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Debt, happiness, college essays, bacon and beer

Editor-in-chief Fiona Anderson on the news that caught her eye this week
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Lots of stories about debt this week and how we’re in too deep. And while it sounds bad, with average debt being $1.63 for every $1 we earn, how else can you buy a house? Think about it. If you earn $70,000 and wanted to buy a house that didn’t scream high-debt level of 163%, and was something closer to your income, well you’d have to buy a $70,000 house. Ha ha! As if that existed.

I believe in good and bad debt, good debt including student loans that lead to a higher income making the loan easy to pay off, and mortgage loans. One recent Globe and Mail article argued that  mortgage debt is not good debt. But even if a house doesn’t go up in value and it’s expensive to maintain, it beats paying $2,400 a month in rent (a number I pick out of a hat, and wouldn’t get you much of a house if you are raising a family) for about 50 years (ages 25 to 75). That works out to $1.44 million dollars paying off someone else’s mortgage a few times over.

The Fraser Institute came out with a retaliating study arguing that while Canadians may have high debt-to-income levels, they actually have low debt-to-asset levels. They didn’t use that terminology, but they did say that between 2010 and 2014 household debt increased 21% to $1.8 trillion while assets increased 31% to $10 trillion. So when you include assets, our debt level is 18% not 163%.

Why do we get into debt in the first place? To buy things that make us happy.  Interestingly, children don’t see it that way. A study compared children aged 10 to 12 in 15 very different countries ranging from Nepal to Norway and found they all reported being happy, regardless of what material goods they owned.  The same wasn’t true for grown-ups.

Also interesting was an  article in the New Republic that said job security or insecurity affects how grown-ups raise their children. In one example, a father who had trouble finding and keeping a job was raising his daughter to prepare herself for bad times. Wealthier parents tend to teach (not necessarily intentionally) their children to feel entitled. 

Every year, the New York Times asks colleges to provide them with the best entrance essays they received that talk about work and money. Very few do as young people often haven't worked or been faced with money woes. But the essays that do talk about such issues provide a wonderful insight into the minds of young people and into everyday life for some of these people.  It’s very compelling reading.

And for completely different stories that caught my eye this week, the California drought is your fault (yes yours, if you buy any California fruit, and that includes grapes used in wine), cheap bacon is everywhere, including milkshakes, and the top two best-selling beers in the world are from China (and I can tell you they are great, if you like 2% beer that come in 650 ml bottles).