Home ownership and the elites grand plan-Divide and Conquer

Here is a little food for thought-

The main stream media has bread North Americans to be 'individuals'. It's all about you. Screw everyone else. Look after #1. Leave the nest as soon as possible, go out and make your own life. In Canada it's most people's dream to own their own home (I heard someone call it the Canadian cancer the other day:)). It's a measure of success here. Over 70% of households in Canada own their home (or should I say make payments to the banks?). That is a large number.

Now think about this- The average home in Canada is $350 000 and in most parts that buys you nothing. Let's use the $400 000 figure for a better look at this. The average family has 2 kids. If each of those kids leaves the house and gets into real estate for themselves we now have 3 different mortgages at $400 000. Although interest rates are at a record low the Bank of Canada just announced they are starting to raise rates. Let's use the 5% rate for a more accurate look at the cost of buying a home through the bank. Borrowing $400 000 at 5% with an amortization period of 25 years ends up costing the borrower $700 000. Now if we times that by three members of the family we get $2 100 000 with just under $1 000 000 of that going to the bankers. And that is with record low interest rates. In the late 80's Canadian interest rates soared over 20%. That changes things in a hurry. If we average rates at 10% the three mortgages end up costing the family over $2 000 000 in interest that they will never see again.

The other thing that convincing each member of the family to get their own mortgage does is it spreads the family very thin and leaves them at high risk of default. Imagine making $2000 a month payments for ten years, then the banks raise rates to 10% or even 20% interest? Your monthly payment now shoots to almost $7000/Month. Not many people can hold on to their mortgages at these kind of rates and that's exactly what they want. In the 80's people were selling their homes they had been making payment on for years for $1 just to avoid default. In this kind of a scenario everyone is trying to sell and house prices plummet. Now your $400 000 home might not even sell for $200 000, and even if it does you still owe the bankers $200 000 and you have nothing to show for it.

In a lot of other cultures (Chinese, Japanese, and Indian to name a few) three generations all live in one household and pool all their money into paying off a single home ASAP. If we look at that, we have a $750 000 home (larger to accommodate more people) being paid of 2-3 times as fast. Also reducing the risk of being exposed to higher rates over the course of the mortgage. Lets say the family of three manages to contribute $2000/month each for only 15 years instead of 25. The interest paid to the bankers over the amortization period is now reduced to $300 000.

It's now wonder they have convinced us all to be 'Individuals' and focus mostly on ourselves. They make a hell of a lot more money. And most likely get to buy back the homes we thought we 'Owned' when they jack rates. If you don't think they would do that do a little research and see what happened in the late 80's. They've done it before and will do it again. Canadian debt levels are at an all time high. The latest figures from stats Canada shows consumer debt to earning ratio at an all time high of 170%. That means every Canadian owes $1.70 for every $1 of disposable income they have. That's much worse then the US was before the big crash of '08.

What does your debt look like? You may want to consider looking a little closer at your finances and preparing for the worst crash we have ever seen that is about to hit in the next couple of years. The time to take action is now, not once it crashes. I will make another post outlining why I believe we have the biggest financial crash we have ever seen about to hit North America.

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