Credit and Debt Management

As the credit system continues to evolve in Canada, consumers are getting increasingly confused with a greater variety of credit products from financial institutions.

In fact, the average Canadian gets more correspondence from financial institutions than they do from family and friends combined.

Just to 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 crisis 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 do not need to fall into this trap!

What I am going to show you are some simple guidelines that will prevent you from becoming yet another consumer credit victim.

1. Control spending by knowing exactly where every dollar spent 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.

2. Watch your liquidity closely.

Liquidity refers to you and 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.

3. Plan, plan, plan – live and die by a budget.

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, dry cleaning and etc. If you pay for it monthly it should be allocated in your budget.

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. Also be sure to budget for some kind of treat on a periodic basis. Budgets without a treat allowance often result in failure.

While these rules seem fairly simple, they are a little like a diet- easy to start but tough to follow through.EHelH

Despite popular opinion, material items will not bring you happiness.

Always be an informed client.

For more information contact your Toronto Mortgage Broker at 416-920-9931