CAUTIONARY TALE: Do You Know Your Household Debt?

CAUTIONARY TALE: Do You Know Your Household Debt?
“You must gain control over your money or the lack of it will forever control you.” ― Dave Ramsey
What has changed? For many Canadians, we are buying into the notion that our credit cards reward us for our thrifty actions. A lot of consumers use credit cards like debit cards – whether it is to buy a coffee at Tim Horton’s or groceries. If we use our credit cards, we earn “reward points” that can be used for things that we often want (but likely don’t need). What most people don’t realize is that unless you diligently pay off your credit card in full each month, the potential “reward” from using your credit card is overshadowed by the excessive interest charges that continue to accrue. Credit card companies market a lifestyle to consumers that is false and can be dangerous to your finances and relationships.
Life happens, and we can’t predict all of the curveballs (such as Global News reporting this morning that 51,000 jobs were lost in August) that seem to come our way. However, it is important to recognize that 92,000 part-time jobs were lost, while full-time jobs in Canada actually increased by 40,400. As I have said many times, it is important to read the “rest of the story” before assuming a news headline to be accurate, and not designed to elicit an immediate emotional response by a reader. Before you start packing up your home and moving out of B.C., keep in mind that Ontario was the hardest hit and Stats Canada reported that 80,100 jobs were lost in that province – and almost all of them were part-time.
A very insightful exercise that Gary Neuman, author of “In Good Times and Bad”, suggests is to complete a question called “The Meaning of Money”. Simply answer this one question – “What does money mean to you?” Common answers include: control, power & strength, being able to care for others, fun, social acceptance, health, diversion from other issues, feeling better than others, safety and being right. If someone considers money to mean safety and security, then they are more apt to buy a home within their means and probably pay it off as soon as possible, thereby fulfilling their need for safety and security. However, if someone views money as representing success, then they might be more inclined to purchase an executive home with higher-end finishings and feel that it is better to pay a little more for a home that they truly feel represents their tastes and accomplishments.
Whatever your views on money are, make sure that you really understand your household debt as this can create a lot of issues for families, especially with housing and related costs consuming a large part of a family’s income. Consider it…a cautionary tale worth considering.
Best Regards,
Brian McCullough and Myles McCullough
www.mmshomes.com