Financial Crisis

Canadians have begun to react to fears about record debt levels with household debt rising at its lowest rate in 15 years in November. But while growth has slowed significantly, it is yet to reverse the rising trend, meaning the record-breaking run of mounting debt continues.

The good news is that Canadians are starting to take better care of their finances. Benjamin Tal, deputy chief economist at CIBC, said household credit, once adjusted for inflation, rose by only 0.27 per cent in November. Meanwhile, data for the third quarter of last year showed that household credit rose at its slowest pace since 2001. The number of unpaid credit card bills has also stabilized at below one per cent.

Despite the improvement, Mr. Tal says there are still some concerning developments in Canada's debt situation.

Everyday readers from across the country add their thoughts to new, amazing stories. Discussions are created and debates rage on in the space below posts and we, at WalletPop want to thank and highlight the most, popular comments of the week.


Generation X

Nothing gets your blood boiling more than talk of money woes and this week was chock full of posts that touched on the much-maligned subject.

The 'lost' group aka Generation X's financial literacy -- or should I say financial illiteracy? -- piqued your interest.

This group who are well known for their care-free attitude have come a long way and finally wised up to money-saving ways, according to Investors Group.

A study conducted by the financial powerhouse found that adults between the ages of 30 and 44, are for the first time thinking about retirement and actually seeking out ways to improve their financial standing.

"Generation X is five years older (than when the previous survey was done) and there's probably a higher percentage that have married, become parents and are now dealing with parents and grandparents getting older," says expert Debbie Ammeter.

What do you think? Is the lost generation becoming more responsible or just simply growing up? Tell us what you think.

Every day readers from across the country add their thoughts to new, amazing stories. Discussions are created and debates rage on in the space below posts and we, at WalletPop want to thank and highlight the most, popular comments of the week.

Fraud, Fraud and More Fraud

Credit card fraud really scares a lot of people... including you! The perils one can face after their information and/or card is stolen are forever ingrained in our minds but, what about debit card fraud? It's just as dangerous and according to the president of the Consumers Association of Canada more common than most people think.

Reader breadanhitt was one reader surprised by how easy it is to steal debit card information.

"Great information on debit cards. This post is like an eyeopener for me because I am a very careless traveler, but from now I will try to remember the tips listed in this post, so that I can prevent my debit cards from theft."

The Bank of Canada is predicted to keep interest rates on hold when it makes its January announcement on Tuesday.

However, the experts say rates will likely rise in the coming months as the central bank attempts to prevent a crippling rise in personal debt.

According to a Reuters poll, Canada's leading interest rate strategists all expect the benchmark interest rate to remain at 1 per cent this week, allowing the economy more time to adjust to the last rate hike in September at a time when the U.S. economy -- Canada's biggest trade partner -- is still struggling to create jobs and recover from recession.

The central bank last raised the benchmark interest rate in September following quarter point rises in June and July. Prior to that, the key interest rate had sat at a record low 0.25 per cent for 13 months to ease the impact of recession on the economy and encourage the flow of money through the almost stagnant financial system.

Two of Canada's largest life insurers have significantly hiked their rates on some permanent life insurance products and more companies are set to follow suit as insurers buckle under the pressure of low interest rates, a wealth advisor says.

Insurance companies Sun Life and Manulife have increased the cost of Universal Life insurance by as much as 22%, according to an article by the Financial Post's Wealthy Boomer, Jonathan Chevreau. He quotes John Nicola, chairman and CEO of Vancouver-based Nicola Wealth Management as saying that this is the start of a trend that will see other insurers significantly hike premiums, possibly by as much as 50%.

Young Universal Life policy holders or joint-last-to-die policy holders have been hit with the largest increases.

The Canadian dollar has kicked off 2011 in a position of strength. It is above parity with the U.S. dollar and trending at historically high levels against other major currencies such as the euro and the British pound.

At the end of its first week of trade for the new year the Canadian dollar was buying about US$1.01, 78 euro cents and 65 British pence -- all stronger than average levels. But what is driving this strength in the loonie?

Canada's economic strength compared with the rest of the world has attracted a lot of private investment in Canadian denominated assets. But Avery Shenfeld, chief economist at CIBC, says there is more to the high exchange rate than meets the eye. Mr Shenfeld says central banks around the world are also very interested in Canadian dollars in a bid to diversify their assets at a time when the U.S. dollar has lost purchasing power. This additional demand for the loonie may be overheating its value and crippling the Bank of Canada's ability to raise interest rates and curb rising consumer debt levels.

Canadians may be worried about the economy, but in relative terms, things have never been so good.

This according to a National Post article written by John Ivison that quoted a survey by Pollara yesterday. The article suggested that worries about the cost of living, the national debt and retirement savings have all contributed to a more downbeat mood across the country when it comes to the economy. Yet, when compared to virtually all of its rivals, Canada is in better shape than it has ever been.

"Canada's international reputation as a destination for capital and investment is better than it has been for a generation," said Finn Poschmann, vice-president of research at the C.D. Howe Institute.

Were you too busy to visit your elderly parents last year? If you said yes, then you're lucky you don't live in China where ignoring or failing to take care of your aging parents' needs could see you end up in court or worse.

According to the Financial Post, the Chinese government may introduce a new law that will force children to mentally and physically take care of their elderly parents. If they fail to do so, parents can go to court which could result in huge fines for their offspring.

The progressive law is the first of its kind and in a country where a one-child policy still reins supreme it could provide much-needed legal protection for China's senior citizens.

Times are hard but, as they say, what doesn't kill you only makes you stronger. The Walletpop Canada team collectively learned these lessons from the recession:

1. Canadians Woke Up to Our Own Debt Nightmare.
Enough of our smug superiority. We're up to our proverbial eyeballs in red ink, and, in the last quarter of 2010, we actually surpassed Americans in household debt levels. So no more gloating over our more prudent spending habits and money management skills: we have become rabid consumers just like our neighbours to the south. How to deal?

2. Shopping Flyers Are Your Friend.
It always pays to shop around. Never leave home on a shopping trip without consulting the weekly flyers. We've made it easy by providing a list of weekly store flyers across the country (let us know if we're missing your favourites and we'll add them).

3. Only Fools Go Shopping Without Checking for Coupons.
Always google for coupons - cause you never know! . It's easy, it's online, and there's no reason not to do it (unless you lack a printer, in which case, it's probably worth getting one). People save hundreds of dollars annually using coupons, and you can too, with a little advance planning. Get tips from a super shopper and start spending more wisely.

4. Our Homes are not Piggy Banks or Retirement Funds.
You can't rely on a hot housing market to bolster your net worth: it can all come tumbling down, as it did in the US and as it had in the past here at home. Remember property values in the late 80's? Don't put all your eggs in one basket, be it stocks, real estate or gold bricks. All of these pillars of investment are worth having in your portfolio: just make sure you've spread your risk by holding a bit of each. No one knows the magic formula, perhaps because there isn't a one-size-fits-all solution when it comes to financial planning. But a wise man once said don't let any one type of investment become more than half of your total portfolio.