Threesome

There has been much debate over the years about dual income households. Many will say that you should be able to raise a family on 1 income. I won’t weigh in on that topic. But, over all the debate on this topic in the last decade – we have missed out on 1 massive detail: We didn’t have just 2 income households. 

Ever since the 2008 financial collapse, and the lowering of interest rates, we have really, in many cases had 3 income households. There was a mom, a dad, and then a house. The sad part is that the house generally brought in more than the other 2 income earners – in many cases combined.

What has really changed in the last 18 months in that the house stopped bringing in the 3rd income. Sure, interest rates went up, and things got more expensive. I won’t argue that point. However, we ability to treat your house as an ATM, and refinance annually to extract equity almost came to a standstill. A lot of Canadian families lost that 3rd income from home equity at the same time the cost of living was shooting up.

The other reality about to hit many households is that the income that Mr. House brought in was A) after tax income, and B) that income did not claw back any government benefits or programs. If you refinanced to pull 50K out of your house, then you would need to earn an income in Canada, Province dependant of around $75,000.00 to $80,000.00. Since that amount is above the Canadian average income – good luck. The other thing that Mr. Home’s equity did was allow you to keep your household income level down for government benefit calculation purposes. Now, if you go out and attempt to earn that income with an extra job, you may just find that you are swimming upstream as for every dollar you take in in additional income, things like child tax, GST/HST, and a litany of other government benefits get clawed back.

Sometimes it isn’t what it is, but rather what it represents. A lot of Canadian families stopped having threesomes……on income anyways, and it is now starting to really show up. By some calculations 50% of the net income to a household up and disappeared in 18 months. That is going to have a profound impact on lifestyles, and how things look going forward.