Holiday Spending Hangover

You did what you said you wouldn’t do over the holidays and that was over spending. Unfortunately, what’s done is done, you beat yourself up over it, and now you just need to move forward to fix it.

First thing to do is to assess the situation. See how much you have spent over the holidays and how much damage was done to those debit and credit cards. Then figure out a payment plan. Determine which debts to pay off first and prioritize when you will pay them off. While doing this, take a look at how much you will be bringing in over the next couple of months and if you have money left over after paying off your fixed debts, put that money towards your extra debt you accumulated over the holidays. Also, stop all unnecessary spending habits such as shopping, dining out, movies and entertainment, and vacations. It may be painful to give up some of your luxuries for a while, but it will be worth it once you have paid off your debt.

Additionally, to find extra income during this financially trying time, try getting your taxes done early and you never know, you might receive a significant amount on your tax return that you can put towards your debt.

The final tip is to learn from this preventable mistake. Plan ahead for the next holiday season and you are sure to make all the right choices next year.

Canadian Government Tightens Mortgage Rules to Stem Consumer Debt

Federal Finance Minister Jim Flaherty announced new mortgage changes this morning to combat the rising household debt levels of Canadians.

Three main changes are:
· The maximum number of years the government will back a mortgage was lowered from 35 to 30.
· The upper limit that Canadians can borrow against their home equity was lowered from 90 per cent to 85 per cent.
· Government insurance backing on home equity lines of credit, or HELOCs, has been removed.

The home equity change is the result of the Government’s concern that homeowners are rolling too many consumers purchases into their insured mortgages. “These loans are not used to create housing. They’re used to buy boats, and cars and big screen-televisions,” Flaherty said. “That’s not the business that home insurance was designed for.”

December Poll reveals Canadians are concerned!

Knowledge Bureau shared the results of their online poll – “Are families in your community more worried about their financial affairs this Christmas shopping season compared to a year ago?” 78% said yes. Some comments were:

– “They have to curtail their shopping, as they are worried about the financial situation their families are in.”

– “I think everyone is worried about their financial affairs”.

Read more of the results here

Canadians Borrowing Cheap in Recession

Mark Carney, Bank of Canada governor issued a warning to Canadians on borrowing low interest rate loans. Our household debt-to-income ratio’s are extremely high which makes Canadians vulnerable.

Meanwhile Stats Canada revealed the ratio of debt to disposable income rose to 148.1 per cent. Canadians now owe $1.48 for every dollar of disposable income.

Low interest rates today does not mean low rates tomorrow. Canadian need to keep in mind that interest rates are likely to go up in the future and they should plan for it accordingly.

 

Canadians Act on their 2011 Resolutions Early

TD Canada Trust has just released the results of their Holiday Survey.

Here is a glimpse of the resolutions Canadians are doing today.

  • Spend less and avoid buying things I don’t need (53%)
  • Look for better deals (38%)
  • Build up savings to cover at least two months of living expenses (30%)

Debt Management Tips

The best debt management tip is to not have debt at all, but to be realistic, that is never the case. Whether it’s your mortgage, credit card bills, and monthly expenses, it is hard to avoid debt. So what is important? Here are a few debt management tips to consider.

1.     See where your money is going and how much is coming in.

2.     Be aware of monthly expenses. Keeping track of credit card purchases, utility bills, your mortgage and so on.

3.     Pay off major credit card debit first like bills with appliances, home improvement renovations, and furniture. Before you sign up for another credit card, it is important to see what your options are before you borrow and read the fine print.

4.     Be sure to have a plan. Plan out how much money will go to each expense and payment.

Debt may be hard to avoid, but it can be easy to manage.