Almost Rich: an examination of the true cost of city living and why rich is never rich enough

Almost Rich: an examination of the true cost of city living and why rich is never rich enough

An income of $196,000 places you in the country’s top one per cent of earners. But does it make you wealthy?



The Western world has become chastened and frugal. The reasons are many: corporations crouched in fear of another, much worse recession; penniless governments a-toppling; and Europe, for the foreseeable future, mired in a debt debacle. But you wouldn’t know it from life in Toronto, where a luxury condo opens its doors every week and we queue for hunks of exotic chocolate at the new Maple Leaf Gardens Loblaws. We’re bouncing along in a prosperity bubble.

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Read profiles of five Toronto households and how they spend their money »



The exact meaning of prosperous, of course, depends entirely on one’s perspective. Last fall’s Occupy protesters were keen to demonize the so-called One Per Cent—the monocled, yacht-owning multi-millionaires who are now greed personified. However, the threshold for the top one per cent of income earners is much lower than you’d expect: $196,000, in the latest Statistics Canada numbers. That’s no small amount of money, but hardly the means for a life of leisure. In an increasingly pricy city like Toronto, where we pay a premium for everything from milk to car insurance, $196,000 can seem positively middle-class.

Break it down, and it translates to roughly $10,400 a month, after taxes. For many Torontonians, that $10,400 disappears fast. Thousands go to the mortgage. For those with young kids, daycare can cost upwards of $1,500 a month. There are the car and RSP payments, wardrobe refreshes, utility bills and something to set aside for when the furnace inevitably conks out. Plus the cost of the sushi, pad Thai and butter chicken that we order in three nights a week—because we’re all too tired to cook by the time we get home from work.

Then there’s the stuff that fills our houses—the calibre of which is the subject of intense, unspoken competition among my peers and neighbours. During my entire childhood, spent in a comfortable lower-upper-middle-class neighbourhood of Montreal, I am quite sure that my mother did not waste a single moment worrying about replacing her laminate kitchen counters with granite or marble. There was no such thing as a $1,000 Bugaboo stroller, or anything like it. You could host a casual weekend party without spending a fortune on artisanal cheeses. Living the good life simply wasn’t the full-time, across-the-retail-spectrum pursuit it has now become.

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HOW THEY SPEND IT



The Lewis-Koonings

Household income:

$200,000



The Norrises

Household income:

$160,000



Craig Haynes

Household income:

$165,000



The Jibodus

Household income:

$166,000



The Damianis

Household income:

$200,000

All that spending has increased our debt-to-income ratio, which reached a record high of 150 per cent in mid-2011. According to data from Environics Analytics, the average GTA household is now carrying almost $40,000 in debt on top of a mortgage. And the city’s fanciest neighbourhoods are the ones where average household debt levels are among the highest: Lawrence Park, the Kingsway, Leaside, Rosedale, the Bridle Path. Much of the debt accumulation can be explained with a single figure: 5.5. That’s the ratio of the average single-family Toronto home price to the income of its occupants. The historical average for this crucial quotient is just 3.5. Relative to income, in other words, homes are now about 65 per cent more expensive than they once were: the Moore Park gut-job semi is selling for $1.5 million instead of $900,000. The result of this unreasonable amount of debt is that even those who earn $196,000 live hand to mouth, hoping that next week’s payday will cover this week’s overspending.

As house prices steadily increase, the city becomes more and more the exclusive domain of the One Per Cent. Data published in 2010 by David Hulchanski, the associate director of the University of Toronto Cities Centre, shows that since the 1970s, wealthy Torontonians have become more densely clustered in discrete, high-profile enclaves featuring a predominance of older, more valuable, resident-owned single-family homes.

The era of the “mixed” neighbourhood, in which people of different income levels and social classes lived happily side by side in an architectural hodgepodge, is falling away. (In 1970, Hulchanski found, 66 per cent of the city was composed of “middle-income” tracts. In 2005, that figure was down to 29 per cent.) Toronto is becoming more like London, Paris, Vienna and other European capitals, where only the richest families can afford to live in the city centres and the rest of the population commutes from the inner suburbs.

My own Toronto neighbourhood of Playter Estates, northeast of Broadview and Danforth, provides a typical example. When my wife and I bought into the area in 2002, our neighbours were retired schoolteachers, construction workers and Greek restaurateurs. In the decade since, most of those people have died or cashed out, and they’ve been replaced by a homogenous Pleasantville of bright, successful 30- and 40-something white-collar professionals. On my block, Chevys and Toyotas have given way to BMWs and Saabs. Fancy new foodie shops save us the trip to Summerhill Market. Out with Dollarama, in with the Riverdale Mac store and about a thousand espresso bars.

Who is wealthy enough to become my neighbour? The lucky ones have family money, perhaps receiving their down payment from retired boomer parents. (“PHD,” Papa has dough, is what my real estate agent used to whisper happily when she’d spot a young couple doing an open-house walk-through with well-off parents in tow.) Or they’re the rare individuals who can support a one-income household with the fruits of hedge fund management, investment banking or real estate development. But for most Torontonians, urban life is unaffordable unless both partners are bringing in serious money.

So what does the prosperous Torontonian look like? Here are five households from across the city, each with an income hovering around the low end of rich. They’re all comfortable, but no one is living large.

HOW THEY SPEND IT »



The Lewis-Koonings

Household income:

$200,000



The Norrises

Household income:

$160,000



Craig Haynes

Household income:

$165,000



The Jibodus

Household income:

$166,000



The Damianis

Household income:

$200,000

The Lewis-Koonings

Household income: $200,000

Suzanne Lewis, a 41-year-old real estate agent at Keller Williams, and Thomas Koonings, the 45-year-old owner of the design-build company 4th Wall, bought their semi in Riverdale in 2007 for $419,000. Since then, they’ve had two kids: three-year-old Evie and 18-month-old Vaughan. At the end of the month, after all the bills are paid, they usually find they have nothing left. “We have a weakness for designer furniture,” says Suzanne. “In 2010, we spent $5,000 on a table and Eames chairs for our dining room.”

HOW THEY SPEND IT Monthly expenses | Mortgage payment for a three-bedroom house: $2,500. Utilities: $500. Gas for their Jeep Commander and Ford F-150 truck: $440. (“The Jeep was a mistake. We shouldn’t have bought it; we could have used the extra money for travel.”) Street parking and two parking permits: $200. Home and car insurance: $300. Cleaning lady: $160. Groceries: $1,000. (“We like Whole Foods and try to eat organic as much as we can. We love the new Leslieville store Hooked for fish. For everything else, Loblaws.”) Baby supplies and toiletries at drugstores: $75. Wine: $400–$500. (“We try to get the better $11 bottles, but they go fast.”) Eating out: $400. Home phone, cable, Internet and two cellphones: $280. Dry cleaning: $50. Haircuts, nails and waxing: $170. Gifts: $200. (“You have kids, you spend money on toys for other kids. That’s how it goes.”) Daycare for both kids: $2,500. Annual expenses | Property tax: $3,800. Upgrades and maintenance on their house: $5,000. Clothes: $3,000. (“When you have young kids you really cut back on stuff for yourself.”) RRSPs and investments: $0. (“Ha! We live month to month. When we have money left over, we go out.”) Savings accounts for the kids: $1,500. (“We put money in on birthdays and special occasions.”) Hockey league fees for Thomas: $500. Gym classes for Suzanne: $900. Swimming and music lessons for the kids: $900.

The Norrises

Household income: $160,000

Doug and Shirley Norris, who are 81 and 80 years old respectively, sold their Montreal house in 1982 and moved into a $230,000 Harbourfront condo near Bay Street. When Doug retired in 1994, he sold his shares in his engineering supply company, Norman Wade, and since then the couple has lived off the proceeds—equities and securities—of their investments. “We read the business papers every morning,” says Shirley, “and Doug spends up to an hour every day on the phone with his broker.”

HOW THEY SPEND IT Monthly expenses | Condo fees: $900. Gas for their Mercedes E320: $150. (“We buy a new Mercedes every three years; it’s our big indulgence,” says Doug. “We always pay cash. This one was $80,000.”) Groceries: $600. (“We mainly shop at Longos and Metro,” says Shirley. “Doug’s a vegetarian and eats like a rabbit: he can go through a lot of broccoli.”) Costco: $300. (“We get everything there. Prescriptions. Fruit. Laundry soap. They have great trout, too.”) Eating out: $200. (“We like Swiss Chalet and Great Chefs on Eight in The Bay.”) Rogers home phone and Internet service: $70. Skype fees: $2.50. (“We use it for long-distance calls to the kids.”) Bathing suits, T-shirts, socks and tennis shoes for the gym: $100. Gym fees at the Mayfair Club: $125. (“I’m there every morning at 7:30,” says Doug.) Newspapers, books and magazines: $70. Annual expenses | Gifts: $1,000. (“We have two grandkids, and we give them presents for birthdays, Christmas, special occasions.”) Insurance for car and condo: $2,400. Slots at Casino Rama and Casino Niagara: $100. (“I take $50 and go with friends in our building,” says Shirley.) Four-month trip to Myrtle Beach: $15,000. A trip to visit their son Brock in Denver: $2,500. Travel insurance: $8,000. (“At our age? And with pre-existing medical conditions? It’s a huge expense. But we don’t want to be in the States and not be covered.”)

Craig Haynes

Household income: $165,000

Haynes, a 37-year-old national sales manager at TD Bank, has lived since 2009 in a rented one-bedroom on the 22nd floor of a condo tower at Yonge and Eglinton. He tries to stay debt-free, but occasionally he splurges on travel or a big-ticket toy, like the $7,500 Royal Enfield motorcycle he bought last year. “People think I make a lot of money,” he says, “but I lose so much of it in tax.”

HOW HE SPENDS IT Monthly expenses | Rent: $1,750. Mortgage and property taxes on an Ottawa home he co-owns with his ex: $1,180. Groceries and eating out: $1,400. (“I often order pasta at Grazie or, if I’m in a celebratory mood, North 44°. I buy better cheese and other exotic ingredients at Pusateri’s, and because I cook at home a lot I pack leftovers for lunch.”) Wine: $800. (“I’ll spend anywhere from $15 on a Rhône to $100 on an Amarone, and I open a bottle almost every night. I’m one course away from sommelier certification, and they practically know my name at the Summerhill LCBO. “) Rogers Internet: $40. Clothes at Harry Rosen and shoes from online collectible sneaker stores: $1,000. (“My big buy last year was a couple of Zegna suits for $1,500 each.”) Live music: $200. (“I go to all kinds of concerts. Last year, I saw The Weeknd at Lee’s Palace as well as Gordon Lightfoot at Massey Hall.”) Annual expenses | Lease, maintenance and insurance for a 2010 Honda Civic: $7,000. (“I’m at an age now that I don’t care as much about what kind of car I drive.”) Travel: $10,000. (“I go to Vegas three or four times a year, though not because I have a gambling problem—my perfect day in Vegas is spent poking around the city’s downtown nooks and dive bars, miles from the tourist zoo along the strip. And I’m a regular at the annual Coachella music festival in Southern California.”) RRSP contributions: $20,000.

The Jibodus

Household income: $166,000

In their native Nigeria, Margaret Jibodu, who is 49 years old, ran a printing press, and her 52-year-old husband, Oladapo, was an architect. The couple sent their sons, Emmanuel and Iyiope (pictured), to Canada for university, and joined them in Toronto in 2009. Margaret opened HD Printing Press in Vaughan, and her husband manages residential rental properties. “Life here is so much easier,” Margaret says. “We don’t need to pay for chauffeurs or security or health care; in Nigeria, you must pay for everything.”

HOW THEY SPEND IT Monthly expenses | Mortgage on their four-bedroom house, purchased in 2010: $2,500. Utilities: $300. Rogers for home phone, cable, Internet and two cellphones: $350. Gas for their Chevy Equinox and Chevy Cobalt: $300. Groceries at Loblaws, Metro, Fortino’s and the Oriental Food Mart on Finch West: $1,600. (“I like to cook dishes that I used to make in Nigeria,” Margaret says. “I often make spinach and okra soup and moin-moin, which is black-eyed beans with peppers.”) Eating out: $100. (“We sometimes go to Mandarin or Mr. Greek to celebrate.”) Lunches and coffees: $50. (“I pack a lunch basket for the family almost every day,” Margaret says. “For our health, we try to avoid eating sugary snacks and drinking coffee. I do occasionally like a Timbit, however.”) White wine, usually consumed with Sunday dinner: $80. Books and magazines: $100. Hair salon: $400. Grooming products for Emmanuel and Iyiope: $75. Annual expenses | Clothing: $3,000. (“I don’t buy as many new outfits as I used to, since I have several nice suits I haven’t worn more than once,” says Margaret. “My new weakness is shoes and bags. I have a red Coach patent leather bag I love that I got for only $379.”) Furniture and furnishings, mostly from The Brick and HomeSense: $1,000. Vacations: $0. (“We have not been on vacation since coming to Canada. It has been work-work-work.”)

The Damianis

Household income: $200,000

Anthony and Antonella Damiani, who are 41 and 39, moved from Etobicoke to a bigger house in Mississauga in 2001. They now have two kids—10-year-old Angelina and eight-year-old Marcus.Anthony, who began working in the HVAC industry as a teen, runs his own company, Furnace King, which has clients across the GTA. Antonella is a manager at Agility Logistics, a freight company. Although the kids’ expenses add up, the Damianis won’t sacrifice their big annual family vacation.

HOW THEY SPEND IT Monthly expenses | Mortgage on their three-bedroom home: $2,000. Mortgage on their Georgian Bay cottage: $1,200. Utilities: $430. Gas for their Chevy Avalanche and BMW 328xi: $300. Groceries at Highland Farms: $1,200. Eating out, mostly at Swiss Chalet and Jack Astor’s: $840. Rogers for home phone, cable and Internet: $200. Clothes: $1,000. (“I drive across the border to Buffalo all the time on business,” says Antonella. “I shop a lot when I’m over there, mostly at stores like Guess.”) Vitamins, creams and lotions at Shoppers: $400. Books and magazines: $100. (“I get Men’s Health, new business books, and a novel now and then,” says Anthony.) Gifts: $250. (“The kids are constantly going to birthday parties. And there’s always a christening or confirmation to attend.”) Annual expenses | Insurance for cars, house and cottage: $3,640. Kids’ RESPs: $4,000. RRSPs and blue-chip stocks: $20,000. Donations to Princess Margaret Hospital, SickKids and women’s shelters: $1,500. Vacations: $7,000. (“In February, we take the kids to an all-inclusive in the Dominican or Mexico,” Anthony says. “Sometimes my wife and I will go to the Bahamas for four days in the winter and leave the kids at home with their grandparents.”) Season tickets to the Leafs for Anthony: $2,000. Hockey league fees, tournament fees and new equipment for Marcus: $1,500. Dance classes for Angelina: $700.

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