//mortgage finesse
Credit & debt management » by Calum Ross
As the credit system continues to evolve in Canada, consumers are getting increasingly confused with a greater variety of credit products from a greater variety of financial institutions. In fact, the average
Calum Ross
is senior vice-president and practicing mortgage agent with The Mortgage Centre. He has appeared on Canada AM, Investment Television, BNN and Citytv. He holds an MBA in finance and is an Accredited Mortgage Professional. He can be reached at 416.410.9905.
Canadian gets more correspondence from financial institutions than they do from family and friends combined (what have we come to?). To further complicate matters, institutions are granting credit to consumers at a pace never seen before. The combination of increasingly sophisticated marketing techniques to consumers coupled with more and more available credit truly becomes too much temptation for many people to bear. Consumer debt is a major issue in North America. The concept of keeping up with the Jones has destroyed both people’s financial health and their personal lives. What I am here to tell you is that you don’t need to fall into this trap! Here are some simple guidelines that will prevent you from becoming yet another consumer credit victim: 01 Control spending by knowing exactly where every dollar goes. Tracking your spending habits in detail periodically will enlighten you in ways that you never considered. While doing this on a monthly basis is not realistic, try to do this in detail for at least one month a year. Helpful tip: If you and your spouse spend $3 per day on coffee, this totals $1,095 per year. Depending on your tax bracket, this amount could represent over $2,000 in pre-tax income. Is the free coffee at your office that bad?
02 Watch your liquidity closely. Liquidity refers to your or your family’s ability to pay its short-term debt obligations. Watching what available funds you have to pay upcoming debt obligations is fundamental to avoiding credit problems. Helpful tip: Think carefully before using purchase p rograms that require no payments for a set period. If you can’t afford to pay for it now, should you buy it? 03 Develop a realistic budget and live by it always. A good budget must have specific financial goals with a clearly defined time horizon. Be sure to take into account all of your payments, including loans, utilities and dry cleaning. If you pay for it monthly, it should be allocated in your budget. You can’t be too detailed. Most financially successful people are excellent financial planners. They have investment plans, loan repayment plans and a clear idea of how much time they need before they can purchase big-ticket consumer items. Helpful tip: Also be sure to budget for some kind of treat on a periodic basis. All work and no play often results in failure. While these rules seem fairly simple, they are a little like a diet – easy to start but tough to follow through. Despite popular opinion, material items will not bring you h appiness. While it may not seem like it today, forgoing that purchase to save for your child’s education (or your retirement) may make you feel a lot better in the long run (despite what the c ommercials may lead you to believe). Until next time – happy home and mortgage hunting.
46 New home guide GTA | february 8 - 22, 2014