Older millennials, adults aged 35 to 44, had debt-to-disposable income ratios around 250 per cent in 2019, while Freestone noted that metric was roughly 150 per cent for the same age group in 1999.
Can confirm we’re sitting around 250% but this is after exercising significant restraint to not take on as much mortgage as the banks would have given us. Everyone I know who bought over the last couple of years went all out and I can’t imagine them being any lower than 300-350%.
Expensive is relative. This means nothing in isolation. Being a capital expenditure, what is the projected return on the $1k per month spend?
10% is generally considered a good investment. Given the scenario, does spending $1k per month on the vehicle return at least $1,100 back? In other words, if, in an alternate reality, this person had no vehicle, would we find he had at least $1,100 less income each month? If so, that is not expensive at all. A total bargain compared to putting $1,000 per month in a bank collecting 0.5% interest. Now that’s expensive.
That’s just it though, and your average investment profile hasn’t likely been getting 10% overall these past few years. Even if you stuck that cash in a high interest savings account, it’s been making maybe 4-5% this last little bit, which sounds good until you consider that inflation has been about the same amount, eroding the purchasing power of it. 10% return in your RRSP’s isn’t going to drive you to work in the morning either.
Obviously in our car-centric North American cities, cars are essential to make a decent income. My point is more that it shouldn’t be that way. If it’s not a work vehicle, why is it essential to own something that costs >$12K/y when it sits unused 95% of the time?
In what way is it is essential for the vast majority of the population? Rural dwellers, perhaps (although Canada’s Old Order Mennonite/Amish population seem to manage just fine), or those with particular disabilities, but most people?
I live in a small town and could easily go without a car. Imagine those who live in cities, which is the majority of Canadians. The whole reason they are wanting to jam themselves together so tightly is exactly so that they don’t need vehicular transportation to live life!
I do own a car, though, as the ROI on my vehicle easily exceeds 10%. I don’t like owning a car, but where else am I going to find those kind of returns?
It wouldn’t be that way if it weren’t a good investment, but it generally is (becoming much less so over the past couple of years, granted) for a lot of people. In part because of subsidies, of course, but I expect that it would still provide good ROI even if the subsidies were lifted. The early road infrastructure in Canada was built by private interests, after all.
Being capital, it is a useful tool that gets useful things done. When useful things get done, life improves for all of us. What else are you going to invest in with similar affordability, risk, and returns? In other words, which tools would most people find more useful than a car to get useful things done?
Enjoyment? Heck I even work from home. My car is a toy, and sits unused in my garage for 95% of the time. It probably costs me $12,382,818,826 a year, and gets 20 miles to the hogshead and all of that. Do I care? Honestly not really.
My investment portfolios? Up 15% one year, down 20% the next year, up 5% the next year, then down 10%. You factor inflation in there, and it doesn’t amount to shit. So that $50k my car cost? Might be $100k this year, $50k next year, and so on. Just like my house. Worth $425k last year, now it’s suddenly worth $600k, then it’ll be worth $400 when oil shits the bed, then it’ll be worth $609k.
My point is, can’t I at least have some damn hapiness somewhere? 8 years of school, I’m a millenial (borderline), so I pretty much don’t have fuck all to work with, and never have or will. I was in debt to my eyeballs for a decade, so I could have a job afterwards, and have the things I want in life. Which means I’m a decade behind. And you only live once, or so logic leads us to believe anyways. You can’t take it with you. So live it up. And keep your hands off my car.
Huh. I thought attending grade 9 was legally mandatory these days.
No doubt you are way better off financially having entered the workforce full-time at 14. Compound interest is no joke. Enjoy the car it has afforded you!
When did I ever day I wanted to take away your car? I just said our society shouldn’t be as car-centric and require that almost everyone has to have a car and drives everywhere. Cars are expensive and many people are struggling to make ends meet, yet they can’t eliminate the cost of owning and driving a vehicle.
Before cars, those who could not afford a horse and buggy, or the fare to ride the train, lived in compact, densely populated areas known as cities where they could rely on their own two feet to get around. That’s literally why cities were invented. I understand that more people live in cities now than ever before, no doubt to avoid the problem you speak of. If your rural homestead isn’t making ends meet because the cost of getting goods on and off the property is more than the value the property is creating in return, the solution is obvious. We figured that out tens of thousands of years ago.