Friday, 6 April 2012

free groceries

This morning I read an article on CBC regarding Mark Carney's recent statement that if Canadian families don't get their household debt under control, the Bank of Canada is going to take measures of its own to protect our economy.  I was shocked when I read that in terms of our income vs. debt ratio, we are only 9% away to the levels the US economy was at just before the crash in 2008.  This is serious.

The trouble is, credit is just too easy to come by right now, banks want to give it and with low interest rates, people want to have it.  And since our incomes are not increasing at the rate of inflation, many people are using credit to fill the gap and pay for things like food and gas.  We are also using that credit to purchase luxury items, yes, they are luxury.  Big screen tv's the latest apple product, nice cars, beautiful clothes, vacations, oh and a house to boot.  Many of our parents had to work their whole lives for these things, but we expect to have them by the time we are in our early 30's.  It is not realistic and it is about to all come tumbling down.

So this morning I was at Superstore shopping for produce when I was approached by a staff member wanting me to sign up for the PC MasterCard.  When I said that I didn't want any more credit, he misunderstood me and showed me that they have an introductory low interest rate for transferring balances from other cards onto theirs.  I said "I don't need that."  Then he said if I sign up now, I can also get $20.00 in free groceries.  I said "I'm debt adverse, I pay in cash"  He said, in an annoyed and condescending tone, "Well, cash won't get you free groceries" and walked away.  How stupid does he think I am that $20.00 in free groceries is going to lure me into a credit card that will ultimately cost me more than the measly free food they are offering?  I can guarantee you that most of the people shopping in that store, myself included, can't afford to be buying things on credit, nor should they.  The credit card companies are preying on people who they know can't afford what they are offering and will make a huge load of money off them in interest.  It is unethical and it is wrong.  

Interest rates are going to go up sooner or later and we all need to be careful of how much debt we take on, not just for ourselves, but also for our country as a whole.  The article this morning stated that when the interest rates rise, 10% of Canadians will no longer be able to afford their debt. What has happened in the States is grim, don't think it won't happen here.  We need to go back to the old school way of buying, if you don't have cash in hand, then you simply can't afford it.  Simple as that.

P.S. I am not simply pointing fingers at others, I have had to learn this hard and humbling lesson myself.  I saw a great bumper sticker yesterday that said "No matter how far down the wrong road you have gone, turn back."  Well said.

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