Today is the International Day for the Eradication of Poverty. If you do one thing today, read this article of George Stoumoubolouplos' website.
This issue has always been close to my heart: my mother grew up Zambia, one of the poorest countries in the world; I've built houses in slums in Mexico; I've traveled through many undeveloped parts of Asia; I slept in a back alley in Rome on New Years Eve because I couldn't afford a hotel (that one doesn't count); and I've met countless beautiful people along the way.
I've also come to know many Canadians who might not be living in a cardboard shed and eating grass, but are on the verge of serious financial trouble.
The federal government's threshold for housing affordability is 30% per cent of your monthly income. That means a quarter of Canadian households are (3.3 million) are paying more than they should on housing. That stat comes from the National Household Survey released this year. My mind exploded when I read that. I'm still trying to find pieces of my hypothalamus.
As you already read here, right now your home is falling apart. Slowly. You will have to put money into maintaining your home. It's a fact.
I think banks do a poor job of taking this into account when you when they pre-approve some people for a mortgage. My colleagues Jacki and Bill wrote a great blog about this.
So people get excited and make their budget: new mortgage + food + bills + cars + beer = we can afford it! What they haven't taken into account are repairs, maintenance, and ever changing market value of homes. As well, the unexpected twists life can take: two lines on a pregnancy test, a flood, a bad driver who doesn't know how to use the McKenzie Towne traffic circle. Can your budget handle this? Are you able to pay yourself a condo fee?
"Last month, Statistics Canada reported that the Canadian household debt-to-income ratio had climbed to a new high of 163.4 per cent — in other words, the average Canadian owes $1.63 for every dollar they earn." From the George Article.
Mind blown again. I'll never find all of my cerebellum at this point.
You see, being house poor doesn't just limit your potential to party like a rock star, it greatly increases your chances of the most stressful question you will ever have to ask yourself - how will I provide shelter and food for my family?
There are hundreds of millions of people around the world asking the same question today. But their circumstances made it unavoidable. I'm hopeful for the abundance of intelligent minds and tireless workers that are giving everything they have to end this problem. People like my friend Dan Meades.
For you, in this wonderful country we should all be thankful for, it is avoidable for most of us.