Maternity leave impacting ability to pay mortgage...

(only in hosing-mad Canada)

So, for the third time in as many weeks I’ve met with someone who said that their maternity leave - or that of their spouse - is severely impacting their ability to pay their mortgage. (Refresher: on may leave, often incomes are reduced substantially depending on a few factors.)

I mean, there are always things that can have a major and negative impact on one’s ability to pay their mortgage. Job loss, marital breakup, illness. Those are the big 3 we see.

But surely starting a family is a matter of proactive intention? Yeah, I get that there are babies who are ‘surprises’ but none of these cases were.

OK, a few thoughts on this.

The perfect economic storm has had great impacts on Canadian households – a pandemic & accompanying shutdown; generational inflation; a housing bubble making all housing far more expensive

All of these have contributed to excessive regular household expenses, many of which are hard to avoid

Some of the accompanying job losses have had knock-on effects from which many households still haven’t recovered (using debt to cover life expenses)

And now their household incomes are taking a beating due to one family member off on mat leave, however temporarily

Many people entered the housing market due to FOMO; many of them had really no business doing so as they couldn’t afford the homes they bought; yet buy them they did – somehow – co-signors, or with many qualifications being very suspect (mortgage-to-income ratios that would make your eyes water). ANYTHING to not miss out. But that kind of thinking can end up backfiring.

In many cases, things would’ve been ok had everything gone ok. But life isn’t like that, very often. The tipping points from doing ok into insolvency (whether legal insolvency or just technical insolvency) are often fine margins. Some of those factors are done by choice, even if never really intentionally.

In matters of personal finance, avoidance is a huge protection, but it takes proactive decision-making and good advice. And there seems to be less and less good advice either on the internet or in terms of peer pressure.

Avoidability.