$200 is the difference between sink or swim
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Thread: $200 is the difference between sink or swim

  1. #1
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    $200 is the difference between sink or swim

    I always wonder how many of these headlines are true, and how many are trumped up to sell more news. If it is true though, that's an awfully scary financial picture for a lot of people. Talk about a razor thin margin....yikes.


    Over half of Canadians are $200 or less away from not being able to pay bills


  2. #2
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    I believe it, but you have to remember that is just the difference between a personal surplus and a deficit. Depending on factors, you can run a deficit budget as a household for a fairly long time. I'm not saying it's a good thing, but they do make it sound like the second someone spends more than they make in a week, they are in the poor house.

  3. #3
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    I went for many years in similar circumstances and a few times went over the line. Credit cards bailed me out. At the time my money was tied up in rental real estate. I had a positive net worth and a positive cash flow (in theory) but it was close. So, cash flow doesn't tell the whole story.

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  5. #4
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    I believe it. There is a growing divide of "haves" and "have nots". I can't imagine having only $200 as a cash buffer before dipping into credit. Seems scary to me.

    I suspect it doesn't bother most people since credit is so cheap, it makes borrowing money seems like a smart thing to do. If interest rates were even 5% or more you wouldn't see people borrowing wads of cash like they do. Alas, that might not happen again for another 30+years....

    Most CMFers don't have a problem with credit I suspect. They borrow but for appreciating assets.
    Hidden Content - Working on a $1 million portfolio and $30k per year from it.

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    I've seen those stories that advise keeping $10,000 or 6 months or a year's wages in cash in the bank. The hell with that, if I had that kind of money laying around I would buy another house. Today I keep it in a stock investment account. Why not, in an emergency I have credit cards, and can cash in my investments any time if I need the money.

  7. #6
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    Quote Originally Posted by My Own Advisor View Post
    I believe it. There is a growing divide of "haves" and "have nots".
    I agree MOA, but these are fluff stats. Not being able to hold to a budget isn't indicative of the condition of the economy and growing have-nots, just the condition of if people are spending too much compared to what they earn. Tons of students and 20 somethings live off of $1000/month just fine, maybe $1200 would hurt a bit. But a family who makes $5000/month and spends 4800, or makes $10,000 and spends $9,800 is in the same boat? Nah.

    Real indicators of hardship are things like the growing number of people age 25-30 that haven't been able to land a career job, or Housing Price: Income ratio exploding, or the number of retirees funding their age 25-30 children who would otherwise be homeless.

  8. #7
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    This article doesn't really surprise me. It boggles my mind to see people playing around with debt like there are zero consequences just because of the fact that it's cheap to get right now.

    "Hey guys, I still have have a 20k student loan from 2005 and 18k credit card debt, and have $500 cash in the bank. But I've built up $75k equity in my condo. Do you guys think I should take out a HELOC so I can buy XYZ stock? Interest rates are so low and the stocks are soaring! I wanna get in while I can!!"



    "Leverage" is too many people's favourite word.

  9. #8
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    Quote Originally Posted by DollaWine View Post
    This article doesn't really surprise me. It boggles my mind to see people playing around with debt like there are zero consequences just because of the fact that it's cheap to get right now.

    "Hey guys, I still have have a 20k student loan from 2005 and 18k credit card debt, and have $500 cash in the bank. But I've built up $75k equity in my condo. Do you guys think I should take out a HELOC so I can buy XYZ stock? Interest rates are so low and the stocks are soaring! I wanna get in while I can!!"



    "Leverage" is too many people's favourite word.
    I'd be impressed if it's XYZ stock. It's usually taking out the HELOC for the boat or the motor-home along with a new fully financed truck.

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    And...BRB using that boat and/or motor home for literally 11 days or less out of the year. I'd much rather rent those things, and not be tied to them. Maintenance, registration/insurance, hauling them, cleaning, depreciation...I never envy people with a whole bunch of shiny stuff any middle classed person can get in debt to their eyes over. I'd rather be free and not owned/enslaved by my stuff. But I'm one of those under 30's who are treading very carefully and partially relying on a parent support. Heck, my only parent is also relying on me for support as well.


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