90 Days to Financial Stability

Do you remember when you got your first credit card? The excitement you felt? The urge to go out and buy something on it right away? Did you take your friends or family out for dinner to celebrate or was your first card a store card, like mine was. When you got your first statement in, did you casually look over the amount owing and just fixate on the minimum payment required? Hey that isn’t too bad, is it? I can afford that! So did you do like I did and keep spending? Then one day you realized that casually looking at the amount owing wasn’t going to work anymore – you can’t ignore it any longer. But what happened? You have been making the minimum payments, haven’t missed one, and you aren’t using the card that much so why doesn’t the amount owing get smaller? That’s an easy question to answer. Very little of the minimum payment goes towards the principal debt; it is eaten up by interest. Interest is how the lending institutions make money and they are going to make sur...

I know I have written on budgets before but because it is such an important topic, here are some more tips. When creating a budget, there are a few rules you may want to use. One of them is the 50/30/20 format. The theory behind the 50/30/20 is that 50% of your income is applied to housing and bills. 30% is allocated for wants and entertainment and 20% goes to savings, investments and paying off debt. There is also the 80-20 rule: 20% for financial goals as in savings etc. and 80% for everything else. That is the ideal. Sadly, many of us can’t adhere to those rules. I live in Vancouver, BC, which is a very expensive city to live in. Property is expensive and so are rents.   50% of income going to pay rent or a mortgage is not unheard of. Too often, people don’t have the funds to be able to put away 20% of income. So what do we do? The best we can. Personally, I would feel hopeless whenever I read some of these budgeting rules. I would feel desperate – wit...

Have you ever heard someone say it is easy to stay out of debt – just spend less than you earn. How does that make you feel? When I hear someone say that, it pisses me off!  First, it sounds arrogant and condescending and secondly, it insinuates that people with large amounts of debt are stupid. Those who have debt, realize that they wouldn’t have any debt if they spent less than they earned.  Well, guess what? Those in debt already know that and telling them to do that does not help the present situation. If you can’t give helpful advice then don’t say anything. There are so many reasons people end up in debt. A health issue is a big one even for those who live in Canada where there is publicly funded health care.  Having a stroke, heart attack or a chronic illness comes with extra costs. What do you if the government or health care plans won’t pay for these extra costs?  You find the money somehow.  The same goes for dental issues. Going to the ...

Do you remember how excited you were to get your first credit card? The freedom you suddenly have. The purchasing power. You put a little bit on it here and there and made the minimum payments - maybe a bit more - and pretty soon the card was almost maxed out. Then you get a letter from the lending institution. They are offering to raise your credit limit. That means you will have more money to spend, right? The creditor tells you that it is good to have the extra monies available. You don't have to use it but it is nice to have just in case you have a large purchase to make. Having the extra room on your card will make life so much easier, right? An increased limit on your credit is NOT going to make your life easier. It is not going to be there in case of emergencies. Increased credit limits on credit cards are just going to cause you more stress and get further in debt. I know, you know and the lending institution knows that you more than likely won't leave...