Consumer Debt | General financial discussion | Discussion forum

There is a concern that people who've been able to arrange deferred payments may not all be able to resume them due to job loss etc.

So far, however, I don't know that defaults have been high. The CUs whose AGMs I have attended report very low defaults. Perhaps the "stress test" is working.

Vatox said
This is my concern here. It is the debt servicing ratio that means the most.
https://betterdwelling.com/canadians-spend-65-more-income-servicing-debt-than-americans-highest-in-g7/  

Canadian Households Spend 12% Of Income Servicing Debt

That is from the article you provided link to. While %% is higher than in other countries, the thought that a Canadian household only spends 12% of income for servicing mortgage, car loans, credit card balances is quite reassuring.

The counter argument made by that same article is equally amazing:

The narrative that Canadian debt service ratios are “not that bad,” lacks any context. Households devote a whole 5 points more to carrying debt, than any of their economic peers… just to continue having debt in good standing. Those are points removed from spending in the productive economy.

So, Canadian household financing two cars instead of one, buying larger house that will be filled by more furniture and other stuff (bought somewhere), having larger credit card bills from spending more - that somehow decreases spending in the economy?

Wait, there is more:

Debt is future income used today. People pull forward their consumption, and then pay for it plus interest. In the short run, it’s great for the economy. You’re not just getting what people can buy today, but the economy also enjoys their future income now. The issue is, that person needs to devote a regular stream of income to pay it off. Your human capital stock now has to cut back on spending in other parts of the economy.

What "other parts of economy?" Granted, I started to visit Casino Niagara less frequently after I've got a mortgage, and had strict personal rules on how much could I spend there, but what other parts of economy I had to cut back on spending?

If they think I had to cut back spending on groceries, furniture, home electronics, annual vacations just because I got mortgage, financed one car and leased another - they should think again.
Instead, I worked harder and got well deserved promotion, with nice salary increase.

You can always find alarming news/stats, same with good news, e.g. restricted pandemic spending opportunities has allowed many households to build up savings ready to spend when things open up again.

I do agree out of the billions of humans there are just a handful of regulars here, don't take this place as any indicator of what's going on at large. And I agree with Bud, we'll only vote for whoever keeps the spending taps open for us so I don't see any problems on the near horizon, i.e. they'll bail us out or we turf for whoever will.