December 28, 2012

What were the most outstanding events of 2012 for Canadians? Not an easy question.

Sadly, near the top of my list is the tragic story of Amanda Todd and her suicide resulting from bullying. More and more public attention has been focused on the problem of teenagers being bullied and the how this has been amplified by online harassment. We must do a better job.

I asked an 8 year old for her opinion on the most important events in 2012. Her answer is quite profound:

  • Felix  Baumgartner (this was the stratosphere free fall from space to earth)
  • Getting an Ipad 5  
  • Turning 8
  • Christmas presents (thanks Santa)
  • Graduating to Grade 3 piano
  • Winning 4th place in an inter-school competition
  • Singing in her school’s Christmas play, “Miracle on Bethlehem Street.”

Other opinions regarding the most significant events of 2012 have been identified by the media as follows:

  • Hurricane Sandy
  • Newtown Connecticut Massacre of 20 elementary school children no older than 9 years of age and six school employees.
  • Kate Middleton’s pregnancy and the suicide of one of her hospital’s nurses, Jacintha Saldanha, after receiving a prank phone call from two Australian DJ’s.
  • The 2012 Olympics
  • Costa Concordia Crash
  • The SOPA DEBATE - the Stop Online Piracy Act (SOPA) is a complex issue that involves freedom of speech, copyright infringement and how governments negotiate agreements without public discussion.
  • Penn State Sex Scandal
  • Trayyon Martin Shooting
  • Whitney Houston’s premature death

I mention all of these items because I think they were important elements for characterizing the 2012 landscape. However, I would have to put Debt on the very top of my list because it has finally received the public and media attention it deserves. 

Basically, 4 types of debt have been highlighted:

  1. The European Debt Crisis
  2. The US Fiscal Cliff
  3. Household Debt (in Canada)
  4. Consumer Debt (in Canada)

The European Debt Crisis

The European debt crisis involved government debt and how a number of countries were insolvent or nearly insolvent. Greece received the most media coverage as it struggled to meet its international debt obligations and public demands for government services. Greece, Ireland, Italy, Portugal and Spain joined the list of troubled countries.

The US Fiscal Cliff

The highly publicized fiscal cliff in the US refers to the political gridlock between Republicans and Democrats to cut its record $16 trillion government debt. The year end expiration of wide-ranging tax cuts and the imposition of draconian spending cuts have rattled investors and business leaders around the world.

Household Debt (In Canada)

CBC reported in October 2012 that Canadian household debt (household debt includes mortgage debt) hit a new high at a debt-to-income ratio of 163%. That number is close to households in the United States and the United Kingdom before home values crashed. At the peak of the U.S. housing bubble in 2007, household debt to income reached 170 per cent.

Still, many financial analysts suggest that Canada's housing market is on a more solid footing than was the United States as Canadians hold more equity in their homes and many of their mortgages are backed by the federal government through the Canada Mortgage and Housing Corp.

Consumer Debt

Consumer debt, (personal loans and credit card debt that excludes mortgages), almost hit a $500 Billion ceiling in 2012 in Canada. (Seasonally adjusted to 498,820 Billion as Reported by the Bank of Canada December 21st 2012)

This is one of the most troubling developments in 2012 for individuals and families in Canada for me. Consumers are unable to meet all of their expenses without borrowing to subsidize their incomes. We must get more serious about managing our consumer debt in 2013.

So, here is my Top 10 List for 2012:

  1. The European Debt Crisis
  2. The US Fiscal Cliff
  3. Household Debt (in Canada)
  4. Mortgage Rules Change (in Canada – economy slows down)
  5. Consumer Debt (in Canada)
  6. Amanda Todd Tragedy
  7. Newtown Connecticut Elementary School Massacre
  8. Penn State Scandal
  9. Hurricane Sandy
  10. Personal Budgeting

I end this year, 2012, with personal budgeting not because it was a highlight of 2012 in Canada or around the world, but because it is the single most important thing individuals and families can do for themselves in 2013. We really do need to stop borrowing to meet our family expenses.

Happy New Year everyone.

Remember, if you are experiencing financial difficulties do not wait. Call Solutions Credit Counselling at 1(877)588-9491 or fill out our Debt Consolidation Questionnaire and get your Free Credit Counselling Advice today.

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