Personal Finance

Average Canadian debt to income is 168%, what's yours?

  • Last Updated:
  • Sep 29th, 2016 4:18 pm
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Aug 8, 2012
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https://en.wikipedia.org/wiki/Consumer_leverage_ratio

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"In essence, the CLR demonstrates how many years it will take on average to pay off the debt in full if the whole annual disposable income is used to do so."

(again, don't confuse disposable income with discretionary income)

So basically this ratio says it will take the average person 1.68 years to pay off ALL their debt if they use 100% of their after-tax paycheque to pay off debt (which of course is impossible to do).

So ya, pretty useless still. But that's what it does.
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Penalty Box
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Nov 13, 2010
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it's ok, the govt is helping to prop it up.

if it weren't, you'd only buy what you have REAL money for,
Means everyone would just rent. Won't need cmhc, won't need mortgages, won't need realtors, etc damn how many people would need another job eh
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Nov 24, 2013
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steveoheh wrote: Debt - to - income ratio is suppose to be calculated monthly debt payments vs monthly income not total debt vs total income that is your networth. This percentage says that in general people are going in debt further every month by 68% of monthly income.
That's a debt servicing ratio. Debt to income is total debt to total income.

I really think the 168%!!! metric that gets trumpeted in the news media is of little utility. I have a mortgage on a new house built last year, so my household figure is over 500%. A 168% national average isn't quite as bad as it sounds.
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Jan 16, 2016
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Negative... if you consider my friends who owe me for last week's drinks! ;)
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Jul 18, 2016
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Mike15 wrote:
steveoheh wrote: Debt - to - income ratio is suppose to be calculated monthly debt payments vs monthly income not total debt vs total income that is your networth. This percentage says that in general people are going in debt further every month by 68% of monthly income.
That's a debt servicing ratio. Debt to income is total debt to total income.

I really think the 168%!!! metric that gets trumpeted in the news media is of little utility. I have a mortgage on a new house built last year, so my household figure is over 500%. A 168% national average isn't quite as bad as it sounds.
Agreed. I think the more useful numbers examine consumption related debt versus income. ( Credit cards, Car loans etc ). However, those number are deceiving too. After recently paying off all credit card debt, I just took out 25K in balance transfers for investing. 25K or 50% looks huge, but at 0% and 1% fee, its insignificant, and its offset by what I hope will be an increasing asset.

Here is that number from May 2016. Considering that an average car loan is about 20K, these numbers look pretty reasonable.
http://www.cbc.ca/news/business/transun ... -1.3587197
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Aug 2, 2010
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0 except when I use the 1% & 0% interest balance transfers provided by credit card companies which I invest at a higher rate and then pay off before the due date all the time. Right now I have $68K of those coming due in the next 9 months.
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Nov 3, 2010
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Taikonaut wrote:With a mortgage, and using my income only... 113%
I have 80 k of income and 160k mortgage.
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Mar 24, 2008
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Total debt (including mortgage)/Total annual income x 100 = 43%
Last edited by ksgill on Sep 18th, 2016 8:33 pm, edited 2 times in total.
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Mar 24, 2008
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eonibm wrote: 0 except when I use the 1% & 0% interest balance transfers provided by credit card companies which I invest at a higher rate and then pay off before the due date all the time. Right now I have $68K of those coming due in the next 9 months.
How is it 0% if you owe ~ 68k? Total debt ratio is total debt/ total annual income, it has nothing to do with the interest rate/payments.
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ksgill wrote:
eonibm wrote: 0 except when I use the 1% & 0% interest balance transfers provided by credit card companies which I invest at a higher rate and then pay off before the due date all the time. Right now I have $68K of those coming due in the next 9 months.
How is it 0% if you owe ~ 68k? Total debt ratio is total debt/ total annual income, it has nothing to do with the interest rate/payments.
He basically said it's 0% except when he owes $68k :)
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ace604 wrote:
ksgill wrote:
eonibm wrote: 0 except when I use the 1% & 0% interest balance transfers provided by credit card companies which I invest at a higher rate and then pay off before the due date all the time. Right now I have $68K of those coming due in the next 9 months.
How is it 0% if you owe ~ 68k? Total debt ratio is total debt/ total annual income, it has nothing to do with the interest rate/payments.
He basically said it's 0% except when he owes $68k :)
The whole point of this article is to show how people will be greatly strained if interest rates rise. Is this a problem for Eonibm, or myself. Is it reasonable to suggest that Eonibm will be under strain if interest rates rise?

This is the point that some of us are trying to make. These debt service ratios are deceiving. If it is REAL debt where you don't have the cash ( or a significant asset - a house ) to quickly cover it, than this is a big problem. However, if you have all that cash sitting in a high interest savings account, the high debt ratio is insignificant. I can max out my credit cards and lines of credit, invest that cash in the stock market, watch the stock market crash and lose half its value, and STILL reach into my savings and cover all that debt. But, OOPS, I have a debt to income ratio of more than 200%???!!! Oh my God! How scary! Well, actually, not scary at all!!
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bewiseman wrote:
ace604 wrote:
ksgill wrote:
How is it 0% if you owe ~ 68k? Total debt ratio is total debt/ total annual income, it has nothing to do with the interest rate/payments.
He basically said it's 0% except when he owes $68k :)
The whole point of this article is to show how people will be greatly strained if interest rates rise. Is this a problem for Eonibm, or myself. Is it reasonable to suggest that Eonibm will be under strain if interest rates rise?

This is the point that some of us are trying to make. These debt service ratios are deceiving. If it is REAL debt where you don't have the cash ( or a significant asset - a house ) to quickly cover it, than this is a big problem. However, if you have all that cash sitting in a high interest savings account, the high debt ratio is insignificant. I can max out my credit cards and lines of credit, invest that cash in the stock market, watch the stock market crash and lose half its value, and STILL reach into my savings and cover all that debt. But, OOPS, I have a debt to income ratio of more than 200%???!!! Oh my God! How scary! Well, actually, not scary at all!!
No, the whole point of the article is to generate clicks to get ad revenue quoting a useless stat.

And it's not a debt servicing ratio, it's a consumer leverage ratio. But whatever. Still useless.
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Mine's 0. No mortgage (live in a housing co-op), no credit card debt (I use credit cards a lot but never carry a balance), no auto loan (paid off 4 years ago), no personal loans.

I'm in my 40s, married, have 2 kids under 14, earn teacher's salary. Bucking the trend, I know.
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Kiraly wrote: Mine's 0. No mortgage (live in a housing co-op), no credit card debt (I use credit cards a lot but never carry a balance), no auto loan (paid off 4 years ago), no personal loans.

I'm in my 40s, married, have 2 kids under 14, earn teacher's salary. Bucking the trend, I know.
Whats a housing coop?
Penalty Box
Aug 11, 2005
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This is the first decent thread by techcrium and you guys manage to eff it up arguing about what a debt to income ratio is?
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Apr 16, 2012
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Luckyinfil wrote: This is the first decent thread by techcrium and you guys manage to eff it up arguing about what a debt to income ratio is?
So what is yours? I hope you have low debt to income otherwise you are due for a margin call for that amazing investment call in VRX...
Luckyinfil wrote: Bought some VRX at 101, purely speculation. Pearson is back and there was a huge drop when he left. I was expecting those losses to be pared somewhat when he returns.
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0% currently. Rent a fairly cheap apartment, almost everything else gets saved and invested.

Contemplating buying a house, so that % may increase in the future.
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Nov 15, 2004
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cmoibenlepro wrote:
Piro21 wrote:
mpt wrote: 0%
Same.

I have no debt of any kind, I rent a cheap apartment, and I save.
Renting means that you lose amounts forever, that you could save instead. Not bad if temporary though
Renting means I have all the water and electricity I want, I have someone to watch my place whenever I go away, I'm not subject to garbage restrictions, I don't have to bother with repairs, mowing lawns, or shoveling snow, and I can live 15 minutes away from work right next to a subway station. I can also pack up and leave whenever I like with no selling process or costs if opportunities arise.

Paying a small amount for all that while I save up my salary isn't a big deal. It's a better deal for me than throwing away money on taxes, utilities, maintenance, and debt interest. Getting to work before everyone else and being able to stay longer instead of wasting time commuting has also been pretty good for my career and my bank account.

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