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Hiking While Canada's Household Debt is Exploding!

Message from Tom & Nick

Last weekend, we were up in the Blue Mountain area and hit a few trails.

There's something about getting out of the city that helps clear the mind and offers the opportunity for some reflection.

What am I doing with my life?

Can I continue to enjoy the moment while building/planning for the future?

How much longer do I have on this planet?

Am I nurturing my most important relationships?

What is important? What isn't?

Living life on my own terms is massively important to me.

At some point I realized that in order to do the things I wanted to do I would need to figure out the money game.

This idea of school -> debt -> 9-5 job -> invest in RRSPs -> take 2 weeks vacation -> not have time for my health -> hope for good retirement seemed like a very crappy life to me.

I wanted freedom. I still want freedom.

Heck, in my own way, I'll fight for personal freedom.

The freedom to choose what to do with my time and who to spend it with.

The ability to say "no" to shit I don't want to do.

Today, both Nick and I have a lot of freedom. We're so grateful for how things have worked out to this point.

We're enjoying the moment.

But it doesn't mean we're not preparing and planning for the future.

Here's what we're planning for in the financial world next.

Let's start with this headline from earlier this week...

Canadians are loading up with debt.

Unfortunately for most, it's not good debt. It's bad debt. It's debt used to pay the rent, pay the mortgage, to buy random "stuff".

Canada as a country is loading up on debt too. We're over 100% of gross debt to GDP depending on who you listen to.

The U.S. is a lot more forthcoming with their debt issues.

Look carefully at this chart of their debt situation...

It's small so I'm going to call it out.

This is important to understanding how to live life on your own terms going forward.

In 2008, the U.S. had a total federal debt of $8 Trillion.

So from 1776 to 2008 they accumulated $8 Trillion in debt.

Then from 2008 to 2020, in twelve short years, they added $16 Trillion for a total of $24 Trillion.

So a couple hundred years to accumulate $8 Trillion...

...then in just over 10 years they TRIPLED it. LOL!

Tripled.

In every ten year cycle I've marked above, the trend of debt growth gets higher and faster.

Remember, the U.S. dollar is the global reserve currency.

What they do definitely impacts Canada.

Just think...what happened to the price of groceries here in Canada during this time?

What happened to the price of properties during this time in Ontario (aided by the insane supply/demand fundamentals)?

What has happened to rents?

If this trend continues, does this mean the U.S. is going to have over $70 Trillion in debt ten years from now?

$70 Trillion?!

What will the price of burgers, steaks, hot dogs, rent, houses etc, etc, look like then?

Are you ready for that world?

How are you going to retire in that world?

Will you be able to live life on your terms in that scenario?

A few weeks back I tweeted this out to our Bank of Canada...

Wild times.

This is why we are screaming from the rooftops for anyone out there that they should try and acquire/buy/own as many good assets as they possibly can right now.

Do not wait.

We are in the middle of very volatile times.

And listen, sometimes you do have to sell assets too...we get it.

Recently, we've met several investors who own multiple properties.

Some with millions in equity in them but because of the interest rates right now they have little, or even negative, cash flow.

Owning income property is a business. You must mitigate risk.

So we believe it's 100% OK to sell assets to free up some liquidity.

Real estate is a game of survival, you must adjust.

Hold what you can, sell some if you need to.

But overall, you're going to be better off, in our humble opinion, by owning good assets over the next few years.

In a world where our money is literally debt.

Let's repeat that...all of the cash in our pockets has come into existence as a form of debt.

All of it.

If you reverse it all back to its origin...any money that you have, at one point, entered this world as debt.

This means it all has interest due on it.

So as Canadians' personal debt rises, as the country of Canada's federal debt rises and as the U.S.'s debt rises...we actually need more and more debt to pay the interest on the existing debt.

It's madness.

If we don't get larger quantities of debt, more currency devaluation, more inflation...the system dies.

So when we see headlines of "higher debt", we're never surprised.

This is how the current system works. This is by design.

If we don't get more debt the whole thing falls apart.

Debt in this world is, unfortunately, not optional.

It's by design.

Although we're in a period of high rates now, we believe that the future holds a lot more of "prices going up as currency values go down".

Why do we always harp on about this stuff?

Because if you don't understand the money game, it's very difficult to live life on your terms.

The ability to have time freedom and personal freedom is highly correlated to our understanding of economics.

I just spoke to a university student who is piling on tens of thousands of dollars in debt in hopes of getting a good job.

Why are we doing this to the next generations?

Why are we letting them go into debt for education that can largely be made completely free?

It makes no sense.

There's this great quote from the book Bitcoin is Venice by Allen Farrington and Sacha Meyers:

"Those who do not own hard assets are increasingly tending to drown in debt from which they will realistically never escape, unable to save except by speculation."

How are we planning for the next ten years or so?

We're sticking with our 3 bucket strategy:

🪣 Bucket #1: Rental properties (great fiat dollar machines) and our own businesses.

🪣 Bucket #2: Bitcoin (the most scarce asset we've ever come across that is also an emerging global financial pricing system). We still own gold.

🪣 Bucket #3: Cash (for emergencies and deflationary periods like right now!)

So much of what is giving us the freedom we have today, we believe, will continue to give us freedom over the next decade.

Let's see if we're right, time will tell.

If it's time for you to jump into the world of income real estate then we've got something for you.

Next week, we're doing our introductory 90-minute investment property class.

This is where we cover all of the different strategies we've used across Ontario with thousands of investors on hundreds of millions of dollars worth of real estate. Multiple billions actually.

It's next Tuesday May 30, 2023.

You can grab yourself a spot at the class here.

We also share more details of our personal stories and stick around afterwards to answer any questions you may have. It's an online class.

In the meantime, we'll hit the hiking trails, drink espresso and go to Canada's Wonderland, LOL.

Nick is there right now actually with the family. It was his birthday this week too.

Happy Birthday, Nicholas Alexander Karadza.

My little brother is now 45. Jeez, time is flying!

Enjoy the sunshine everyone, and live life on your terms!

Tom & Nick

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