More money, more problems? - MoneySense

More money, more problems?

Canadians are feeling good about our quick post-recession recovery. Maybe too good.


Household net worth is improving, the stock market is stronger — and household debt is on the rise too. In fact, the ratio of household debt to disposable income in Canada is now at a record high. Did we learn nothing from the brief but nasty recession of 2008-09?

According to some financial experts, we can blame “the wealth effect.” RBC economist David Onyett-Jeffries explains succinctly: “If you feel you have more, you are more willing to spend more.”

As Canadians have became more economically confident this past year, we’ve been spending more money and taking advantage of our home equity. Not a good idea, warns Vancouver-based Scott Hannah, president of the Credit Counselling Society. “The only thing we can count on is uncertainty and we need to plan on that basis,” he says.