This will likely be the most important article that I have written to date. I believe that if we polled most people in Canada they would agree that slavery of any form is repugnant. Yet the vast majority of Canadians willingly adorn the shackles of debt slavery on a daily basis. In the second quarter of 2012, Statistics Canada reported that Canada’s national debt-to-income ratio had risen to a rate of 163.4%. This statistic on its own does not alarm me because I think this is a poor calculator as it measures total personal debt (including mortgages) and charts it against annual after tax income. What does alarm me however is the trend of this statistic as seen in the graph below.

Photo: Contributed

As we can see from this graph, Canadian household debt-to-income has risen steadily from just below 90% in 1990 to present levels of 163.4%. For the past twelve years, Canadian households have increasingly signed away their freedom for deeper levels of debt enslavement. Is “Slavery” too strong of a word to describe this condition?

Well let’s see what Webster’s Dictionary has to say on the matter. “Slavery: …a civil relationship whereby one person has absolute power over another and controls his life, liberty and fortune”. I think this sums up debt slavery quite succinctly. When you are in debt and have to service that debt, you are not in control of what job you perform, how long you have to work, how many jobs you have to work, the quality of relationships in your life as work trumps all, your physical and mental health…the list goes on. With today’s low interest rates and low barriers to entry, debt is easier to access than ever before. The rub is it’s harder than hell to get out of.

So is this just the result of greedy people wanting the newest big screen TV on which to watch the latest crap reality show? Well…partially. We have become a “Must Have” society. The most recent gizmo to prevent us from actually living or thinking for ourselves is presumed to be essential in today’s society. But I digress. This is also due to governments and banks trying to “stimulate” the economy by making it easier to access credit. Yes, brilliant idea. Make poorly run big business more profitable at the expense of the freedom of the citizens. The basic essentials of life are comparably more expense than in previous years. And of course, this is also the result of depreciating purchasing power of currencies all over the world due to governments and banks printing money out of thin air.

The point of this article is that Debt is deadly serious. When the average household borrows $400,000 to purchase a house, one must realize that to completely pay off this debt with interest at 4% over a 25 year term, $633,405 will have to be paid back to the bank. Keep in mind that 4% is an historically low rate. This also does not include the possibility of a rate increase over the 25 year term. If we go back to more traditional rates of mortgages around 8%, the total sum now required to pay back $400,000 is now $915,900. Have I got your attention now?

So what am I saying? Never buy a house? No, of course not. I am just trying to advise people of the seriousness of debt and the true size of the iceberg that lies below the surface of the water.