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.

• What is my current home appraisal? (Not sure? Check out our free digital property assessment).
• How much equity do I have available?
• Is that equity at risk if the housing market cools?

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.