# Article: Canadians struggling to save money



## Montrealer (Sep 13, 2010)

According to CTV and RBC, Canadians are having trouble saving money and a very small percentage of people in Canada have any type of savings, some don't even have savings for a "rainy day".

http://montreal.ctv.ca/servlet/an/l...ic-survey-20120209/20120209/?hub=MontrealHome



> John Size, CTVNews.ca
> 
> More than half of Canadians don't have savings set aside for emergencies, but they are paying down more personal debt, an RBC survey found.
> 
> ...


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## Four Pillars (Apr 5, 2009)

And?


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## HaroldCrump (Jun 10, 2009)

It's the same thing over and over again.
The entire system is built to ensure people _do not_ save money.
And of course individual responsibility (or lack thereof) plays a big part too.


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## OptsyEagle (Nov 29, 2009)

If everybody had lots of money .... the money wouldn't be worth anything.


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## OhGreatGuru (May 24, 2009)

OTOH, Randall Denley published what I thought was a good opinion piece on Feb.7 stating _"the real reason so many baby boomers face a bleak retirement is not because the federal government might make them work two more years before they get the $6,000-a-year Old Age Security handout. It’s because they have lived beyond their means for decades."_

And I think this applies to more than just the boomers.

PS: I forgot to add the link to the article

http://www.ottawacitizen.com/retirement+security/6111476/story.html

PPS: I see there is a separate thread on this article under the Retirement Forum:

http://www.canadianmoneyforum.com/showthread.php?t=10383


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## Saniokca (Sep 5, 2009)

OhGreatGuru said:


> "the real reason so many baby boomers face a bleak retirement is not because the federal government might make them work two more years before they get the $6,000-a-year Old Age Security handout. It’s because they have lived beyond their means for decades."


That's a great quote.

But it's so much easier to blame the goverment...


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## sags (May 15, 2010)

Rather than having a survey and ask people their opinions, it might be better to look at the facts.

Credit report agency Transunion, looked at their data and found that Canadians credit card debt declined at the same rate their HELOC debt rose.

Digging deeper, they found that people maxed out their credit cards and then transferred the debt to their line of credit. Then they refinanced their home and paid off down their HELOC.

Then they repeated the cycle.

Robbing Peter to pay Paul has been happening since the introduction of lines of credit and easy mortgage refinancing.

It is only sustainable when home prices are rising, and as happened in the US, when home prices fall and people can't refinance and have their lines of credit frozen or reduced............it falls apart.

I remember reading some financial forums where Americans were complaining loudly that their credit line limits were frozen or reduced, and they were complaining they were counting on the credit line to pay for their kids higher education or as an emergency or saving fund.

We are pretty much in the same situation as they were..........just before the housing crash.


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## meddlesomemarmots (Feb 16, 2011)

sags said:


> We are pretty much in the same situation as they were..........just before the housing crash.


That was my thoughts when I first heard about the recent trend of LOC rates going up (although hearing other annecdotes, that may well not be the full picture). I personally know far too many people that are living with a financial loss everymonth - luckily most of them aren't homeowners, so only stand to lose face with a bankruptcy.

The idea of people borrowing against their retirement policy is incredibly worrying however. As you said - it's an echo of American senitments before/after the crash.


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## Montrealer (Sep 13, 2010)

HaroldCrump said:


> It's the same thing over and over again.
> The entire system is built to ensure people _do not_ save money.
> And of course individual responsibility (or lack thereof) plays a big part too.


I think it's more individual responsibility than anything, I spent my 20's spending money on BS that never got me anywhere, clothing, cars, women, entertainment, going out and bad habits like drinking and spending money to impress my social circle and at one point I thought to myself, AM I WORKING TO LIVE or LIVING TO WORK? And that is when I woke up.

I now have ZERO commercial debt, my car loan is almost paid off on which I initially got a good deal and will have $100,000.00 in liquid cash savings in the coming 3 to 5 years. 

I think that saving should be automatic and you should live off of what you don't see or have and always live below your means, if you make $30,000.00 a year, don't buy $150.00 jeans or a car worth $30,000.00, buy jeans for $40.00 at Winners and buy a used car under $10,000.00 

Saving is a mindset...


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## CuriousReader (Apr 3, 2009)

OhGreatGuru said:


> OTOH, Randall Denley published what I thought was a good opinion piece on Feb.7 stating _"the real reason so many baby boomers face a bleak retirement is not because the federal government might make them work two more years before they get the $6,000-a-year Old Age Security handout. *It’s because they have lived beyond their means for decades.*"_


That's the biggest reason, but people always in denial and always blame someone else (corporate greed, government, etc) - sure there are things that those other factors can do better or better controlled, but at the end of the day it's one's personal decision to live beyond their means by way of tapping into credits.

Obviously there are extreme cases where someone really need to cover their BASIC necessities through credit, but those are definitely the exceptions.

Western culture for decades has been dependent on life on credit, the availability of credit, mortgages, etc comparing to Asian background (where I grew up) where you basically have no access to credit at all - though recently this been on the up as well - and you have to pay everything by cash, if you have no money, you cant borrow money through credit cards.

I've seen people that live paycheque to paycheque CHOOSE to go out (eat out, drinks, etc) at least 2-3x a week while they often concerned about how to pay for foods and rents, but never concern about paying for drinks.

It sounds silly to most of us in this forum who have better grasp of financials than probably 90% of the population, but that's the reality. People like to maintain a certain lifestyle or image, regardless that they are paying it on credit.


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## Daniel A. (Mar 20, 2011)

meddlesomemarmots said:


> That was my thoughts when I first heard about the recent trend of LOC rates going up (although hearing other annecdotes, that may well not be the full picture). I personally know far too many people that are living with a financial loss everymonth - luckily most of them aren't homeowners, so only stand to lose face with a bankruptcy.
> 
> The idea of people borrowing against their retirement policy is incredibly worrying however. As you said - it's an echo of American senitments before/after the crash.



Why would it matter if you were a homeowner with bankruptcy ?
There is no face to be lost in bankruptcy.


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## Daniel A. (Mar 20, 2011)

Four Pillars said:


> And?


Yes


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## v_tofu (Apr 16, 2009)

Similar discussion already going on over here:

http://canadianmoneyforum.com/showthread.php?t=7037


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## the-royal-mail (Dec 11, 2009)

meddlesomemarmots said:


> The idea of people borrowing against their retirement policy is incredibly worrying however. As you said - it's an echo of American senitments before/after the crash.


Agreed - that's why I've been speaking out against schemes like HBP as recently as today, but people continue egging other people on to use RRSPs for house down payments.

Heaven forbid anyone who wants a house, would simply save for a house instead of automatically raiding their retirement account for RE. Enough with the shell games.


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## Jon_Snow (May 20, 2009)

My initial reaction is to proclaim that people have no one to blame but themselves, yada, yada.... but I know some people are hit by bad luck in life and are dealt a bad deck and find themselves in financial trouble... but here is the BUT. Many people do indeed CHOOSE thier lifestyle, ie. living beyond their means, plain and simple. My wife and I made a conscious decision years ago that we would go the other way... we bought LESS house than we could afford. Paid off our vehicles quickly and are still driving 10 year old cars (which are still in great shape). Ten years ago, we were saving about 2k a month.... then as our income grew we got to a point where we could save 3k a month. The key was to not ratchet up our lifestyle to match our growing incomes. This is a fault of many I believe. As our mortgage amount has decreased, we have been able to save even more of our income. The last 3 years have been huge for us... our mortgage is now very small, and we are saving 5k per month ($7500 monthly income, $2500 living montly expenses). I am not even counting our dividend income, which is probably close to $1000 a month. 

I read alot of posts here about advanced investing strategies... margin, options, shorting, puts, calls - frankly, alot of it makes zero sense to me and seems risky to boot. I'd put our "living below our means" up against all of these as a means to become financially independant. 

Disclaimer: wife and I have no kids, nor the desire to have any, and thus our monthly expenses are probably alot lower than alot of couples could acheive. 
Buying real estate in late 90's at reasonable prices has helped us immensely as well. I feel for young people trying to get into a house these days... I would suggest renting and hope the correction that Garth Turner waxes on about actually occurs.


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## the-royal-mail (Dec 11, 2009)

Jon_Snow said:


> I read alot of posts here about advanced investing strategies... margin, options, shorting, puts, calls - frankly, alot of it makes zero sense to me and seems risky to boot. I'd put our "living below our means" up against all of these as a means to become financially independant.


Thank you Jon. I have noticed the exact same thing. Many of our new user IDs lately seem to be about shell games, risky RE deals that they can't afford, "clever" investment schemes and other such nonsense. There seems to be very little talk about learning to manage the money people actually have. Indeed, most of the people in question can't even save for a rainy day and we're supposed to instruct them how to invest properly in real estate and equities?

Learn to walk before you run.


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## Jon_Snow (May 20, 2009)

Agreed.


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## HaroldCrump (Jun 10, 2009)

To continue programs like the HBP in the current over-heated, bubble/balloon RE market is nuts.
All this is doing is further fueling the RE insanity, egging people on to take on way more household debt that they can afford, and creating huge imbalances.
This program should either be completely discontinued or suspended until the RE market changes.

If you cannot afford that house without raiding your retirement, then you cannot affford that house, period.


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## Causalien (Apr 4, 2009)

Jon,

I disagree. Learning about advanced investment strategies are actually the same as working at a job for 10+ years. It takes time and one can reap tremendous rewards. The end goal is so that your investment will work for you eventually. But before delving into these strategies. Money management is key. Because how much you should risk in an advanced strategy comes from money management. It's all interlinked.

I agree with your accusation when it is someone new with less than 3 years investment experience talking about these exotic products though. Because it usually end up being a make money quick scheme. When in fact, it is just like any other job you do and takes decades to master. Just like you can become a pro player in poker and live off of it. 

I read some of the comment in the article. Quite surprised that some of these retirees only have 100k saved up... as opposed to the million dollars that will be necessary. That smells like trouble.


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## Sasquatch (Jan 28, 2012)

Daniel A. said:


> Why would it matter if you were a homeowner with bankruptcy ?
> There is no face to be lost in bankruptcy.


I have to throw in my 2 cents worth.....

I think the typical mindset of many folks today is that nothing is your fault ie. you have a gambling problem.... it's a disease, you have a drinking problem... you have a disease  etc. etc. etc.

I'm sure there are, instances where people go bankrupt through no fault of their own like illness, disability, accidents etc. and I truly feel bad for these folks.

However, I would make a wager ( no pun intended) that 75 % or more of all bankruptcies are the direct result of people making stupid decisions like taking on too much debt/credit or whatever in the futile quest to keep up with a media induced life style, they are not even close to be able to maintain.

It's time we take responsibility for our own actions. I personally would feel quite embarassed to have to go bankrupt because I was chasing a lifestyle I cannot afford and it eventually caught up with me, like it always will.

But that's just me


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## Maybe Later (Feb 19, 2011)

HaroldCrump said:


> To continue programs like the HBP in the current over-heated, bubble/balloon RE market is nuts.
> All this is doing is further fueling the RE insanity, egging people on to take on way more household debt that they can afford, and creating huge imbalances.
> This program should either be completely discontinued or suspended until the RE market changes.
> 
> If you cannot afford that house without raiding your retirement, then you cannot affford that house, period.


I will respectfully disagree. The HBP can be used to great advantage by disciplined individuals. I don't agree with the general disdain for individuals or families that run the math and use it responsibly. I posted as much in the "When to start an RRSP" thread. Home ownership is a goal many Canadians have and I appreciate government programs that facilitate it. In my opinion the gross income test/TDSR as a basis for determining how much a family can borrow is far more to blame than the HBP. The amount my family can pre-qualify for to borrow is staggering and scary.

It isn't always a case of affording the house. Today with 5% down and cash back mortgages the down payment isn't the barrier or the problem. It's the total debt load.


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## meddlesomemarmots (Feb 16, 2011)

Daniel A. said:


> Why would it matter if you were a homeowner with bankruptcy ?
> There is no face to be lost in bankruptcy.


I would imagine (and never been in a situation as this) that the effect on someone's life would be much greater after losing their house in a bankruptcy, than someone who is in a renting position? (Feel free to correct me, I've never been in a situation like this, so am only imagining what it would play out like).

There is so much social pressure, spousal pressure, and investing of money in real estate at the moment, that losing your house in a bankruptcy would probably have a potential to destroy your life much easier than a renter.

For one, a renter is less likely to be 'rent poor' (in the sense of the opposite of 'house poor'). And at least in my experiences, a bankruptcy should be an indicator that their lifestyle is incompatible with their income. For a someone who 'owned' where they lived, they are almost definately going to have to move out of where they were used to living, and deal with 'losing' their equity that they'd built up, the work they'd put into their place, the Jones' gossiping about what happened etc.

It's most definately a simplistic look at things, but with the real estate obsessed state of the country, it seems to me that removing someone's title of 'homeowner' from them involuntarily would be akin to losing a constitutional right.


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## Daniel A. (Mar 20, 2011)

Hmmm

Companies & individuals go bankrupt every year, divorce, job loss, family death, business failure, many reasons.
It makes no difference if you own a home or rent the effect is the same.

Your not removing anyone's name from the title the house is sold and you move on. The Jone's will talk about anything I would not worry about them remember most people deep down hope you fail few are genuine.
If you go to work and 5 people want a promotion 1 gets it that means there are 4 people waiting for you to fail. And they may be pointing out your flaws.


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## meddlesomemarmots (Feb 16, 2011)

Daniel A. said:


> Companies & individuals go bankrupt every year, divorce, job loss, family death, business failure, many reasons.
> It makes no difference if you own a home or rent the effect is the same.


I'd say that the result is the same, but I wouldn't say that the process is. Many homeowners at the moment are financially grounded in the belief that their real estate is their retirement fund/their kids college fund/their 'paying off the fun stuff' fund. Having a multi-thousand dollar asset provides a sense of false security, that without financial sense (which a chunk of the people we are talking about are without) can be misleading as to how well off someone really is. It doesn't take much to go from - "I'm fine to borrow a bit from my secured line of credit, my house is worth a fortune" to "I can't believe my line of credit is larger than my equity".

As a renter, and without the possession of a huge asset, like a house, the financial picture is more black and white. Plus the chances of continuing to live where they live is higher.

They both end up renting, and trying to rebuild their economic and social lives - it's how they get there, that I'm getting at.

And of course, me and you know that the Jones's are a fleeting bunch whose opinion matters very little, but we also know that a large amount of the people we're talking about wouldn't see social peer pressure in the same way.


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## Daniel A. (Mar 20, 2011)

meddlesomemarmots said:


> I'd say that the result is the same, but I wouldn't say that the process is. Many homeowners at the moment are financially grounded in the belief that their real estate is their retirement fund/their kids college fund/their 'paying off the fun stuff' fund. Having a multi-thousand dollar asset provides a sense of false security, that without financial sense (which a chunk of the people we are talking about are without) can be misleading as to how well off someone really is. It doesn't take much to go from - "I'm fine to borrow a bit from my secured line of credit, my house is worth a fortune" to "I can't believe my line of credit is larger than my equity".


 True the use of a house as a ATM will get some, there are many that don't view their line of credit the same as other credit.
Where I live you can't buy a building lot for under 900,000.00


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## meddlesomemarmots (Feb 16, 2011)

Daniel A. said:


> True the use of a house as a ATM will get some, there are many that don't view their line of credit the same as other credit.
> Where I live you can't buy a building lot for under 900,000.00


Pretty sad that I can pinpoint where in Canada you live within 25 km, on the price of a tear down...

It's one thing to live it up as a house millionaire - it's another thing to do it when 75% of the house is owned by the bank.

The home equity loans you hear on the TV are worryingly like the ones we'd have in Britain before the financial crisis - they always make me squirm!


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## Daniel A. (Mar 20, 2011)

Just imagine what an increase in the interest rate would do.


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## Plugging Along (Jan 3, 2011)

Jon_Snow said:


> . Many people do indeed CHOOSE thier lifestyle, ie. living beyond their means, plain and simple. My wife and I made a conscious decision years ago that we would go the other way... we bought LESS house than we could afford. Paid off our vehicles quickly and are still driving 10 year old cars (which are still in great shape). Ten years ago, we were saving about 2k a month.... then as our income grew we got to a point where we could save 3k a month. The key was to not ratchet up our lifestyle to match our growing incomes. This is a fault of many I believe. As our mortgage amount has decreased, we have been able to save even more of our income. The last 3 years have been huge for us... our mortgage is now very small, and we are saving 5k per month ($7500 monthly income, $2500 living montly expenses). I am not even counting our dividend income, which is probably close to $1000 a month.
> 
> I read alot of posts here about advanced investing strategies... margin, options, shorting, puts, calls - frankly, alot of it makes zero sense to me and seems risky to boot. I'd put our "living below our means" up against all of these as a means to become financially independant.
> 
> ...


I could have written the post myself, with the exception of having kids. I will be the first to admit that I have very little interest in the advanced investing strategies, even though I have a business degree with an accounting major, and I actually understand the fundamentals. For me I have taken an approach of live below our means, at the same time of building up our means. I've always put aside savings, (except when both my spouse and I were out of work), and treat it like a bill. We save about the same amount as you do monthly. However, to do this, we also had to make more with 2 kids. I think living below one means , learning to increase income, and investing are the three critical finance skills, however, one really only needs to master two in order to do well. 





Sasquatch said:


> I However, I would make a wager ( no pun intended) that 75 % or more of all bankruptcies are the direct result of people making stupid decisions like taking on too much debt/credit or whatever in the futile quest to keep up with a media induced life style, they are not even close to be able to maintain.
> 
> :


I just read a study that actually said more than 1/2 the bankrupcies in the US are caused by illness or medical reasons. Surprising only 1/3 was cause by consumer debt. I don't know that the number for Canada are, but it certainly made me really appreciate the taxes that I do pay for health care, since that is one area that is the highest unknown or control.


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## hboy43 (May 10, 2009)

Hi:

I am not convinced that the majority of non-savers are not more rational than I. All these years I have been saving and investing while they have been out having a ball. They have a call on my wealth via voting in the people who will "tax the rich". I don't have a call on all their years of living it up.

hboy43


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## HaroldCrump (Jun 10, 2009)

Maybe Later said:


> I will respectfully disagree. The HBP can be used to great advantage by disciplined individuals. I don't agree with the general disdain for individuals or families that run the math and use it responsibly.


I think the key word you used is : _disciplined_.
For someone (or a household) that is _already_ fiscally disciplined, this program, and many others, are advantageous.
Similar to credit cards and lines of credits.
They can be used responsibly or abused.
You must be among the minority that managed to take advantage of the HBP program and not compromising the security of your retirement.
I believe a vast majority of people aren't.

In the case of a program like the HBP, it is not just the individual that is involved.
This is an issue for the tax payer population as well.
Folks that are raiding their retirements in order to pay for houses they couldn't otherwise afford, then end up relying on welfare programs like the GIS and OAS to fund their retirement.

The correct policy in this situation is for such home owners to pay the true cost of the mortgage i.e. not be subsidized by the rest of the tax payers via this program.

I am not saying that people should not be allowed to buy homes, or even that they shouldn't be allowed to buy homes they can't afford.
All I am asking for is not to subsidize such purchases - let them pay the true interest rate for the mortgage.

If the HBP program were scrapped, there would be only two alternative solutions for someone wishing to buy a home - pay higher mortgage rates or save the down payment money first.
What is wrong with saving the down payment money first in a savings account?



> Today with 5% down and cash back mortgages the down payment isn't the barrier or the problem.


That is a problem, IMHO.
If the only way someone can afford a home is with 0% down, then they can't afford it.
Or, just pay the true interest cost that the bank will then demand.
Don't put the rest of the tax payers on the hook for funding their retirement.



> It's the total debt load.


But debt begets more debt.
It's a cycle.
Someone buys a home they can't afford.
They raid their RRSP (via the HBP).
Then they take out an HELOC.
Then an unsecured LOC
Credit cards, etc.
It goes on and on.


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## Four Pillars (Apr 5, 2009)

For the record, the maximum you can borrow from your RRSP to buy a house is only $25,000. We're not talking about a lot of money here and it has to be paid back (or you pay the taxes). 

Whether the HBP is beneficial for any individual is obviously worth exploring, but the fact remains that good or bad, it isn't going to make or break anyone's house buying or retirement experience.


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## HaroldCrump (Jun 10, 2009)

^ true, but in many cases it is a potential total of $50,000 for a household (i.e. couple buying a home jointly) - not an insignificant amount (for most people).

We keep hearing of stats that show the average size of RRSP is smaller than that (don't recall the exact numbers).

$50K compounded over 15 years is not an insignificant amount of retirement savings.

My point is that raiding RRSP to fund home ownership creates an illusion of affordability.
It also makes the assumption that home equity is being built in the process, which is (can) also be a form of retirement saving.
But is it?
That theory is predicated on the assumption that RE prices will always trend upwards and that the family in question will be able to cash out the equity to fund their retirement.

Overall, there are too many caveats, assumptions and moral hazards in this program.
I don't like the tax payer to be involved in someone's dream of home ownership.
Want to buy a house - save for the down payment.
Can't save the down payment - be ready to pay higher interest on the mortgage.

Let's get the tax payers and the govt. out of the way (via HBP, CMHC, etc.)

Don't ask me to pay for your home, esp. since I'm not invited to dinner and not allowed to swim in the pool


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## jamesbe (May 8, 2010)

I'd venture to bet that people "raiding" their RRSP aren't taking out the full amount as they probably don't have it. If they do have that amount I'd say they are probably responsible enough to pay it back.

I wish I knew about the HBP when I bought my house, I didn't know it existed so I just saved my money. Then I bought a house, I could have used the tax deduction...


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## Eclectic12 (Oct 20, 2010)

jamesbe said:


> I'd venture to bet that people "raiding" their RRSP aren't taking out the full amount as they probably don't have it. If they do have that amount I'd say they are probably responsible enough to pay it back.
> 
> I wish I knew about the HBP when I bought my house, I didn't know it existed so I just saved my money. Then I bought a house, I could have used the tax deduction...


 ... and because I didn't pay attention to new announcements, I missed out on the opportunity to put in the current year's worth of RRSP contribution, let it sit a week and pull it out for the HBP - without losing the tax deduction. *sigh*

IAC, the question is what criteria separates the "responsible" from the "raider".



Cheers


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## Four Pillars (Apr 5, 2009)

I suspect that a lot of HBP users make the contribution just to use the HBP, so they aren't really raiding anything.

Anyway - I'm not trying to sway anyone's opinion on HBP being good or bad, personally I think it's a great tool, but like anything - it can be misused.

In terms of importance - when I hear of Marina's niece borrowing 10x their salary, my first thought is not "Oh my, I wonder if they used the HBP".


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## the-royal-mail (Dec 11, 2009)

Great posts Harold. I agree completely. Heaven forbid anyone these days would simply save for what they want, instead of resorting to shell games and kicking the ball down the road. People need to stop incurring debt - this is what leads to the sort of chaos we've seen in places like the US, France and Greece.

Retirement savings (tier 3, maybe it's time I start talking about this some more again) are for retirement. If you want to buy a house or have a baby, start a 4th tier to save for what you want, prior to spending it.

People have no clue how to manage their money these days and we're in great trouble indeed when the best we can seem to come up with are schemes and shell games.


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## meddlesomemarmots (Feb 16, 2011)

the-royal-mail said:


> People have no clue how to manage their money these days and we're in great trouble indeed when the best we can seem to come up with are schemes and shell games.


But people have the unalienable right to own property. If it's too expensive, it is the government's job to help out the unlucky ones who have been priced out of the market. 

It's weird - most people are so excited about their quest to buy their first bit of land as quickly as possible, regardless of the long term effect on their finances. That $550,000 starter home is sure going to put a constraint on your long term financial happiness. Personally, I'm more excited about saving a ton by renting now, and building up a substatial downpayment, so I'm not paying for the bank tellers for the next 25.


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## stephenheath (Apr 3, 2009)

HaroldCrump said:


> Don't ask me to pay for your home, esp. since I'm not invited to dinner and not allowed to swim in the pool


We don't have a pool for you to swim in, but you're always welcome for dinner, Harold  Just pony up them tax breaks and pick your seat


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## HaroldCrump (Jun 10, 2009)

^ LOL 

In general, I am not saying that HBP is not suitable for anyone at all.
My point is that it is a subsidy.
And like other subsidies, it is designed to facilitate and encourage a certain behavior or action (buy homes, in this case).
However, such subsidy/encouragement is required when there is a reason to support and pump a certain sector or investment.
Like the US govt. right now needs to pump/support the RE sector.
Or how they did the "cash for clunkers" program to support the purchase of new cars.

But _we don't need to pump the housing market any more_.
Enough bubble already.

Way back decades ago whenever this HBP program was created, there may have been a reason to stimulate housing and all the sectors that benefit for it.
But not any more, not right now.

I know this is a different thread, and we had that other thread about the 2012 budget, but one of the things I'd like to see in the 2012 budget (in my dreams, of course) is an end to the HBP program.
Or at least a temporary suspension for 5 years.


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## Daniel A. (Mar 20, 2011)

The HBP program has only been around for the last ten years Harold.

We do live in a very social country if the issue is subsidies by government that you don't like the sad thing is none of us get to pick and chose.
I'm sure by way of taxation there are some that have benefited you or your family.


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## Maybe Later (Feb 19, 2011)

the-royal-mail said:


> Retirement savings (tier 3, maybe it's time I start talking about this some more again) are for retirement. If you want to buy a house or have a baby, start a 4th tier to save for what you want, prior to spending it.


There is nothing magical or sacrosanct about an RRSP account. It is a type of savings/investment account, a tool. If you're saving for a down payment within your RRSP or with coffee cans buried in the backyard it is still saving for a down payment. It doesn't necessarily mean you are borrowing from your retirement. If it makes good financial sense, individuals can, and should, take advantage of it.



the-royal-mail said:


> People have no clue how to manage their money these days and we're in great trouble indeed when the best we can seem to come up with are schemes and shell games.


To quote Inigo Montoya from The Princess Bride, "You keep using that word. I do not think it means what you think it means."

A shell game is meant to deceive. A plan is very different. I don't think "shell games" applies here, or in other instances you've used it recently. 



HaroldCrump said:


> $50K compounded over 15 years is not an insignificant amount of retirement savings.


This is incorrect. It is 1/15th of 50K compounded for 15 years, 1/15th, compouded for 14 years, 1/15th compoinded for 13 years, 1/15th compounded for 12 years, .... Also presuming that it isn't replaced in a single year, or faster than 15 years which is entirely possible and should be based on the total financial plan.



HaroldCrump said:


> Way back decades ago whenever this HBP program was created, there may have been a reason to stimulate housing and all the sectors that benefit for it.
> But not any more, not right now.


Consider also that the HBP also promotes the RRSP program. I don't think it is for everyone, but if it causes people to open RRSP accounts a decade before they might otherwise, perhaps it might not be all bad?



Four Pillars said:


> I suspect that a lot of HBP users make the contribution just to use the HBP, so they aren't really raiding anything.
> 
> Anyway - I'm not trying to sway anyone's opinion on HBP being good or bad, personally I think it's a great tool, but like anything - it can be misused.
> 
> In terms of importance - when I hear of Marina's niece borrowing 10x their salary, my first thought is not "Oh my, I wonder if they used the HBP".


I agree completely.


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## Eclectic12 (Oct 20, 2010)

Daniel A. said:


> The HBP program has only been around for the last ten years Harold.
> 
> [ ... ]


Only ten years?

If that were true, I wonder how I was able to use it 15 years ago?

According to following link, it's been around 20 years.
http://www.talktorenato.com/media/Home_Buyers_Plan.pdf


Cheers


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## Eclectic12 (Oct 20, 2010)

Maybe Later said:


> There is nothing magical or sacrosanct about an RRSP account. It is a type of savings/investment account, a tool. If you're saving for a down payment within your RRSP or with coffee cans buried in the backyard it is still saving for a down payment. It doesn't necessarily mean you are borrowing from your retirement. If it makes good financial sense, individuals can, and should, take advantage of it.
> 
> [ ... ]


That's a good point ... and probably a reasonable criteria for separate the "planners" from the "raiders". 

A planner is going to look at their options for saving and figure out that the HBP is in the toolbox. A raider is going be searching high and low for *any* cash to use.


Cheers


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## Maybe Later (Feb 19, 2011)

I'm a planner, but even to me raiding sounds more fun.

Who wants to go watch the Oakland Planners or _Planners of the Lost Ark?_ Boooooorrrrrriing.


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## londoncalling (Sep 17, 2011)

Maybelater: LMAO

I agree with many on this thread that the HBP like any investment tool can be used or misused depending on who is using it. I also wish I had used the HBP when I purchased my home. 

Others here mention that using their RRSPs for a home down payment is a terrible idea. I would say there are far worse injustices being done by people everyday. MERs for example will do more damage to ones Tier 3 retirement savings than using the HBP. 

If one looks at returns for real estate vs the returns of the market for the last 10 years or even back a few years it would seem that using money for retirement savings was a terrible idea. Therefore, everyone should have sold their investments back in 2008 and bought a ton of real estate.  What I am getting at is that stats and information can be used to argue any point. 

It is not for me or anyone else to decide if one should/should not use the HBP to fund their downpayment. Just make sure that if you do you can afford to repay it and not to upsize your home purchase by tapping into it. With any program there will be abuse or misuse. Let's put the onus on the people making the purchases and the banks and brokers that are approving people to buy houses that are currently valued way above their affordability. 
Unforunately the gov't and BOC are telling us to eliminate our debt yet rates are at record lows. This is sending a mixed message as it punishes savers and rewards borrowers.

It seems that since we started this "everyone must be a homeowner" mentality and further fueled RE with the 0 money down infinite term mortgages we have now made this expectation a reality. RE agents, banks, brokers and developers love it. Now we have to figure out how to deflate this balloon instead of having it burst.


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## RedRose (Aug 2, 2011)

Helium rises...


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## MoneyGal (Apr 24, 2009)

The planners didn't lose the ark in the first place. 

Seriously, that's the funniest thing I've read all day. 

(plus the Princess Bride quote, very nice. Upvotes all 'round!)


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## londoncalling (Sep 17, 2011)

RedRose said:


> Helium rises...


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## Maybe Later (Feb 19, 2011)

@ MoneyGal and londoncalling. Thanks, glad you enjoyed it. 

I'm glad things can be taken in jest. That's not to take anything away from Eclectic12's post, which is probably very true. Clearly one size does not fit all.


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