If Black Friday is any kind of a predictor, looks like on-line-shopping jumped to the top of the list for purchasing goods on Black Friday. And you know what that means? More debt or more accurately cyberdebt – a new form of debt that originates at home by the click of a mouse. Maybe we need to upgrade Charles Dickens’ famous Christmas poem to read:

T’was the night before Christmas when all through the house,

Not a creature was stirring, except for the mouse,

Clicking, beeping, and searching the internet with great care,

Rushing to every possible outlet before someone else gets there.

The children were on their iPads filling up their sweet heads,

Not sleeping, with their apps, chatting and playing games, instead….

I mean, we can download the Christmas movies, YouTube the Christmas music, Facebook our family pictures, text our Christmas wishes to friends and families, ,  cross the oceans in a cyber-second. Who would ever want to leave the house and actually meet or talk to someone?

On-line-shopping is like spending money on steroids. It accelerates the feelings associated with instant gratification to instantaneous over-indulgence. The money disappears faster than Captain Kirk’s latest trip to Vulcan. On-line shopping adds warp-speed debt accumulation to our list of 21st Century foibles. Yes, cyberdebt could accurately be defined as a new phenomenon of electronic funds transfer where consumers overspend, 24/7, without leaving their homes, without speaking to a retail associate, without discussing their budgets with financial advisors, act on impulse without caution, reflection, creating a new social group, cyberdebtors, who suffer the highest rate of buyer’s remorse in the universe, the next morning.

I remember the early days of business technology when I attended a real-life tutorial about computers. The instructor told us that not everyone needed an advanced computer for their business. He said that computers could do everything much faster, including making big mistakes.

Such is the case with consumer spending. On-line-shopping can open a new door to mistake-making, a very efficient and high velocity mechanism for bad decisions. It’s funny to see how credit cards may have been merely pioneers boldly going where no-one has gone before – travelling into cyberspace without cash, without loans officers, all alone, to shop, consume and overspend.

As reported in the Wall Street Journal, November 29th, 2015, Christmas shopping isn’t what it used to be. Online shopping, especially via mobile phones, shows us how buying habits have changed. According to A National Retail Federation survey, they found more people shopped online than in stores during the Thanksgiving and Black Friday weekend.

As reported by Adobe Systems Inc., consumers spent an estimated $4.45 billion online Thursday and Friday, which tracked purchases across 4,500 U.S. sites. It estimated more than half of Black Friday shopping came from mobile devices.

Unfortunately nothing was said about the debt that is likely to grow for a significant number of individuals and families.

In Canada, somebody owes the $541 billion currently outstanding in consumer debt in Canada (Bank of Canada, November 27th 2015). Black Friday undoubtedly added a layer of new debt to this ever-increasing total.

So, you’d better watch out for cyberdebt this Christmas. It can, in a flash of a digital camera or by the touch of a fingertip in the middle of the night, while in the privacy of your own home, send households into a debt spiral that will inevitably crash land sometime in January or February.

The debate between free or user pay post secondary education continues with usual arguments fanning the flames with hot air and ideology.  

In an article published today in the Vancouver Sun, we have been told that a new study from one sociology professor in California reveals that those who have to pay for their education do better than those who get free education.

My suspicions go wild when I hear such assertions. No one study could ever reach such a definitive conclusion. How could anyone suggest such an outcome without knowing, for example, how many middle and lower income groups do not attend post secondary education institutions because they can’t afford it?

Thorough studies of secondary schools where economics do not restrict attendance, might be a better starting point to better understand why some students do better than others even when the education is free.

It would be quite probable that high schools in wealthy districts such as St. Georges, York House and Crofton in Vancouver British Columbia (which are private schools) would produce higher grades and higher post secondary school attendance percentages than any other private or public high schools in British Columbia.

I would hypothecate that most university students from wealthier families would do better than middle and lower income families because of the consolidated advantages of tutors and no financial pressures to make ends meet while on campus.

Wealthy families would likely search for universities that cater to the wealthy where prohibitive tuition fees keep middle income and lower income families out. No doubt Harvard graduates would find employment easier than other univerisities of lesser stature and they would earn considerably higher incomes.

There are many other factors involved with how well students do in school. The role of parents contributes immensely to how successful their children will be in school. Working parents suffer disadvantage after disadvantage. They miss their children’s field trips, their school concerts, the opportunity to volunteer for the school, to have a relaxed debriefing with their children after school and often, they are too tired or stressed out to provide any meaningful input to homework.

The question of whether or not the poor should pay the same fees as the wealthy simply cannot be defended in a social justice framework that claims fairness and universal access to public institutions, the courts, and public schools. The answer is very simple. The poor can’t afford to pay the same fees and expenses to attend universities without borrowing humungous amounts and graduating with mountain-sized student loan debts that have a tendency to keep them poor for many years.

Some suggest that the student should pay for their post-secondary education because  people only appreciate things if they have to pay for them. In other words, nothing should be free.

This borderlines on the ridiculous but in a cruel way because young people need a college diploma or a university degree to simply get a job. The marketplace demands it – it does not matter if you are poor or cannot afford it. You have to get it.

In this context, the government or if you prefer, the state, has a duty to ensure its citizens are employable and equipped to live productive lives otherwise they and the taxpayer will pay through the back door of social assistance, unemployment insurance, health care and/or the criminal justice system. Governments have a vested interest in a working population.

Finally some governments such as Newfoundland-Labrador recognize the importance of getting the necessary tools for all young people to find a job by giving everyone access to post secondary education insitutions with grants instead of loans.

It’s refreshing to see religious leaders such as Pope Francis acknowledging the plight of the poor and an economic system that leaves the poor behind.

It has taken a lifetime – or two – or several million - to witness the recent realization that the government in Newfoundland-Labrador has had in understanding the draconian nature of lending huge sums of money to poor people  to get a post-secondary education that’s necessary for finding a job – and doing something about it.

As reported by CBC news on August 3rd 2015, provincial student loans have now been replaced with non-repayable grants.

I’ve often wondered why the major political parties, federal and provincial, have methodically steered away from the issue of student loans for decades. The principle of lending money to people who can’t afford something has long been known. How could it be construed to be helping the poor by lending them not just payday loan amounts but gargantuan life-defining amounts that would effectively keep millions of individuals and families poor after graduation?

The second principle of contemporary jurisprudence, the fresh start principle for honest but otherwise overburdened individuals or families, was violated by the federal government by way of a housekeeping amendment to the Bankruptcy and Insolvency Act in 1997-98 that prohibited student loan debts from being discharged from a bankruptcy for 10 years (now 7 years).

No debate or public attention followed this stripping of student loan debtor’s legal rights. It just seemed that our society had evolved to such a myopic state that debtors have been considered bad, especially defaulting debtors. Who cares about debtors? Debt is a negative and perhaps even worse, too boring a topic for politicians and the media.

This all happened at a time when the total consumer debt outstanding (excluding mortgages) in Canada was almost $200 billion up from $20 billion in 1975 and destined to reach $535 billion in 2015. In other words, we had already become a nation of debtors but nobody wanted to talk about it – or scrutinize it.

The student loan division of government used parliament to collect its debts - to improve its position as a creditor over all other unsecured creditors in a bankruptcy. At the same time all mercy for student loan debtors was eliminate. It didn’t matter what caused the insolvency or how compelling the cry for compassion was – a voice so often heard in Canada for human rights and freedoms. It all fell on deaf ears.

Bankruptcy legislation was first drafted to bring impossible debt problems to a conclusion and let honest debtors have a second chance while punishing dishonest ones.  

The government of Canada and the provinces inadvertently punished poor people for attending a very expensive university or college if the student loan debtors couldn’t find a job or suffered the same kinds of problems that happen to all other consumer debtors like health problems or marital breakdown. Student loan debtors were isolated and disenfranchised.

The effect of this disregard for student loan debtors spilled over to the wider society where it has been an easy sell to the public that the government shouldn’t lose any money because of all the help they are giving to poor people by lending them impossible sums of money.

Today’s announcement by the Newfoundland-Labrador government to abolish student loans demonstrates great compassion and leadership that should be followed by the other provinces and the federal government.

I remember vividly over the last 2 decades how many times experts from all walks of life have consistently argued that, what the government in Newfoundland-Labrador has just done – couldn’t be done.

Before rushing into my usual tirade about banks doing surveys and leaving the impression their findings are indisputable facts, I just loved the reference quote in the article in the Vancouver Sun  today about a boomer who lived through double-digit interest rates in the 1980s and over the years missed more than one naïve financial goal.

Yes. How many naïve financial goals are we still being subjected to?

I have recently researched the top selling personal finance books and suddenly realized that pretty much all of them make the roadway to wealth and retirement sound far too easy.

Dave Ramsey, for  example, a zealot and leading spokesperson for debt freedom bulldozes everything in life aside to achieve this one noble pursuit of debt freedom. After you get the mortgage paid off and all of the other debts you can then, relax and enjoy life.

The lightbulb went on when I realized this is kind of the same message as other get rich quick, 9 essential steps to follow or 10 must do steps have. You forget about life until you reach your financial goals. Then go party on your yacht.  

I wonder about how many of these authors earn a minimum living wage or in some cases, even have children. I mean it costs around $200,000 to raise a child to the age of 18 (according to statistical studies from the Department of Agriculture) and that does not include post-secondary education.

So, this Vancouver Sun article that brings up the topic of naïve financial goals comes at a time when many pillars of financial wisdom have crumbled into fairy dust, like Freedom 55.

Unfortunately, not too many experts or journalists are pointing the finger at child poverty, the incredible discrepancy between the wealthy  15% of the population and middle and lower income families in terms of income and assets.

Many of the Freedom 55 financial plans from the past did the same thing as the financial freedom books – push all else aside – spousal entertainment – children’s extracurricular activities – vacations - and a few years later the fat RRSP’s were either cashed in early to meet basic living expenses and pay down worrisome debt levels, or used to pay family court lawyers to wind up broken relationships and families.

The figure cited in the Vancouver Sun of an average of $24,000 for non-mortgage debt for Vancouverites, really doesn’t tell us very much. We need to know a lot more -  who owes the debt,  the income groups, the family size, the age group, the assets or lack thereof, whether or not they have a student loan and on and on. Without these details, this figure of $24,000 is just a mathematical number upon which journalists and banks wildly editorialize about everything under the sun including who is optimistic, who worries and does not worry about debt and on and on.

I didn’t particularly like the comment that the troublesome non-mortgage debt figures are balanced by the finding that 29 per cent of Canadians don’t owe any money at all. Excuse me. Hello!!!

Nothing is balanced. This survey simply shines a little light on the probability that the wealthy don’t owe too much debt and the majority of working individuals and families do.

I find the rest of the hypothecating, philosophizing, opinion-izing or outright gossiping hard to take seriously as there are few demographic facts to back up the hot air. 

Look out renters. The news is out. Rents are predicted to go up in Metro Vancouver.

An article in the Vancouver Sun today announced that low vacancy rates and unprecedented demand is pushing rents higher and higher. It appears that the high cost of home ownership (real estate) is kicking would be buyers down the food chain a couple of notches to expensive rental accommodation.

High rents have a tendency to keep people poor and out of the real estate market.

Once again a cry for affordable housing can be heard from an important part of the population - middle and low income families. This crescendo-ing sound of desperation comes at a time when consumer debt in Canada is at an all-time high at $535 billion dollars (excluding mortgages.)

Impossible rents and impossible mortgages combine to broadcast a very strong message to governments that something is wrong with this picture.  Middle and lower income families are being displaced to the suburbs and even worse, out of the real estate market entirely instead of being accommodated in some meaningful way.

The argument that nothing can be done because it’s a simple matter of the economic law of supply and demand has been made before. It was made for many years before the credit crunch of 2007-08 brought the world to its knees. What followed was massive government intervention to keep auto manufacturers, big banks and other corporate entities deemed too big to fail out of bankruptcy.

High rents have, in the past, led to rent controls and may once again if something substantive is not done to accommodate young, elderly, middle and lower income families with affordable housing.

Post-secondary school students also become victims of high rents because they do not have an income. They are students. Society needs a highly skilled and technically trained workforce so it’s not just the students that benefit from their studies but society at large. There is a public interest element to the cry for help for affordable housing.

There are solutions – new ones waiting to be discovered by innovative thinking and decisive public policy. There are also old ones like rent controls, wage and price controls and doing nothing - which ultimately leads to disaster for everyone.

I think it’s time for governments to act on affordable housing.

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