Managing Debt

The advancement we have made as a society and as a nation, have given rise to a phenomenon known as ” Consumerism”. This concept can be described as an insatiable appetite for the latest and greatest material goods that the world can produce.

This has also given rise to a huge problem called ” Consumer Debt”. The unfortunate part is that many people are paying for today’s pleasures with tomorrow’s earnings even though we live in a world of uncertainty.

Managing and controlling this growing problem of unsecured debt may be one of the most significant breakthroughs, far surpassing many of the changes that technology has delivered. Overcoming this will come with a heavy price and sacrifice for the brave few who will face it head-on.

Budgeting

In simple terms, budgeting means living within the limits of your income. Unfortunately, most people spend more than they earn and are forced to use unsecured credit such as credit cards or credit lines, to make up the difference, when they overspend. Others may leverage equity they have built up in their home to help balance their budget, but again, this is a temporary fix for a spending problem that has yet to be corrected.

When all of these types of measures are exhausted, situations quickly become critical and unfortunately can create stressful environments that call for drastic changes. It should be noted that financial stress in the #1 cause of marriage breakup in North America.

Saving for the Future

Saving for a rainy day is a concept that we are taught by our parents at a very early age. As an adult, we may describe it as “delayed gratification”. The act of putting money aside to spend in the future is no different than food harvest in preparation for winter. Both of these examples are illustrations of taking advantage of surplus and forecasting a need some point in the future.

A good rule of thumb is that we should pay ourselves first and that we should be able to save 10% of our earnings on an annual basis. The type of account that you use to accumulate the savings can vary based upon your personal situation. The best available solution today in Canada is the Tax-Free Savings Account.

Mortgage Management

For better or for worse, most Canadians still rely on their traditional banks to create homeownership solutions. Fortunately, the ever increasing presence of Mortgage Brokers has forced these institutions to relinquish some of their huge profits back to the consumer.

Mortgage Brokers ensure a level playing field for informed consumers by forcing banks to compete for a business that they took for granted for many years. Unfortunately, clients are slow to change institutions and many settle for posted rates, especially at renewal, which is usually 1-2% higher than the most competitive rates available through a Mortgage Broker.

Last Resorts

When all else fails we must make changes to improve our situation. Some of these changes will be painful initially yet will render permanent solutions to temporary problems. Sometimes it may mean downsizing our place of residence or reducing the number of vehicles per household. When all cost-cutting solutions are exhausted, we may need to look at entering Creditor Protection or Consumer Proposal and as a last resort, filing for Bankruptcy.

The important thing to remember is, if and when a situation like this presents itself, material items can always be replaced. We must place an emphasis on items such as our health, our family and our friends. We must also seek out good advice from people that we can trust. Isolation from others is the last thing we need during any type of struggle.

Please click here to contact us so that we may help you see through to a brighter tomorrow.