Where are the Pakis*?
Don't travel to Britain

The spending is the issue

Financial Post:

A new survey highlighting the fact almost half of working Canadians are living paycheque to paycheque reveals the inevitable corollary of failing to save enough: For most of us, retiring before age 60 will be a pipedream if we don’t get our saving act together.

This from one of the richest countries in the world:

Almost one in four (24%) don’t think they could come up with $2,000 if an emergency arose in the next month.

Don't these people have a credit card or a line of credit to tap into? Or, horror, those are already maxed out!? This is the case for far too many people. If their incomes go up, then their spending increases proportionally. Most of them saved 0% before and after getting extra cash, their saving rate is still stuck at 0%.

Anecdote #1: a few years ago, a woman at my workplace was telling us her sad story. She graduated university and immediately went into debt by purchasing a house. Every month after her mortgage payment and other expenses, she had no savings.

A few weeks later she was talking about driving into the heart of Toronto for a ... hamburger. That was a two-hour round trip.

A few months after that, in March, she did her taxes and pleasantly found out that she'll be getting a $1,000 refund. She immediately went on a one-week vacation and burned through a grand -- it went on credit. She spent the bloody money before she even had it!

Anecdote #2: a woman was telling us how life was so uncomplicated before she had children. She, with her husband, used to live in a condo, went to a pricey gym, dined at fancy restaurants, had parties on weekends and on and on. Now, with kids, every single cent goes towards managing the household expenses. They have no money for the gym, restaurants or other necessary luxuries.

Guess how much they saved before the kids ruined their paradise?

Anecdote #3: I read this story in the news a few years ago. A childless, working couple were making approx. $250,000 a year in after-tax income. Their spending patterns were meticulously detailed: house, utilities, food, dining, clothes, pets, gym, booze, etc.

The last item was savings. $0. If you can't save for a rainy day or retirement when you're making a quarter million a year, then when will you?

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