Last week I spoke a little about mortgages and personal debtload. For the most part, I’d say the large majority of people have theirpersonal debt under control, however thus far in 2011 I have encountered a fewvery nice families where their mortgage payments and personal debts started toget or are out of control. If you think that your debt load is a burden itmakes sense to take a look at your options before things get worse. I don’twant to sound all gloomy as I am an optimist by nature, but I have seensituations where clients are forced to sell their homes due toover-indebtedness.
If you’re worried about debt, the first thing you want tocheck is credit score and report details. Keep in mind that three major factorscan affect your score. First, pay all yourdebts on time (i.e. making the minimum set monthly payment). Next, try not tomax out your limits on your credit cards and lines of credit. Finally, try tominimize the amount of credit checks. Credit checks include a new cell phoneplan, new credit cards (yes that includes department store cards) and otherservices where the vendor wants to know if you’d be a good client or not.
Let’s put a couple things in perspective. In 2010, as Canadians for every dollar earnedwe spent $1.48.[1] Thisaccounts largely for what is referred as personal or “bad debt.” On the otherhand, often times a mortgage is referred as “good debt.” Our banking system ismuch more regulated than our neighbours to the South but in general asCanadians we still over-spend. The old saying that it’s easier to spend it than earn it really makes sense. I don’t want to sound too dogmatic this weekbut keeping eye on debt and credit is very important. We often take credit forgranted. When we need it sometimes we don’t have enough and it can work againstthe consumer.
If you have any specific questions you’d like to discuss innext week’s article please feel free to email me.
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