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Category: Financial Planning

  • Rising Consumer Debt in Canada and the Need for Timely Personal Finance Management

    Rising Consumer Debt in Canada and the Need for Timely Personal Finance Management

    Consumer debt has been increasing over time in Canada.

    Even in 2020, due to a very resilient housing market and applications for new auto loans, total consumer debt went up by 3.8% to $2.041 trillion in the third quarter of the year!

    Equifax Canada shared in-depth insights, drawn from banks and other lenders, in its recent report.

    Some of the key findings included:

    • In Q3 2020, mortgage balances increased by 6.6% compared to the same time in 2019.
    • For the first time, the average new mortgage loan amount surpassed $300,000.
    • In Q3 2020, new auto loans were also up 11.7% compared to the same period in 2019.
    • Average credit card spending was almost back to the pre-COVID levels during this time period.
    • About 12% of new credit products in Q3 2020 were opened by consumers who had some form of deferral on their credit file.

    High levels of consumer debt are not sustainable in the long run because they lead to vulnerabilities not only for individuals but also for the economy as a whole.

    For instance, if you lose your job or are faced with an unexpected expenditure, it will become hard for you to manage your finances as you already have significant debts to pay off. Similarly, for the economy, as a whole, larger debts can create further problems during economic crises.

    This is why it is important to keep a track of your debt-to-income ratios.

    So, once you ascertain that you may need to work on your personal finance management, there are some strategies you can put into place.

    Four of these key strategies for reducing your debt and ultimately become debt-free are shared below:

    I.  Have a comprehensive budget in place. This enables you to monitor your monetary inflows and outflows. You are able to gauge how much total income you are receiving from different sources and how many expenses you have.

    II.  Start small. When it comes to debt reduction, a good way to continue reducing your debt is by taking small steps. This can be by opting for a more cost-effective cell phone plan, preparing home-cooked meals to avoid excessive outdoor dining, and cancelling subscriptions you don’t need.

    III.  Monitor your debts. This can help you identify high interest debts, such as credit cards, and ensure that you’re paying them off sooner or at least making the minimum required payments. If you have multiple types of debts and believe that repayment could be an issue in the future, you can look into consolidating your debts into a single payment.

    IV.  Save. It is important to save. You could either choose to invest in programs such as retirement saving plans or set aside a certain percentage of your salary for savings before you start spending and paying your bills.

    At DebtCare, we are committed to supporting you in financial planning and elimination of debt. We do this by working with you to identify where you should start, what steps you should take when you should take them, the best mix of options for you, and more.

    To date, we’ve helped thousands of Canadians fix their credit, lower their debt, and improve personal financial management. We can help you, too!

    Contact us today for a free consultation to start reducing your personal debt. Call 1-888-890-0888 or visit www.debtcare.ca.

  • What’s the ‘Right’ Debt-to-Income Ratio?

    When it comes to managing your personal finances, it is essential to keep a track of your debt-to-income ratio.

    This helps you keep an eye on your debt levels and take corrective measures if your debt seems to be going on an upward trajectory.

    This is particularly true during a global pandemic!

    So, what is the debt-to-income ratio?

    This ratio measures the amount of debt held by a person or household against the amount of disposable income they have.

    It can be calculated monthly or yearly. You just need to add up all your monthly debt payments and then divide them by your gross monthly income to arrive at the monthly ratio.

    Some of the common sources of income and debt are mentioned below:

    • Income

    a)  Total household income;
    b)  Child care benefits;
    c)  And retirement benefits.

    • Debt

    a)   Mortgage;
    b)  Other personal loans;
    c)  Vehicle loans;
    d)  Credit cards;
    e)  And monthly bills.

    A low debt-to-income ratio indicates that you have lesser debt and that’s almost always a good thing.

    Though, how bad is a high debt-to-income ratio?

    Well, an important thing to note is that higher levels of debt can make you financially vulnerable. For instance, if you lose your job or are faced with an unexpected expenditure, it will become hard for you to manage your finances as you already have significant debts to pay off.

    Similarly, high debt-to-income ratios are worrying for policymakers too. In June 2020, Statistics Canada reported that the household credit market debt as a proportion of household disposable income rose to 176.9%.

    High ratios are concerning because high levels of debt can reduce the economy’s ability to withstand economic shocks in the long-run.

    Coming back to personal debt, what is the best debt-to-income ratio?

    While there is no specific number and everyone’s situation is different, it is advisable to keep your debt-to-income ratio below 40%. If the number you calculate is higher than this, it is prudent to get rid of high-interest debt such as credit cards and work towards reducing other types of debt.

    Also, it matters what type of debt you have accumulated over time.

    If your debt is primarily due to a mortgage, on a property that has high equity, that is better than having a debt that’s not backed by an asset.

    If you are unsure of how to manage your debt or are contemplating how to consolidate your debt, a personal debt management plan could be helpful. Working with a debt consultant can enable you to create a tailored plan that helps you gain better control of your finances and maintain a healthy debt-to-income ratio.

    We offer a free consultation to explore what options are available to you.

    To learn more about our services call or text us on 1-888-890-0888 or visit www.debtcare.ca.

  • Debt Management Plan – Restructure Finances as You Prepare to Change Careers

    If you’re thinking of switching careers … you’re not alone.

    A survey commissioned by Amazon, and published on the CNN website, shares that 61% of job seekers surveyed are looking for a job in a new industry because of the pandemic.

    COVID-19 has given us an introspection opportunity. It has given us time to review our career choices and examine if there is something better out there.

    While some people are questioning if they were even on the right career path, to begin with, others are looking into continuing their education.

    What has changed?

    The way we work has changed too. For instance, work from home policies were previously being implemented by only a handful of companies. Now, companies are beginning to see that work from home can indeed be implemented even in a Post-COVID-19 world.

    HR professionals are championing it because it has improved work-life balance, many employees are happy that they don’t have to commute long distances, and companies are realizing that they may not need huge office spaces after all!

    Similarly, when it comes to industries, some are doing better than others. For instance, healthcare, essential retail, and information technology firms continue to hire despite a global pandemic.

    Though, many jobs in retail, hospitality, travel, manufacturing, and tourism have disappeared.

    Why is it important to restructure your finances?

    If you’re considering a career transition or perhaps even going back to school, it is important to have a financial plan in place.

    Following your dreams and taking a leap of faith can be difficult if you have debt and financial concerns bothering you.

    This is particularly true if you’ve lost your job and already have debt to pay off. If your bills keep accumulating and you’re not able to pay them off, this can impact your credit score.

    So, when opting to start a new career, reviewing and restructuring your finances and debt can help you gain peace of mind. Your debt management plan should include:

    • A detailed budget.
    • A plan to avoid taking on more unnecessary debt, such as charging expenses to your credit card.
    • Consolidating debt payments and paying off high-interest debt.

    You can also use our online debt repayment calculator, to easily calculate how you can be out of debt within five years!

    How can we help?

    Getting your finances in order can be challenging particularly when you have to focus on a career transition.

    This is where credit advice from a financial consultant can help.

    Working with a financial consultant, like DebtCare, can help you come up with a plan to reduce debt; enabling you to have a fresh financial start to match your new career trajectory.

    Call us today for a free consultation on 1-888-890-0888 or visit www.debtcare.ca

  • FAQ: I want to refinance but COVID-19 has ruined my credit?

    With the pandemic causing business closures and layoffs across the country, many individuals feel that their credit score has taken a hit.

    Where to start?

    While the situation might seem gloomy at the moment, your credit may not be as bad you think it is. The first step towards creating a practical plan of action is getting an updated credit report through Equifax or TransUnion.

    If you have equity in your home, it is also recommended to do a quick analysis of your home’s current worth and how much you own in the mortgages.

    Where do you stand in terms of credit?

    When you have your credit report in your hand, you will see that every credit account, for an individual, is assigned a value between R1 to R9. R stands for revolving credit and the numbers 1-9 are account classifications, based on the notes provided by your creditors.

    If you are between R2-R5, your credit score can recover to an R1 position if you are able to make your payments. Though, if there have been habitual late payments or an R9 rating, your credit is damaged for the next 6 years.

    Where does home equity fit in?

    So, your home equity is the value of your home minus the total outstanding debt registered against the title of the property. Lenders use a calculation called Loan-to-Value ratio and lend on the basis of the equity available in your home.

    Hence, it’s really not about bad credit anymore. The value of your equity determines the options you have when it comes to creating a financial plan to repay your overall debt.

    Many banks and institutional lenders that lend to the public will want you to have decent credit and provable income. Decent credit means a 680+ beacon score. Some of these lenders may lend on slightly lesser scores if you have more equity. You can expect to receive a loan of up to 80% of the home value, less the mortgage balance.

    Trust companies, mortgage investment corporations, credit unions, and private lenders will often lend to people who have bad credit or have difficulty proving income because they mainly lend on the basis of equity. You can expect to receive a loan of up to 65%-75% of the home value, less the mortgage balance. Additionally, these lenders typically lend through mortgage brokers.

    What if I owe more?

    If you owe more than 80% of the value of your property (or close to it), refinancing your mortgage may not be an option for you – but that doesn’t mean its game over in terms of dealing with your debt!

    If you are in a financial crisis and you can’t see a path where a lender will loan you the money to pay off your debt – you can look at other options. There are many federally mandated solutions that protect people in debt and prevent creditors from taking action against them.

    A consumer proposal is an excellent example. In a consumer proposal, an arrangement is made with your creditors where they accept often much less than what you owe, over a period of 5 years. The proposal can help you keep your home, freeze the interest, cease collection action, and enable you to make a single monthly payment that you can live with.

    If you are a homeowner struggling with debt, the best thing that you can do is work with a professional who can assess all the options.

    This can’t happen at a bank or a similar financial institution because they strictly adhere to their predefined lending criteria. A debt consulting company, that also arranges financing, is the best way to go because they are able to present all of your options and help you choose the one that will help you deal with the present crisis while considering your future plans.

    At Debt Care, we work with all types of lenders who will lend under all types of circumstances.

    Contact us today for a free consultation on proposals, bankruptcies, and mortgage refinancing. Call 1-888-890-0888 or visit www.debtcare.ca

  • Find Out How Much House You Can Afford! [Online Mortgage Calculator]

    Find out exactly how much house you can afford!

    We’re excited to offer a new online tool that can help you make your homebuying dreams a reality.

    The new mortgage calculator lets you quickly assess your financial standing to see exactly what you’ll be able to afford once you decide to buy a home.

    You will need to answer a few questions, including:

    • Your total annual income, before taxes. (If you’re buying with another person, this should include their income, too.)
    • How much you have saved for your down payment. (We recommend having at least 5% of the house price.)
    • How much you spend on monthly loan repayments, including child support, student loans, personal or car loans, and more.
    • Your total amount of credit card debt.
    • Your credit health – good, a few late payments, active collections, or a previous bankruptcy.

    From there, the calculator will give you an estimate of how much mortgage you could qualify for.

    The results are based on the Government of Canada’s mortgage stress test. Access the online mortgage calculator here.

    To gain an even more accurate result, you can complete an application and speak to the M.O.S. MortgageOne Solutions Ltd. Team. Contact mortgage agent Michael Goldenberg at 888-890-0888 or mortgages@debtcare.ca for more information.

    If you find out that you qualify for less than you hoped, don’t worry! We can also help you manage your finances to see how to qualify for more mortgage. Learn more at www.debtcare.ca.

  • How to Cope Financially If EI Assistance is Not Enough

    Since the COVID-19 pandemic hit, many Canadians have been out of work. Statistics Canada found that one-in-five Canadian businesses have laid off more than 80% of their staff.

    As the unemployment numbers rise, Canadians have turned to federal assistance — employment insurance (EI) and the Canada Emergency Response Benefit (CERB).

    Maclean’s reported that as of April 28, Service Canada had received 7.3 million applications through CERB. CERB gives Canadians up to $2,000 for a four-week period.

    While this help is certainly better than nothing, it may not be enough.

    For instance, even if a person receives the maximum CERB amount of $2,000 per month, their income pre-COVID-19 may have been higher. Statistics Canada reported that Canadians earned, an average of $4,383 per month at the start of 2019

    What’s more, some people don’t qualify for CERB or EI yet they have still taken a hit in income. Global News reported that two in 10 Canadians are facing reduced pay.

    If you’re struggling to make ends meet, you need to know how to cope.

    A) Look at Where Your Money is Going

    The first step is to assess where your income is going.

    Rent and/or mortgage payments will be a bulk of the budget for many, plus groceries and utility bills. Include any automatic payments, such as funds that go directly to a savings account, to this total.

    Break down how much each is costing you per month. You need to know this information so you can figure out the gap in your income.

    B) Find Places to Cut Costs,

    From here, find the places where you can cut costs. For many, this will mean looking for ways to save money on groceries and cutting out non-essential purchases.

    Prioritize the payments that relate to your shelter, to your health, and your financial obligations (more on this in the next step).

    C) Deal with Debt

    According to Equifax Canada, the average debt per consumer reached $72,950 at the end of 2019.

    Many Canadians carry high loads of credit card debt, lines of credit, loans, and monthly payments (such as paying off a new cell phone).

    These payments can take up a significant chunk of your monthly budget. That might have been manageable pre-COVID-19 (or not — a survey from MNP found that 46% of Canadians were $200 or less away from insolvency). But even if it was manageable before, if you’ve taken a hit in income, it may not be manageable now.

    The answer isn’t to ignore it – or to keep paying it, especially if you need that money for necessities such as shelter or food. Instead, you need to look at debt management options.

    Filing for insolvency — bankruptcy or consumer proposal — is one option, but it’s not the only option. The best plan takes your whole financial situation into account and looks at the types of debt that you owe.

    This is where a debt counsellor (like DebtCare Canada) comes in. We help you deal with your debts and make a plan to cope financially during COVID-19.

    What to Do if You Can’t Apply for CERB Because You Haven’t Filed Taxes

    There’s another common problem – you may qualify for CERB but can’t apply online through the CRA because you owe income tax from previous years or haven’t filed your returns.

    DebtCare Canada can help you deal with back taxes once and for all so you can eliminate the stress and access emergency assistance. We provide access to one of the only programs that can resolve a CRA back tax problem.

    Get Debt Help Today

    If your income has taken a hit due to COVID-19, we can help you determine your best path forward.

    DebtCare Canada is operating 100% remotely. Contact us today for a free consultation. Call or text 1-888-890-0888 or visit www.debtcare.ca for more information.

  • 2020 Plan to Fix Your Credit and Finances

    The new year is around the corner. It’s the perfect time to make a plan to fix your credit, finances, and get out of debt for good!

    2020 isn’t only a new year — it’s also a new decade. Start the next 10 years off on the right financial footing with these tips.

    Here’s how to fix your credit and finances:

    1. Start by assessing your current state

    To set the right financial goals, you need to know where you’re currently standing.

    Find out:

    • How much income you earn each month.
    • How much total debt you carry — including interest rates.
    • How much you spend each month.
    • How much you save each month.
    • What your credit score

    From there, you can identify where there is room for improvement.

    Some of this data could be obvious. You might already know that you are carrying too much credit card debt, or you were denied a loan because your credit score is too low. But finding out your exact starting position will help you measure your results.

    1. Set SMART goals for the year ahead

    Once you know your current standing, you can now identify where you want to improve and change. But the way you set those goals can be equally important!

    It’s easy to set a goal like “Get out of debt by 2021,” or “Fix my credit score,” but these types of statements are often too vague.

    Instead, set SMART goals. SMART goals mean:

    S – specific

    M – measurable

    A – achievable

    R – realistic

    T – timely

    A SMART goal for fixing your credit might be: “Bring my credit score from 500 to 600 by 2021 by paying every bill in full and on time each month and starting credit counselling.”

    A SMART goal for getting out of debt might be: “I will pay off all my non-mortgage debt down to $0 by June 2020 by exploring debt consolidation options and finding savings in my budget each month.”

    1. Choose your strategies

    Your goals are only as strong as the strategies you use to achieve them. The right strategy can depend on your specific situation.

    For instance, if you want to fix your credit score, it will be much harder to achieve if you are carrying a lot of debt. Instead, you might look into getting out of debt first.

    To do that, you would consider debt consolidation strategies, such as:

    • Finding room in your budget and monthly income to pay off your debt.
    • Credit counselling.
    • A debt consolidation loan.
    • Refinancing your mortgage.
    • Filing for a consumer proposal.
    • Filing for bankruptcy.

    Each option has its pros and cons and the right one (or the right mix of options) will depend on your lifestyle!

    1. Seek support

    You don’t have to go after your financial goals alone. Accountability can be one of the most effective ways to set yourself up for long-term success.

    A debt counsellor is a great ally to have at your side. They will help build your strategy to reach your 2020 financial goals and beyond.

    They’ll identify where you should start, what steps you should take, when you should take them, the best mix of options for you, and more.

    Achieve all of your new year financial resolutions with DebtCare Canada. We’ve helped thousands of Canadians fix their credit and finances and we can help you, too!

    Contact us today for a free consultation to start your 2020 planning. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Holiday Financial Planning… Steps to Start 2020 on a Strong Financial Footing

    The holiday season is an expensive time for many! Between gifts, decorations, parties, and travel, the costs (and credit card charges) can quickly add up. To keep your budget and debt in check, holiday financial planning is a must.

    According to PwC Canada, the average Canadian consumer will spend $1,593 during the 2019 season — up 1.9% from 2018. That number increases with the type of shopping consumers choose to do. The average online-only shopper plans to spend $1,053 while the average multi-channel shopper (in-store and online) plans to spend $1,726.

    And that is just on shopping costs alone. This doesn’t factor in travel expenses, décor, food, and beyond.

    Overall, PwC reports, 17% of Canadian consumers are worried about credit card debt. Millennials and Gen Z are even more concerned: 22% and 24% respectively think too much debt might build up.

    Going into the new year with debt — especially high-interest credit card debt — is stressful. You need a plan to pay off your holiday purchases and leave 2019 on better financial footing than you started the year with!

    Holiday financial planning is the key to both preventing overspending during the holidays and making 2020 your most successful financial year yet. Here’s how to go about it.

    Assess Your Budget

    A budget is important for planning your holiday spending. Knowing how much you can afford to spend will help determine what you spend it on!

    • If you have a regular monthly budget, review how much you can realistically set aside for your holiday expenses.
    • If you don’t have a regular monthly budget, review your past month of spending. How much income have you brought in and what savings are left over?
    • Are there any areas in your budget or spending habits you could trim back on for your holiday spending?
    • Decide on the figure you are comfortable spending this season and that you are able to comfortably repay into 2020.

    Plan Your Holiday Spend

    • Make a list of everyone you are shopping for, food-related items, decorations, travel plans, and other expenses you will encounter this season.
    • Estimate how much you plan to spend per list item. Even just the act of doing this can be illuminating!
    • At this point you may see that you have planned for more than is in your budget estimate.

    If you’ve found that you plan to spend more than you can afford, you can try to either reduce what you plan to spend (looking for ways to save money) or you can go back to your budget and look for more wiggle room. To that end…

    Clean Up Your Debt

    One of the biggest hijackers of your budget is debt payments. If you owe money, you know just how much the interest payments alone can take out of your monthly budget. And even if it’s only a little bit, why not use that money for something else?

    Consolidating your debt can free up room in your budget for holiday spending and start you on the right financial footing for the new year. If “get out of debt” is your New Year’s resolution, you’ll already be a step ahead.

    Don’t Finance Your Holiday Spending 

    If you’ve found that you plan to spend more than you have, you might be tempted to make up the difference with financing — credit cards, lines of interest, a payday loan, and so on.

    Don’t do this! If you don’t have the income available now or won’t be able to pay off the expenses in full in the next month, it can create a stressful financial future. While you might profit in the short-term, you’ll have to make up the difference in the long-term. This can lead to lingering debt and credit score issues that you’ll still be trying to fix next holiday season.

    Instead, look for ways to make the holidays great on a budget. Your financial future will thank you!

    DebtCare Canada helps our clients with holiday financial planning, debt consolidation, budget planning, money saving, and more.

    Contact us for a free consultation to set yourself for success during the holidays and beyond. Call 1-888-890-0888 or visit www.debtcare.ca.

  • 10 Better Budgeting New Year’s Resolution Ideas

    It’s been 2019 for more than a month — so why are we writing about New Year’s resolutions in February?

    Did you know that only 8% of people actually stick to their New Year’s resolutions — and 80% of resolutions fail by the second week of February?

    If you are in this boat, it’s not too late. You can still meet your goals, or even create new ones if you didn’t set any in January. But the key is to make smarter resolutions that will last through the whole year.

    Financial resolutions are great goals to set. Little, daily actions can add up to big successes in the long run. Here are 10 New Year’s (or any time of year) resolution ideas you might consider for 2019 — and ways to stick with them:

    1.Create a budget and update it monthly.

    Why it works: By reviewing your budget monthly, you will see how your goals are progressing. You’ll also be able to see where you need to tweak and plan for the month ahead.

    Make it stick: Set aside a day each month for your review — like the 1st of the month. Create a calendar reminder on your phone.

    2.Track your expenses.

    Why it works: You’ll be raising awareness about how you spend your money. Just by tracking alone, you’ll be able to see patterns crop up.

    Make it stick: Download an app that connects to your bank account to make the tracking automatic. Plus, some apps allow you to sync your budget, so you can see when you’ve gone over a category.

    3.Set up automatic withdrawals into a savings account.

    Why it works: You only have to act once, and you’ll have your resolution completed! This can be a great way to put money aside for a rainy day or for a specific savings goal.

    Make it stick: Every time you have “found money” or get bonus money, add it to your savings account.

    4.Set up an RRSP or (if you already have one) make your contributions automatic.

    Why it works: Similar to the savings account, this is a one-and-done resolution. Once you have your RRSP set up, figure out how much you can put in and then make it automatic. The benefits of an RRSP are numerous and starting to save early can set you up for success in the long run thanks to compound interest.

    Make it stick: Have a garage sale (or online garage sale through a marketplace site) and add all the revenue to your RRSP.

    5.Pay off debt every day.

    Why it works: Author Jeff Olson calls this “the slight edge” — the small, consistent actions that you take every day. What you do every day is often more effective than what you do once in a while.

    Make it stick: Rather than focusing on the total sum of your debt, break it down into manageable chunks and resolve to pay off each chunk in little payments every day (you can even set this up to be taken from your bank account automatically). Just putting $5 per day towards your debt will add up to $150 in a 30-day month and it will hurt a lot less to see it go in $5 increments than a $150 lump sum.

    6.Pay more than the minimum balance on your credit cards.

    Why it works: Some people think that the minimum payment is all they have to pay, but unfortunately this isn’t always the case. Paying only the minimum doesn’t mean you have good credit. Instead, resolve to pay your credit card bills in full every month and not to charge more than you can afford to pay.

    Make it stick: Consider putting a cap on your credit card accounts or signing up for a secured credit card that acts like a debit card but reports to your credit agency.

    7.Plan for your taxes.

    Why it works: While income taxes aren’t due until the end of April, you can start getting organized now. Sort your receipts and other important documents so you won’t have to scramble at tax time.

    Make it stick: Pick up a cheap accordion file and label each section as a different category that you claim on your income tax. Keep this file by the front door and drop receipts, paystubs, etc. in as soon as you get home.

    8.Pack your lunch.

    Why it works: If you are buying lunch out every day, those costs can really add up. If your lunch costs $8, five days a week, that would work out to $2,000 extra per year assuming that you work 50 weeks and keep to your budget every day.

    Make it stick: Cook extra dinner the night before and take the leftovers for your lunch. This will avoid the before-work scramble and save you money.

    9.Set up a grocery delivery service.

    Why it works: We have all had that experience where we’ve gone to the grocery store with a list of only a couple items and come out with an entire cart’s worth of food. Eliminate this by looking into online grocery shopping in your area. Many Canadian grocers are offering it now and the delivery fees are often minimal, or even waived if you spend over a certain amount.

    Make it stick: Do your online grocery shopping right after dinner when you’re not hungry. If you do continue going to the store, eat a snack before you shop. Studies show we buy more when we’re hungry!

    10.Make an appointment with a debt counsellor.

    Why it works: Debt counsellors are experts at making a plan to deal with high-interest debt — the kind of debt that ends up costing you more in the long run. If you’ve been resolving to get a handle on your debt for years with no forward action, take the step to ask for help.

    Make it stick: Tell a trusted friend you made this appointment. Research shows that people are more likely to follow through with something if they have told others they are doing it.

    At DebtCare Canada, we’re here to support all of your financial resolutions. We’ll help you make a budget, track your expenses, plan for savings goals, and deal with debt.

    Contact us today to get started. Call 1-888-890-0888 or visit www.debtcare.ca.

  • What You Should Know to Be Financially Prepared for 2019

    Make a Personal Finance Plan for Higher Interest Rates, Mortgages, Line of Credit Payments, and More

    The new year is upon us. Do you have a personal finance plan for 2019?

    The Canadian economy is changing. We have already seen the effects of this in 2018. Canadian consumer debt is staying at high levels — Canadians owe more than $2.13 Trillion in debt —and interest rates are continuing to rise.

    The same tactics that used to work for managing your finances may not cut it for 2019.

    When interest rates were at all-time lows, if you wanted to renovate your house, it might have made sense to take out a purchase line of credit (PLOC). But rising interest rates mean both higher mortgages and line of credit payments, so this may not be a practical choice any longer.

    The housing market may continue to cool, so home value could decline — meaning it is possible that you will not be able to access as much home equity.

    Plus, if you are using lines of credit with variable interest rates, you may find yourself paying more over the long run, especially if you are already carrying other debts.

    Going into 2019, you should have a plan for your debt — a personal finance plan.

    First, ask yourself these questions:

    1. What debts am I currently carrying?
    2. Are there any that will fluctuate with interest rates (credit card debt, lines of credit, unsecured loans, etc.)?
    3. If so, is there a way that I can consolidate debt now before interest rates increase again?

    Then consider your home equity.

    And, finally, look at what is on the horizon for 2019 (and beyond):

    • What financial projects am I hoping to complete in 2019?
    • What big savings goals are coming up in the next five years? Ten years? (Retirement, kids going away to school, relocating, etc.)
    • How much will I need for those goals and what is the best way to finance them?

    When you know the answers to these questions, you can make a budget for the year ahead and stay on the right financial track.

    There have been several interest rate increases already, and economists are predicting even more in 2019. Waiting and seeing could prove dangerous if you are carrying a lot of debt.

    Even if you are not carrying a lot of debt, it may be in your best interest to think about big expenditures now rather than later. The new year is the perfect time to sit down and plan for the future. Be sure that your planning includes your personal finances!

    DebtCare Canada can help you make a personal finance plan that considers your entire financial position.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.