking, but 1/3 of one's salary for taxes, 1/4-1/3 to live, and 1/4-1/3 to save/invest still works with a little left to play with. At my age, I just can't imagine having to pack up and move across the country with no real plan and zero money to get established in a new location. Perhaps they've learned having such-and-such an address and driving a heavily depreciating turd isn't that important after all.

vwnate1 · #2 09-03-2019, 08:48 PM

I guess then that living within your means is out of the question ?

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I can't feel sorry for stupid people like that ~ I could afford a reasonable house payment yet couldn't get a loan for years and years even though I had excellent credit .

They'd offer me an adjustable loan, that's stupid, they never go down only UP.

I'm glad I didn't have to buy a trailer, I lived in trailers in the 1960's and don't ever want to do that again unless I absolutely have to .