Sep 30, 2024
The Great Canadian Housing Crisis has claimed another victim. Paymon, from Vancouver, British Columbia, called into The Ramsey Show to explain that his family spent more money every month than they earned after taxes.
“I’m drowning, and I really need help,” he told co-hosts George Kamel and John Delony.
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The family’s story highlights how housing can become a trap rather than a shelter for many people worldwide.
Trapped by housing costs
Paymon revealed that the family was paying CA$7,200 (approximately $5,330) monthly on the mortgage for their CA$1.4 million ($1.04 million) home. Altogether, the family’s monthly fixed costs were CA$12,500 ($9,250), nearly on par with the couple’s combined take-home pay. However, his wife is now on maternity leave, which has reduced the family’s income to just CA$8,500 ($6,300).
“I can see why you’re drowning, my friend,” Kamel tells him.
This story is typical across North America. Thirty-six percent of American consumers earning over $200,000 a year said they were living paycheck-to-paycheck, according to a study from PYMNTS. Higher interest rates and the rising cost of living have taken a toll on the finances of even those who could be considered “high income earners.”
Canada’s notoriously frothy housing market worsens Paymon’s situation. As of July 2024, the average single-family home in Vancouver sold for C$2 million (US$1.48 million), according to Nesto. The average Vancouver home is roughly 14 times higher than the median after-tax household income, according to a report from RATESDOTCA.
By comparison, the median American home sold for just 5.8 times the median household income in 2022, according to Visual Capitalist’s analysis of Federal Reserve data.
Like many others, Paymon's family has turned to “life hacks” to cope with elevated costs and make ends meet.
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Relying on ‘life hacks’
Paymon has found creative solutions for his financial struggles. He rents out part of the family home to help with the mortgage. He takes tax write-offs on his car for business expenses and wants his wife to start a new company to gain write-offs on other expenses.
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Kamel describes these as “life hacks” that are ultimately futile. “No one built wealth through tax savings,” he tells him.
Nonetheless, financial hacks like this have become popular with young Americans. According to the Policygenius 2024 Financial Planning Survey, over 60% of millennial and Gen Z Americans have used “money hacks” like cash stuffing, day trading stocks, and maximizing credit card points.
Meanwhile, a survey by Zillow found that 55% of millennials and 51% of Gen Z were keen on “house hacking” — renting out a portion of their primary residence to meet housing expenses.
However, Kamel and Delony point out that all these hacks have risks, for instance losing the tenant. Instead of relying on creative maneuvers, they encourage Paymon to sell the house and rent a cheaper unit.
They failed to mention another solution — moving out of Vancouver. One in three British Columbians are considering leaving the province, primarily because of housing costs, according to an Angus Reid poll. In fact, a study from earlier this year by Demographia ranked Vancouver as “impossibly unaffordable” to live in.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
