December 2, 2022

LACKIE: Bank cards paved the way for financial disconnection

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I have a theory that the generational shift to a troubling and problematic level of comfort with debt coincides almost entirely with the invention of the bank card.

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No really, listen to me.

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Xennials like me—like those of us born at the dawn of Gen X and Millennials—probably all have fleeting memories of waiting with our parents queuing at the bank, their stack of bills and their bankbook in hand. It’s actually crazy how vividly I remember going to deposit the $10 check my grandma would send on Christmas.

Once in a while my dad would throw the coin jar off his dresser and ask us to help him roll the coins. We would literally see dollars forming in our hands. Every penny added up. Quarter rolls meant a lot of money.

Somewhere early in high school, I got my first debit card and my mom started automatically depositing my allowance. The money would magically appear only to disappear again. I would bet that if you were to ask any of my peers about which ATMs allowed withdrawals in $5 increments, they would all say “Royal Bank” without hesitation.

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I signed up for my own credit card on my first day of college, lured, I remember, by the purple cell phone they gave me just to fill out their forms. Miraculously, I didn’t destroy my credit.

By the time I got my first real job as a big girl, electronic pay was a thing and the money was reappearing. My mom had me set up an automatic dropper so that on payday the money would go straight into the RRSP account, she insisted I start.

I couldn’t tell you when I sent my first wire transfer, but I’m sure by then money had become quite abstract. Earning was a concept, saving was a concept, spending was a concept. All with real-world implications, of course, but transactions had become so easy that all you had to do was swipe. Away from the production of saving to buy something important and putting back hard-earned money.

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And now here we are. Inundated with articles exploring young Canadians’ addiction to cheap debt and questionable priorities, slandering millennials for spending on avocado toast and $7 lattes instead of retirement.

Because of course baby boomers had an entirely different philosophy. They bought reasonable starter homes that they could actually afford in order to pay off their mortgage as soon as possible. They probably had Formica countertops and basement woodwork and groaning doorbells. They saved to renovate. Lines of credit were no such thing.

So what has changed? Is it fair that my cohort and those that followed arrived on this earth a generation of fiery brats? Or is it possible that alongside our culture’s descent into advanced capitalism, glaring unaffordability has set in and the game has changed. For most of us, there are no promising neighborhoods left. A first home in a city like Toronto will cost you $1 million.

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Living within your means while moving the ball forward like our parents did is simply impossible for most of us. They were blessed with vastly superior opportunities. So instead, somewhere along the way we have learned to disregard our path, many are now comfortable with objectively crippling debt because we have simply been conditioned to be.

Mortgages are now less loans than payments, especially now that rising interest rates have added decades to static payment amortization periods. And I would say that the majority of young, big-city buyers who buy these million-dollar mortgages do so with the full acceptance that they will pay it off for life.

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Because what is the alternative? We have been inculturated to believe that all it takes to have a decent life is to work hard and be a good person. And having your own home is central to this belief system.

And so we have a disconnect. A detachment that has perfectly coincided with a rise in consumerism fueled by online marketing machines, a rapidly rising cost of living coupled with stagnating wages, and a banking system that has taught us to believe they are our side.

But as we begin to really feel the effects of rapidly rising interest rates, the consequences of this detachment will be visceral. And I think a lot of my peers don’t even see it coming.

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