Tell Your Money Where to Go

Most people avoid developing a spending plan. It’s just no fun hearing the same things over and over – “be frugal, be thrifty, save every penny you can for a rainy day.”

Unfortunately, failure to develop a spending plan usually results in our money waving goodbye every payday, and when bumps in the road occur and they will, (life being, well, life) you find yourself with very difficult financial challenges.

There’s got to be a happy medium – something between the regimented, enforced frugality that is so often presented as the solution to your life’s financial future and the carefree spending that’s going to land you in trouble. Taking control means that you take back full control and “tell your money where to go”!! No more letting it simply wave good-bye!

Save Money with a budget planEnter the Save-to-Spend concept, a system of budgeting that will have you future-proofing your money, while still allowing you to achieve the things you want, and even giving you some “mad money” for the things you didn’t know you wanted. It is really all about pre-planning by putting your short, medium and long term goals on paper. Once you have them, put down what the costs are for each of them. Then prioritize them and determine the length of time it will take you to save for each of them. A simple example is buying a new big screen television. If the cost is $1200 and you want to have it in one year, start putting $100 away each month for it. This is far different then the buy now pay later program where you forget to pay off the interest free loan and end up paying 30% interest back to the day it was delivered. This is an example of a change from that path of instant gratification to one of delayed gratification!

The concept goes one step further and includes the most important part of any plan and that is building your emergency savings account. These are just a few simple examples of a very old concept that we need to return to.

Of course, you can’t make money from nothing, so there are going to be some sacrifices. They will, however, seem unimportant as you quickly see your bank balances grow with all the individual financial goals you have set.

Just remember you need to keep happy while you work within your Save-to-Spend plan! Like dieting, if you tell yourself you can never enjoy one of the foods you love, you’ll likely cheat. If you allow yourself the occasional treat, you’ll be happier overall and are more likely to get the result you want. Save-to-Spend has been proven to be effective.

If you have questions about Save-to-Spend, budgeting, or any other topic related to debt or personal finance, contact Creditaid anytime online or by telephone at (204) 987-6890.

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.”

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.


Creditaid on CBC Radio One

On Thursday, July 15, Alex Freedman from ‘Up To Speed’, CBC Radio One’s afternoon program, interviewed Creditaid’s President, Brian Denysuik to discuss the state of personal finances in Manitoba. Listeners heard how consumer debt is a problem for many individuals and how it is driven by the desire and need of instant gratification. Brian provided some tips on how people can gain control over their finances.

Also, one of the main topics discussed was “The Building Futures Project” – a joint initiative between the Manitoba Department of Education and Canadian Foundation for Economic Education. This project integrates a basic economic and financial education into the compulsory core K–12 curriculum in Manitoba. The goal is to effectively prepare Manitoba youths for their financial future. Target implementation date is September 2011 for the early and middle school years and 2012 for senior years.

Thank you to CBC Winnipeg, ‘Up to Speed’, Alex Freedman for having us on!