Inside the Canadian Credit Bubble, Where Too Many Canadians Live Beyond their Means

The credit cards that once empowered many Canadians are now allowing people to bury themselves in debt they can’t recover from. In The Walrus, Raizel Robin writes about this new middle class. It’s an aspirational one that lives paycheck to paycheck, is not always willing to give up certain lifestyle choices and luxury activities, and relies on Payday loans that only compound their problems. Some financial analysts warn that the day of reckoning is approaching.

Indeed, while the largest chunk of our household expenditures goes toward groceries, transportation, and shelter, many Canadians seem uninterested in prioritizing needs over wants—according to a recent cibc poll, only half of those surveyed were willing to cut spending on non-­essential items in order to keep up with bills. Our debt load is, in a sense, the result of an aspirational burden. “Middle class” once meant exactly that—the ­median in household net worth, or the point at which half the population has a higher income and the other half a lower one. A 2013 ­internal government document deemed middle-­class incomes to be anywhere between $54,000 and $108,000—that’s quite a spread. Middle-­class status has thus become more of a state of mind than a demographic bracket. Federal finance minister Bill Morneau recently admitted as much, defining middle-class Canadians, in part, according to the “lifestyle they ­aspire to.”

But it’s hard to deny the fact that such lifestyles tend to be defined by consumption, or what one American sociologist has dubbed “upscale emulation.” A bankruptcy lawyer I spoke with has helped clients in just this fix—clients such as the Toronto architect crushed by $105,000 in tax debt and $75,000 in credit card debt who still managed to vacation in the tropics four times a year with his wife. Or the divorced, ­self-employed Toronto chiropractor who made $4,900 a month and insisted that both her kids attend private school—until the Canada Revenue Agency froze her ­accounts. We spend our way into the standard of living we feel we deserve, buying stuff that makes us who we think we are, or want to be.

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