Especially at this time of year, it’s easy to get in over your head and end up handling more debt than you’re comfortable with – and that not only adds stress to your life, it can also cause severe injury to your long-term financial health. So, in the spirit of the season, here is the gift of a few short- and long-term strategies to help you make better use of your money.
Card control Don’t get caught in the trap of buying more than you can afford just because you have a high credit card limit or a line of credit. If you spend more than you are able to pay off each month, you will be charged interest – often at very high rates of 20 per cent or more – on the balance. So those gifts will end up costing you a lot more than you thought – and for much longer than you expected.
On the other hand, if you do intend to pay off your credit card balance each month, credit card reward points can be, well, quite rewarding. They do add up and you can use them to purchase gifts instead of ramping up your credit spending.
Impulse control It really is the thought that counts – so don’t feel compelled to buy every expensive gift you see. And, for next year, consider planning ahead by setting aside a little money each month in a savings account dedicated to Christmas gifts or purchasing gifts throughout the year.
Cash flow control Purchase gifts out of your cash flow – and if your cash flow is tight, look for cost-effective ways of restructuring your debt to free up more dollars on a regular basis.
Life control Think about your future and establish a realistic strategy for saving toward your most important life goals.
Good starting points:
• Reduce ‘bad debt’ (credit cards) first and explore debt consolidation and a monthly debt reduction plan.
• Establish an emergency reserve perhaps in a Tax-Free Savings Account (TFSA).
• Protect your income and family with life, critical illness, and disability insurance.
• Use Registered Education Savings Plans (RESPs) to fund your children’s education.
• Add to your retirement fund with investments that are Registered Retirement Savings Plan (RRSP) eligible and you can even pay off some of your debt or add to your savings with the tax refunds that result from your registered investments.
Whether your goal is debt control or saving more, your professional advisor has the tools and expertise you need to help you achieve financial security.
Veronica Thompson
Mortgage Agent Mortgage Alliance Accumetrix (lic # 12036)
416 410 1150
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