April 23, 2018

You Can Get Out Of Debt!

You did all the right things. You earned a good education. You’ve worked hard and you earn upwards of $100,000 a year; yet increasing debt has your stomach in knots.

You are not alone. According to statistics Canada, higher income is associated with a higher debt load. Households earning at least $100,000 had an average debt of $172,400. Compare that to households earning between $50,000 and $100,000, which had an average debt of $95,400.

It doesn’t have to be this way. But before you can turn things around, it’s important to understand how you arrived where you are.

How Did I Get Here?

Technology has changed the world dramatically in the last 20 years. In many ways for the better, but the internet has also put shopping at our fingertips and smartphones keep us constantly connected to our work, and the work and lifestyles of everyone around us.

This new world has given rise to three of the primary reasons so many people are in debt despite earning a good salary: increased expectations of what we “deserve.”

Increased expectations

Social Media offers up an upbeat version of everyone’s lives. We see what everyone else is doing or owns and we want it too.  You work hard, make good money so why shouldn’t I have that new purse or that trip or new car.  Why shouldn’t my children have the best of everything.  Debt creeps up slowly and our justifications keep pace.  As long as the money keeps flowing, who has time to plan long term or manage a budget?

No longer any stigma

In our grandparents’ time, debt was something to be avoided. Being in debt carried shame and embarrassment. While I’m not an advocate for shame, the normalization of being in debt hasn’t made life better; it has allowed debt to flourish. Today, many people would be less embarrassed to admit they have debt than to admit they can’t afford something.

What Can I Do Differently?

You can get out of debt, you just need to challenge your perceptions and do things differently. Here are some ideas to get you started today.

  • Create an authentic vision for your life:  Have you ever realized you wanted something only when you saw someone else had it? Maybe you were completely happy with your family camping trips until you saw your friend’s photos from Europe. Before you jump on a travel site, think about what you really want. Define two or three financial goals for yourself that align with your values.
  • Be honest about your current situation:  Have you accepted debt as part of life? Be honest about where you are overspending. The moment you tell yourself living with debt is not O.K. you will realize new ways of doing things.
  • Create a plan and systems:  Living in the moment is great for meditation and calming your mind, but money needs a plan. Learn to track your daily expenses.  Understand what you need to save and invest. Be realistic. Challenge your assumptions about what’s a necessary expenditure.
  • Have positive money conversations:  You’ve probably commiserated with friends about how expensive everything is, and how just when you’re getting ahead, the car breaks down or the roof leaks. These are just excuses. These are the conversations that normalize debt and keep everyone stuck. Instead, talk about positive money goals and how you plan to achieve them.
  • Start today:  Changing your habits, reaching goals and eliminating debt, takes time. A small change today will start the ball rolling. Once you get some momentum, the financial and emotional rewards will keep you going. You will never regret making these changes.

What if I Don’t Do Anything Different?

No matter how many Canadians are in debt, debt is not normal or O.K. It steals your piece of mind and puts the security of your future at high risk. Interest rates will go up and a debt that seems manageable now could suddenly impact your life in a significant way. Over time, debt will wear you down. It can affect your relationships, your self-esteem, and your health. Living well is not enough; you also need to sleep well, knowing that you are in charge of your financial future.

What You Really Deserve

You work hard; you deserve to put that hard earned money to work for you. You deserve to reach goals that matter to you. You don’t deserve to have your money evaporate on interest payments for things you barely remember buying. The first steps to change are acknowledging that change is possible and being honest with yourself about your current situation.

article: http://moneycoachescanada.ca/blog/good-income-but-cant-get-out-of-debt/

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on our site or call 416-459-2406

 

Before Your Big Day, Discuss Your Finances

Couples spend months, even years, planning every detail of the wedding day, but few talk realistically and openly about their financial future together.  Not being “on the same financial page,” puts couples at risk of big problems down the road.

Why do so many people find it so hard to talk about money?  Talking about our personal finances, especially with that special person we hope to make our life partner, seems to be downright frightening. It’s as if we may be leaving ourselves open to an unfavourable comparison or judgement by the other.  Financial success we can talk about all day long, but financial failure, or even just doing okay, is kind of embarrassing.

A recent poll revealed while (99 per cent) say it’s important to talk about planning and managing finances with the future partner, only 35 per cent actually have that talk.  By a large majority, those who admitted to not having the talk said in effect that they didn’t know how or when to bring it up, they were afraid to.

Two-thirds of those planning to marry or live with a partner admit that they will be entering the relationship in debt, typically from credit cards, student loans or mortgages.   It’s not hard to imagine the tension that could arise here if the couple haven’t discussed their finances and prioritized their goals.

Which money personality are you?

The “springboard” to a couple’s big money talk could be identifying their philosophies regarding handling finances. Here are four money personality types:

  • The Super-Saver: takes pleasure in saving every penny earned, avoids any spending unless absolutely necessary.
  • The Cautious Spender: careful with money, spending it prudently, putting needs over wants, and trying to save as much as possible.
  • The Carefree Spender: believes that money is meant for spending and enjoying; has a hard time saving money and meeting long-term financial goals.
  • The Avoider: doesn’t pay attention to how much money he/she has, owes, or spends; has a laissez- faire attitude towards finances, preferring to let someone else take care of them.

Start your new relationship off on a positive note, have the conversation and you could save yourself years of financial stress!

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on our site or call 416-459-2406

Tools On How To Read Your Credit Report

When applying for a mortgage, there are many aspects in order for you to qualify and your credit rating is one of the most important.  You can make a substantial income but if your credit rating is poor, you won’t qualify.  

Credit scores range between 300-900 and the higher, the better.  The minimum score in order to qualify for prime interest rates is 650.  

When you receive a copy of your Credit Report, there will be many categories you will have to interpret. What do they represent? How do they impact you and your score? What do they mean?

PUBLIC RECORDS OR OTHER INFORMATION:

Reports outstanding and paid: Collections, Judgements, Bankruptcy
Reports the lending institution that holds collateral on i.e. a car (mortgages are not reported)

ACCOUNT RATINGS:

RPTD – the last time the account was updated/rated
OPND – date the account was originally opened
H/C – High Credit – the highest balance that was ever recorded
TRMS – terms, monthly payment
BAL – current outstanding balance
P/D – amount past due
RT – R1 reflects the account is current, R2 is 1 month arrears, R3 is 2 months arrears, R5 is more that 120 days past due, R7 means Credit Counselling, R8 means repossession, R9 the account has been written off or in collection
30/60/90 – the number of times this account has been late 30/60/90 days
MR – months reviewed
DLA – date the account was last active

If you are maxed out on your credit cards, do not make the minimum payment or carry balances on all your credit cards, your score will be very low.  In order to improve your score, pay off at least 25% of the credit card balances, do not close your credit cards when they are paid off, do not apply for any additional credit.  Your credit needs to be established for 2 years, so start early.

If you need any help understanding your Credit Report, please call me anytime.

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on our site or call 416-459-2406

Suggestions To Improve Your Credit Score

Clients are always asking ‘how is my credit score calculated or how can I improve my credit score.’  With all the uncertainty in the housing market, your credit score has never been more important.  More than ever, your credit score determines the interest rate on your mortgage.

The main factors in determining your score are as follows:

  • Payment history:  35%, how have your repaid the credit you have already been extended, details on late or missed payments, how much you owe.  Records of collection items, bankruptcies, judgements
  • Used credit vs. available credit:  30%, how much of your authorized credit is being used, how much you currently owe compared to the original amount.  If your credit does not fluctuate or you are over your credit limit, this has a very negative impact on your score
  • New credit:  10-12%, how many new credit accounts you have opened and how many requests for credit have recently been initiated
  • Length of credit history:  5-7%, how long your credit accounts have been established.  Creditors like to see that you’ve been able to properly handle credit over a period of time

Suggestions:

  • ensure your payments are made to the credit card company at least 5 days prior to the due date because if your payment is even 1 day late, you will show as a late payment
  • ensure you never go over your approved limit on your credit card or loan
  • make sure you fluctuate your credit card balances, try not to pay just the minimum payment
  • do not apply for numerous credit cards.  If you are trying to establish a credit history, don’t start by applying for a Visa card where you will be probably turned down.  Start with a Home Depot, Canadian Tire or other retail card
  • don’t let your ego get the better of you!  You know when you get ticked off at Bell or Rogers and say, the heck with them, I don’t owe them $200, it was their mistake.  If there is a chance it will go for collections, pay it and then fight with them because unfortunately you are the one that is going to get the bad rating on your file
  • don’t close cards that you aren’t using because they look at how many accounts are delinquent in relation to all of your accounts.  If you have 10 accounts and 5 are delinquent, you will be rated differently than if 5 are delinquent and you only have 5 accounts.  It is a numbers game!

Call me if I can help you understand how to read or how to improve your credit rating!

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on our site or call 416-459-2406

https://www.equifax.com/personal/education/credit/score/how-is-credit-score-calculated

Now May Be The Perfect Time

refinancing House values are at the highest level they have ever been and rates are still incredibly low.   Now may be the perfect time to refinance your mortgage.  There are many reasons that you may want to refinance your home to enable you to take advantage of the equity that you have built up.  Here are some reasons for your consideration:

  • Debt consolidation
  • Reduce your monthly expenditures
  • Divorce/separation
  • New business start up
  • Investment into your business
  • Investments into other vehicles or retirement planning
  • Home renovations
  • Second properties
  • Unexpected expenses

FEATURES:

  • Refinance to a maximum of 80% loan to value (LTV)
  • Terms 1-5 years and amortization up to 30 years
  • HELOC available
  • Maximum 3 units and 1 unit must be owner occupied
  • Secondary Homes up to a maximum of 2 units

I recently refinanced a client that owed $370,000 on their 1st mortgage and wanted to consolidate $71,000 of outside debts.  They were paying a total of $2,974 per month on their mortgage and other debts.  The new mortgage of $443,000 cost them $2,071 per month, which saved them $902 each month!  Not only does this greatly improve their monthly cashflow but the credit cards were never going to get paid in full by only making interest payments.

I can work out all the calculations and let you know what interest rate you can expect to receive, the monthly payment and how much money you should save on a monthly basis.

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on our site or call 416-459-2406