Many of you need read no further. You’re already shaking your head and telling your computer screen, “Yes.”
Some of you might be intrigued by the topic, and want to know where this is all going.
Others will vehemently disagree with the stance I’m going to take in the following story about two potential renters I encountered last month who were completely, utterly unqualified to submit an offer to lease.
Let me begin today with a personal anecdote…
Oh, the irony of that photo. Am I right?
Here I am, about to lecture “young people” on financial literacy, and I’m so old that I think people still read books!
And they use “spectacles” too.
Well, I don’t own a Kindle, and I never will. There’s something about running my fingers down the page of a fresh book (not to mention inhaling that “new book smell”) that I love so much, as well as the bizarre sense of pride I feel when I put a finished book up on my shelf as some sort of trophy, as if to say, “I read that!”
I ran out of bookshelf space a long time ago. In fact, all of my books are in storage, because I have this other bizarre idea that when I move into a house with room, I’ll display them once again.
Now before I dive into today’s story, I want to ask a cynical, and seemingly-rhetorical question:
Do ‘kids today’ read anymore?
I’m serious. Does it happen? Or is every book turned into a movie with an actor named “Zach” or “Blake,” and kids just watch a reenactment of whatever high school textbook they’re supposed to be learning from?
When I was 19-years-old and had just finished my first year of undergraduate business school, I was working out at the old Dunfield Club on Eglinton Avenue, and I knew a guy there who I called “Big Mike.” He was actually short, but thick. You gym rats know what I mean.
Big Mike was old-school, both in terms of how he worked out, as well as how he perceived the financial markets, and personal finance.
Big Mike wore an inside-out, XXXL sweatshirt, cut off at the bottom. Gym rats – can you picture it? He wore a ragged ballcap with a leather strap at the back, and pants with a stripe. He was a throwback to the old days of weightlifting, when Lee Haney was young.
I was an up-and-commer, and by that I mean was a university kid who had so much time on his hands, he spent 2 1/2 hours per day in the gym. Some people throw a frisbee, right?
I’d see Big Mike at the gym in the afternoons, and we would only talk about two things: weightlifting, and finance.
In between sets – back when you took five minutes before your “big lift,” Big Mike would give me advice on schooling, career paths, investing, and personal finance.
One day he asked me, “What book are you reading right now?” I think I told him I was reading a fantasy football magazine to prepare for my upcoming draft, and he said, “You mean you don’t read?”
I told him that I read a lot, actually. More than most kids my age outside of school. That year I had read biographies on Muhammad Ali, Bruce Lee, Ken Shamrock, Arnold Shwarzenegger, and a few books on the human body, and health and nutrition.
Big Mike laughed and said, “Okay, well you seem to have a one-track mind. But why don’t you mix in some reading about the financial markets, investing, and personal finance?”
The thought had honestly never occurred to me. Even though I knew nothing, for some reason, I thought that was par for the course.
Over the course of the summer, Big Mike continued to quote books, over and over again. He’d tell me something about bollinger bands or exponential moving averages, and say, “Pring, have you read Pring?” even though he knew that I had not.
By the end of August, as I prepared to head back for second-year, I found Big Mike in the gym and said, “Okay, give it to me. Give me a list. You name a book, I’ll read it.”
And name them, he did…
Big Mike gave me the names of ten books to read, and I read every single one of them.
I can only remember nine of them off-hand, the last one escapes me. But here’s the list, as I’m sure many of you have read some of these as well:
The Intelligent Investor, Benjamin Graham (1939)
Technical Analysis Explained, Martin J. Pring, (1985)
A Random Walk Down Wall Street, Burton Malkiel (1973)
The Wealthy Barber, David Chilton (1989)
Rich Dad, Poor Dad, Robert Kiyosaki (1997)
Creating Wealth, Robert G Allen (1983)
Think And Grow Rich, Napoleon Hill (1937)
How To Be Rich, J. Paul Getty (1965)
Financial Peace Planner, Dave Ramsey (1998)
I can honestly say that I didn’t understand Benjamin Graham, and that I had to read Martin J. Pring’s book twice to even comprehend the subject matter. But I remember this book came with a “CD-ROM,” which was a big deal back in 1999!
Books like “Creating Wealth” were old and out of date, and you’d laugh if you read it now and compared it to the Toronto real estate market. I loved this guy – talking about flying to Dallas in the morning, buying a house that was cash-flow positive by a thousand dollars per month in 1980’s dollars, and then flying home in the evening.
But the takeaways from these books were phenomenal. And even if the subject matter is dated – like Napoleon Hill on personal finance in the 30’s, the ideas still make sense.
So what is my point to all of this?
I think many of you know where this is going…
Back in January, I started the 2018 year on T.R.B. by talking about debt.
In fact, I wrote two blogs on the subject:
“What Is The Government Doing To Tackle Consumer Debt?”
“Household Debt Vs. Mortgage Debt”
One of the themes presented in the 200-something comments from TRB readers was that, perhaps, financial literacy is at an all-time low.
If you haven’t read the blogs, I encourage you to read them. Not just for my stories about personally witnessing consumers and how they handle debt in 2018, but also because of the readers and their observations and opinions.
The one mistake that I made in both those blogs was having the assumption that every man, woman and child out there today is financially literate.
As the readers pointed out, there is no “Personal Finance” course in school.
And as others argued, and as I would agree, the public education system in Ontario has been bastardized to the point where kids aren’t taught any true responsibility or accountability, nor do they suffer any repercussions for their actions (or inactions).
And it’s getting worse, folks! Don’t believe anything to the contrary.
Here’s an excerpt from an internal high school memo that I recently read:
….among the recommendations is to phase out the Grade 9 math test, as well as the Grade 10 Ontario Secondary School Literacy Test, which is currently one of the requirements to earn a high-school diploma.
Instead, the report recommended implementing a new Grade 10 assessment that is not a graduation requirement to assess literacy, numeracy and other skills.
–
Great.
Set the bar even lower now.
I mean, why would we want kids to be literate?
Just implement an “assessment” that is not a requirement for graduation. If they all score zeros, we still drink fruit punch and eat cookies!
On the same day I read that internal memo from a Toronto high school, my brother told me that his 8-year-old child had five upcoming exams at her private school in England.
How in the world do we expect today’s young adults to be financially literate, and responsible, if we never teach it to them?
I had a recent listing for a King West condominium, listed at $2,400 per month.
Sadly, this is now what a 1-bed, den, 2-bath unit costs, but the market is the market, and it’s not my job to play social worker to the tenant-pool.
One of the offers that I received on the condo just blew my mind, and not in a good way.
Not to be overly dramatic here, but it made me wonder how the next generation is going to survive on their own.
The application was from a young couple, who were offering the full $2,400/month list price.
And they were so far from being “qualified,” I just didn’t know what to make of it.
She worked for minimum wage. No exaggeration – it was in her job letter. Assuming $14 per hour, over 40 hours, and 52 weeks, that’s $29,120 per year.
He was self-employed, but showed no income. That’s right – no job letter, no income verification, no pay stubs, no bank statement. Nothing.
He had $486 per month in student loans payable.
She had a credit score of 634.
He had a balance of $1,900 on his $2,000 credit card, $8,000 on his $10,000 line of credit, and $9,000 on his $15,000 line of credit.
And here they were, trying to tie up a $2,400 per month rental.
Folks, tell me I’m unsympathetic, but why in the world are these two trying to lease a condo for $2,400 per month, plus hydro?
That’s $30,000 per year in rent and utilities, for two people who, by all accounts, make a combined $29,120 per year.
I know, I know – he is self-employed, and likely makes something. But it’s curious that he chose not to show any proof of income. The application said $3,000 per month, so even if we take him at his word, that’s $36,000, plus her $29,120.
$65,120 of combined gross income, trying to rent for $30,000 per year.
These guys are going to spend 46.1% of their gross income on rent?
Let’s assume that the self-employed gentleman is making $25,000, since anybody that says they’re making $36,000 and provides no proof of income would be lucky to be making $25,000.
Now they’re looking to spend 55.4% of their gross income on rent.
An acceptable GDS ratio is in the 32% range, so what in the world are these two thinking?
I know the answer – they’re not thinking.
They found a pretty condo in a cool area that they like, and despite having a GDS ratio of 55.4%, and paying back $486 per month in student loans, and having almost $20,000 in combined credit card and line of credit debt, they felt this was a solid move.
And this line of thinking, I do not understand.
You can tell me I’m a cold-hearted capitalist, or that I’m an asshole real estate agent that doesn’t know what people in this city go through, or something else, and something else after that.
But I’ve always maintained that I am a realist.
And realistically, these two should be looking for a 1-bed, 1-bath basement apartment for $1,200 per month, so they can get out of debt, pay down their student loans, and save some money.
They should not be looking at a $2,400 per month King West condo.
Wow, I feel like I’m parenting these two. I might be far closer to 20 than I am to 60, but it sure doesn’t feel that way.
Is this really the future of this generation?
You want what you want, and you’re just going to go for it? Balls-to-the-wall, Y-O-L-O and all that?
Forget financial responsibility, let alone financial reality.
Financial literacy is a thing of the past.
I understand that this city is expensive, but unfortunately not everybody gets to rent a King West condo.
Perhaps this is a generational thing. Perhaps these two represent a small segment of a maturing part of the population.
But what if it’s not?
Will we ever look back and admit that taking accountability and responsibility (not to mention the times tables) out of the public education system was a recipe for disaster?
Honestly, folks, when did it become uncool to be financially literate in today’s society?
Pkap007
at 6:23 am
Peer pressure…wanting to sound cool with friends…sense of entitlement that since they work downtown they should be able to live downtown as well..some of the reasons I can think of leading to this decision making..When we got married we were in a 1650$ 1+1 but wanted to get in a 2 bed which went for 1900 we figured if we buy the unit it would cost cheaper so we bought that’s it pure financial sense losing hope with the next gen frankly more so with stupid articles where people say they will leave toronto and toronto will be poorer kinds
Andrew
at 8:27 am
They’re also paying that $30,000 in rent with after tax dollars. That $55,000 in supposed combined gross income is likely $45,000 after tax. So they’re spending 67% of their net income on rent.
Ralph Cramdown
at 8:46 am
So much for financial literacy. The $55,000 figure has no basis in reality. If you read the story again, it’s a number that David just made up, to make an already bad situation look even worse.
andrew
at 8:40 am
Dunning-Kruger effect. Look it up.
Chris
at 9:21 am
Financial literacy does seem, unfortunately, quite rare. However, I don’t think this is exclusive to the younger generations. Remember the discussions we have had about people complaining to the media about Mattamy in Oakville and Whitby? The irate buyers (a.k.a. speculators) ranged from early 30s to late 50s
Anecdotally, I have encountered financially illiteracy among people of all generations.
If we use consumer (non-mortgage) debt as a proxy for financial illiteracy, it doesn’t seem that the young are much worse than the older generations.
https://globalnews.ca/news/3933617/average-canadian-consumer-debt-ipsos-poll/
“The generation that appears to have the most consumer debt is that of the Gen Xers, or people aged 35-54, who report an average debt above $10,000…People aged 55 and over reported an average debt just over $9,000, while the consumer debt levels of millennials — people aged 18 to 34 — were far lower, at around $5,600.
Real estate millennial
at 10:15 am
I couldn’t agree more! it’s clearly evident in every generation. Well articulated!
Condodweller
at 7:05 pm
@Chris Do you think it’s possible that the younger generations have less wealth and therefore less access to debt?
Chris
at 8:55 am
Yes, I would imagine that plays a part in it. The typical older Canadian is probably living in a home that has increased significantly in value since they purchased it, and likely has no (or very little) mortgage debt remaining. Millennials, not so much. More wealth usually means more access to credit, and for many people, a higher willingness to take on consumer debt.
Kyle
at 9:33 am
I am a firm believer that the most fundamental lessons of financial literacy should begin at home well before adulthood. (i.e. the value of a dollar, how to save, what you can do with your savings, budgeting, how long it takes to save up for something, etc). I don’t think it’s necessarily a generational thing. I think it is more of an upbringing thing.
As humans, most people don’t want to learn something unless it is in their interest. So it is no surprise to me that kids that get whatever they want, whenever they want it, in the form they want it in; don’t ever seem to develop these fundamentals. “Mom, my shoes don’t fit anymore” – Poof, a new pair of Jordans. “Dad, i need a new winter coat” – Poof, a new Canada Goose parka. Poof, new gaming systems, trips, gear, tech, etc.
When kids don’t know the cost of things, and don’t have to learn that there is a finite allocation that can fund those costs, and how long/hard it is to pay for those costs. Then how do parents ever expect them to understand how to manage their own finances?
Professional Shanker
at 5:05 pm
Couldn’t agree more – the value of a dollar, greatest lesson I ever learned IMO!
Paully
at 9:46 am
The self-employed dude probably does not want to report any income, because it is all from selling weed.
Sarah
at 10:58 am
HAHA that was my first thought too!!
Dave
at 6:56 am
Too bad all of the weed dealers are going to be fired by the end of the summer. Can’t even collect EI!
Real estate millennial
at 9:54 am
I think that we continuously point the finger and forget that mistakes are made by everyone. The catalyst for the financial crisis of 2008 was not because a bunch of young people were financially illiterate, the burst of the tech bubble wasn’t a bunch of stupid young people that bought anything that ended in “.com” we can go as far back as tulip mania. The generation before always thinks the generation after is the worst of all time and that thinking is misguided. Most homeowners that we scream about and worry about their debts aren’t young people, they’re over leverage baby boomers. Ontario’s poor financial position is lead by premier Wynn a baby boomer. We can go even further and look at student debt which is a down payment for a house, yet the education received doesn’t prepare students for the real world but the Dean of York university makes over $700,000 another baby boomer who makes his living recruiting misguided parents and their kids to spend thousands on unemployable skills. so let’s pump the breaks before you crucify the next generation because they’re usually a few brilliant people in every generation and a ton of fools. Even amongst the people in your closest circle not everyone is equal so pointing out a couple people making poor decisions is a terrible way to gauge a whole generation. Dunning Kruger – stupid people don’t know that they’re stupid is a strong statement but if you’re so smart with all your millions why are you commenting on a social platform and not changing the world with your brilliance helping more people become financially literate similar to “big mike” or start a company like wealth simple. @Andrew? Don’t throw stones if you live in a glass house.
daniel
at 10:43 am
people have been making dumb financial decisions since the dawn of money.
People do take on a lot more debt now, however, debt is also a lot cheaper. I’m not saying it’s a good idea, however, it is certainly the rational response to the interest rate environment we’ve been in.
David Fleming
at 10:03 am
I remembered the 10th book – “Reminiscences of a Stock Operator,” Edwin Lefevre (1923).
That’s been bugging me for the last 24 hours…
Ralph Cramdown
at 11:40 am
Great book, as are most of the others on your list (I’ve got issues with a few… Kiyaosaki is a fabulist and Allen is a fraudster and a bankrupt. Hill is inspiring, but as the prototype for every “believe in it hard enough and it will come true” story right down to The Secret, he’s got a lot to answer for).
But… consumer finance has changed, a lot (real estate and the stock market, not so much). I would say that today’s consumer is more educated about household finance than ever, but consumer facing corporations have gotten even smarter, even faster.
Take telecoms. A few years ago, they introduced a plethora of billing plans giving you so many gigabytes or so many minutes a month, with very high charges for overages. I’m embarrassed to say I initially thought “That’s outrageous! The cost to the company for that extra data is miniscule.” Only later did I realize that the whole point was to inflict maximum pain on the consumer so he’d move a few levels up on the plan grid. How much would you pay every month to avoid an occasional $20 surprise overage? How much to avoid an occasional $180 overage? Exactly.
Or take mortgages. Given their overhead and customer acquisition costs, banks don’t make too much on the first five years of your mortgage if you negotiate a decent rate — renewals are more profitable (or so I’ve been told). But their computers guess whether you’re rate sensitive (astute?) or not and set the timing and terms of your renewal offer accordingly. Plus they’ve come up with the incredible exploding mortgage break fee if you pay off your mortgage early.
Debt? In the olden days, most of the people you’d probably label as unsophisticated just couldn’t get it — credit was for the creditworthy. Now, much of the profit in consumer lending is extracted from portfolios of people who you’d be nuts to lend to as individuals, but who are very profitable in aggregate.
So the modern finance reading list needs a few additions:
Influence: The Psychology of Persuasion by Robert B Cialdini PhD
Priceless: The Myth of Fair Value (and How to Take Advantage of It): William Poundstone
Freakonomics: Levitt and Dubner
Tommy
at 5:37 pm
Well said, Ralph!
J
at 10:03 am
While that couple doesn’t seem like they can afford that rent, their downside risk for that particular decision is somewhat limited. In the worst case scenario, they can terminate their lease after a year, escaping the situation with just a bit more debt (and maybe they would be able to negotiate with the landlord for an early termination of the lease). On the other hand, those stretching to purchase real estate are exposing themselves to a much greater downside risk.
Libertarian
at 11:18 am
Here I thought that today’s post would be a happy one because you were on vacation last week. I hoped you enjoyed Atlantis. I know that you’re super busy from working 24/7, but if you could provide a Coles note version of a review, it would be appreciated!
As others have pointed out, the couple probably has a lot of money, but most of it not legal. The question for me is…will there be a landlord out there who doesn’t care where the money comes from and take this couple on as tenants?
Tommy
at 5:34 pm
There will always be landlords that will take them in. It probably won’t be the nicest unit in a nice neighborhood, though.
Jennifer
at 1:06 pm
parental help?
BJA
at 2:22 pm
David, rather than keep your hundreds (thousands?) of books “in storage,” why don’t you take the ones you’ve read to a used book dealer (and give them for free) so they can be “recycled” to book-hungry people who can’t actually afford to build an extensive library like you’ve been fortunate enough to do? Not to be too critical, but hoarding books you’ve already read sounds pretty ignorant (or at the very least unthinking) to me.
Sarah
at 3:43 pm
Orrrr, he can keep his books he spent his money on, and perhaps one day display them like he said he wanted to. There is nothing wrong with people wanting to keep their belongings. Furthermore, most, if not all of these books can be found in a public library.
BJA
at 4:11 pm
But isn’t one of the points of having one’s own “home library” to be able to refer back to a book you might have read years ago, particularly in the case of the financial tomes David mentions? Much more difficult to do when those books only exist for you at the local library branch, if you’re lucky. Frankly, I didn’t think an innocent “maybe share your stuff rather than box it up” post would elicit such “my sh** is MINE” animosity.
Sarah
at 4:30 pm
No animosity BJA. I’m just sharing the other side of the story. I happily share books with friends and family who are interested. Further more, I purge my closet once a season and donate unwanted/ outgrown clothing. I have donated used sporting equipment, and food too. (so humanitarian of me…)
Your post however, read in a tone (to me at least) that looked negatively on David for wanting to continue to build his home library (let it be in storage or not), and we should ‘think of the less fortunate’ instead of being selfish. And I simply expressed that he is entitled to be ‘selfish’ with things that he purchased and clearly still has a desire for. Books, unlike clothing and sporting equipment, don’t get “old” or out of style. They are possessions that can be passed through generations, or revisited at a later time.
Haha, call me a capitalist I guess. I was just creating a discussion. Maybe I came off too strong.
BJA
at 4:38 pm
Well said, Sarah.
Ralph Cramdown
at 3:51 pm
A tablet, ebook or computer + Project Gutenberg gives you access to many of the best books ever written, and is much more cost effective (and space effective!) than buying even the cheapest used paper books. And for everything else, there’s abebooks.com
https://www.abebooks.com/servlet/BookDetailsPL?bi=22772811317
Sarah
at 3:55 pm
All due respect Ralph… There is something to be said about a home library. We have one in our house. I have several friends homes who have one. And like David said, there is something about the look and feel of holding a book that an ebook cannot compare to. I will continue to build a library. regardless of cost or space effectiveness.
GetReal
at 4:04 pm
Spoken like a true “I built that” capitalist.
Boris
at 12:05 pm
Spoken like a jealous communist.
Ralph Cramdown
at 4:27 pm
I agree completely, and have a couple of hundred linear feet of books myself. But if my choice was between Project Gutenberg and begging for charity, I’d choose the former, or make do with the superb Toronto Public Library plus all the books that can be had for free on curbs and in book boxes around the city.
FreeMoney
at 2:50 pm
I would argue that financial literacy is absolutely not “a thing of the past” (and at 64 years old, I know whereof I speak). I attended public school in suburban (exclusively English) Montreal between 1960 and 1970 and believe me when I tell you there was nothing even remotely like a “financial literacy” course on any curriculum at any time during that period. Hell, my high school physics course didn’t even teach special or general relativity, which were pretty old theories even fifty years ago.
Now perhaps in other areas of the country, things were different; if so, someone please enlighten me. I absolutely agree that financial (and many other forms of) ignorance is widespread today, but to assert or assume that things were different in some imaginary “good old days” is lazy at best.
Condodweller
at 7:16 pm
Someone once said, there were never any good old days; we just chose to remember the good ones.
Neeraj
at 8:24 am
The children now love luxury; they have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise. Children are now tyrants, not the servants of their households. They no longer rise when elders enter the room. They contradict their parents, chatter before company, gobble up dainties at the table, cross their legs, and tyrannize their teachers. – Socrates
Professional Shanker
at 3:24 pm
I think the answer to financial literacy lies in the fact that over the past 10 years there has been no consequence to taking on large amounts of debts or living beyond your means.
Get approved for a mortgage which takes up 50% of your disposal income, no problem as house appreciation rates has allowed people to re-finance and in some cases draw equity out of their primary residence.
Why practice financial literacy when the world (governments) is run in an such a financially irresponsible manner? I truly ask this why would someone do this if there is no near and/or immediate near consequence?
Unfortunately, a paradigm shift is under way.
Tommy
at 5:30 pm
Financial literacy is not at an all time low. It’s always been abysmally low, and in fact, it’s probably at its peak right now due to the accessibility to information. The difference between now and previous generations is that being financially illiterate has seriously dire consequences. In the old days, high school dropouts could find good paying jobs, and own a cheap home despite their financial illiteracy. Today, not only can you not get hired for a decent paying job with only a high school diploma, but the price of living has soared, jobs are scarce, there is greater competition, and there is greater temptation due to more credit products (credit cards, lines of credit) made readily available with high fees and much more stuff to spend money on – internet, games, cars, yoga, starbucks, gym memberships, brand clothing, and Tinder hookups. Keeping up with the Jonses always existed but not like this. Now you have to witness all your peers living the facade of a great life on their social media accounts every single day.
Condodweller
at 7:20 pm
This is very true. Keeping up with the Joneses used to be keeping up with people in your neighbourhood and perhaps at work. Now it’s everywhere.
Boris
at 12:04 pm
nahhh.
Because something is available doesn’t mean people use it.
Ralph Cramdown
at 9:44 pm
OK, financial literacy. Did anyone else notice an issue in David’s post above: “Now they’re looking to spend 55.4% of their gross income on rent. An acceptable GDS ratio is in the 32% range, so what in the world are these two thinking?”
Who is 32% an acceptable GDS to, and of whom? Banks, and of mortgage borrowers. Above this, borrowers are more likely to default. As an amortization table shows, at today’s low rates, almost half of your first year’s mortgage payments reduce your debt. Not so for renters. So, while I can see the appeal of a landlord adopting banks’ 32% rule of thumb, for a renter to be paying that fraction of income is financial suicide. As in probably unable to save for a down payment, for investments, or for retirement. It doesn’t leave much left over for homeowners either, but at least they’re paying the place off…
Whaaa?
at 1:29 pm
“Spoken like a jealous communist.”
Really, Boris? Is that the best you can come up with? Communist? Geez, are we living in the ’50’s?
Natrx
at 1:53 pm
My fiance and I rented at Yonge n Eglinton for $1260 on Orchard view inclusive of hydro (full 1 bedroom going for about $1850 today without hydro) in 2010. I remember the dunfield club. It was on the north east side beside back in the day across from a Venue that hosted clubs or parties (can’t remember the name.. do you?).
People wondered why don’t I rent a ‘condo’ for $1700, but I was fine for not being conditioned that we must have everything new. I think that sheltered upbringing + glam internet lifestyle + everybody is much more judgy has made people, especially young people lose touch of financial reality.
I’m a year ahead of you starting university in 1998. It was all drinking and clubbing for my friends and I. I wished someone drilled into me the importance of financial literacy. We had the world at our oyster given how accessible property and ‘investments’ were in the mid-2000s. Especially relative to starting salaries for many jobs which haven’t changed much in 15 years.
Great point on the long inbetween sets. Nowadays everybody has their smart phones, headphones, in the zone thing going with limitless choices. But back than, it was more social for sure. Striking up random conversations or getting to know some of the regulars. Give/get tips, etc. Very few had CD walkmans in the gym. Bally’s was the club for me during that time.
Tommy
at 8:03 pm
Natrx, great comments. Your writing style is adorable. If someone had tried to teach you about financial literacy back when it was drinking and clubbing for you and your friends, would you have listened? 😉
Sounds like you made out ok and that the world was still your oyster 😉
OMAR KHAN
at 3:22 pm
Just going to point out I don’t think Financial literacy is at an all time low, just we now have to read and hear about financial illiterate people even more today because everyone has the internet.
The fact that young people are moving towards index funds, and away from high priced mutual funds shows we are getting more literature as a society, but there are still idiots out there. Just like there has always been.
Daniel
at 4:36 pm
Can someone please affirm David’s theory about declining financial literacy. It’s crucial to his overall worldview of general decline in our society.
Groosome
at 1:46 pm
Yes, but as a middle class (at least) white male, what else is he supposed to think? It comes with the territory.
Appraiser
at 4:55 pm
Anecdotes Rule – Wooohoo!
Condodweller
at 8:46 pm
It is one thing to be financially literate, and quite another to implement the knowledge and put it to good use on a regular basis. One can read all the books in the library and yet continue with regular routines. There needs to be an impetus for someone to sober up and change their ways. In terms of debt, unfortunately, as I posted before the blame can be laid at corporations as they are using our very own brain chemistry against us to buy their stuff which often times we don’t really need. With the advent of social media, we are willingly giving away our habitual data to be used against us to sell us more stuff. I can plug in any product name into my favourtie search engine and start receiving ads for it immediately. I am all for being responsible but when corporations are using science to persistently try and separate me from my money it is difficult even for the strongest willed person to not give in eventually. Instead of calling people illiterate and blaming them perhaps we should start looking at exploitative corporate practices. Subliminal advertising was made illegal long ago, maybe it’s time we outlaw questionable marketing techniques which are designed to take advantage of consumers in ways that are not immediately obvious to them. Late night TV shopping channels have exploited people by getting them to buy crap when they are tired and can’t think straight and promising them a full refund knowing full well that the majority of people don’t send anything back. Fast forward to tomorrow when Amazon are just going to send us stuff based on data they have collected about us in the belief that we are going to keep it and pay for it. I am curious how that’s going to work out.
Ralph Cramdown
at 10:53 pm
All true, but…
If everyone stopped buying crap they don’t need with money they don’t have to impress people they don’t know, the economy would collapse. This is called the fallacy of composition — my income is somebody else’s spending, and vice versa. Advertising’s creation of desires is what’s keeping us at near full employment.
So by all means work on your own habits, e.g. by setting up an automatic periodic deduction and investment plan. But don’t reform the system that keeps the masses working to consume, and ignorant of what Marx called class consciousness. Besides, wealth is relative. You can only get rich compared to others.
Condodweller
at 10:20 am
Naturally, the economy will be impacted if people cut back but let’s cross that bridge when we come to it and let’s first control what we as individuals have control over. Besides, I’d rather we as a group cut back some discretionary spending vs. being forced to cut back all discretionary spending plus some non-discretionary spending as well when all the borrowing fueled spending comes to a halt as people reach their credit limits and are forced to start paying off debt instead of continuing to spend.
Ralph Cramdown
at 11:29 am
If we as a group (i.e. everybody) cut back some discretionary spending, then our incomes are reduced. If I save some money (i.e. spend less than I earn), that money goes to somebody who’s spending more than they earn. For every credit, there’s a debit. Likewise with the balance sheets of households and governments. If the government is running a deficit, the private sector must be running a surplus, and vice versa. People who think that “the government” should pay down its debt and households should pay down their debts at the same time are suffering from a cognitive error about basic accounting.
David thinks he’s in the business of helping buyers find homes, but he’s really in the business of creating high quality debt for rich people to own.
Tommy
at 7:52 pm
Incorrect, Ralph. Economics is not a zero sum proposition. The government AND the private sector could be riddled with debt simultaneously.
Dan
at 9:58 am
Hi David,
Don’t disagree as a general population, but regarding teaching financial literacy in schools, Canada is on the upward trend (still a ways to go).
Ontario has introduced financial literacy education. It is integrated throughout the curriculum from 4-12 (http://www.edu.gov.on.ca/eng/surveyLiteracy.html) and is also a stand alone part of the careers course in high school https://www.thestar.com/news/gta/2017/03/23/ontario-launches-plan-to-teach-high-school-kids-financial-skills.html
Canada ranks 3rd in the world for youth financial literacy. Again, still a ways to go on this front as well https://globalnews.ca/news/3474278/why-canadas-top-3-ranking-in-global-youth-financial-literacy-test-isnt-much-to-celebrate/
Kali Wolters
at 8:17 pm
Incredible points. Outstanding arguments. Keep up the good effort.