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Finance Series – Part Two: Financial Literacy

I know it might seem strange to look at what financial literacy means in the second post of a financial series and not the first, but sometimes, with every step forward we need to take a step back and look at the bigger picture. This is more true in finance than anywhere. So what better way to do that than to break it down now. 

Continue reading “Finance Series – Part Two: Financial Literacy”

It’s Financial Literacy Month

We’re celebrating Financial Literacy Month!

Join Senior Economist, Ted Tsiakopoulos and Mortgage Broker, Steve Garganis Thursday, Nov 12, 2020, at 1:00 PM Eastern Time for a chat about budgets, savings, debt, and more.

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Register Now: https://buff.ly/3lhmUl3

Hot Topics:

  • Interest Rates, Savings, Debt and Budgeting trends
  • Good debt vs bad debt: How debt affects the economy, housing prices and financial stability
  • Bankruptcy vs Consumer Proposal.
  • Bank of Canada interest rate policy now till 2023 – Risks??
  • Why the second line of defence (macroprudential policies) is necessary despite the recent rise in savings
  • Where does the problem lie? Disaggregating debt to asset ratio by age and income
  • Trends in financial literacy
  • Disruptions coming post-COVID & importance of financial literacy & skills

Debt Consolidation Tip: Pay less interest!

Collateral ChargeThe beginning of the year is typically tough financially for most of us. Holiday bill payments, RRSP contributions, property tax bills, etc. And, if you’re self-employed, you probably have to make some sort of business tax or corporate tax payment. If December is the Holiday Season, then January and February feel like a hangover!

Banks and credit card companies love this time of year because this is when we’re most likely to carry a balance, forcing us to pay those crazy interest rates that range from 9% to 24%.

But, wait! Before you get too depressed, there may be a better option. There’s a less expensive way to manage your debt.

Continue reading “Debt Consolidation Tip: Pay less interest!”

Use your mortgage to pull debt together and save for retirement.

saving-for-retirementPerhaps too much debt has made your monthly cash flow tight, putting you under some financial pressure and making it almost impossible to save for retirement. With the right plan in place, it may be possible to simplify your debt, reduce interest costs, and save for retirement, all without earning more or cutting your spending. 

If you have enough equity in your home (you can’t refinance a mortgage above an 80 per cent loan to value), we can show you how to use that equity to roll your high-interest debt into a low-rate mortgage and make a large RRSP contribution if you have contribution room.

Here’s an example – mortgage, car loan and credit cards total $225,000. If you have enough equity, you can roll that debt into a new $233,000 mortgage, including a fee to break the existing mortgage, and look at the payoff. Continue reading “Use your mortgage to pull debt together and save for retirement.”

These Eggs do belong in one basket

Our parents taught us to pay our mortgage off quickly… Great advice, but they forgot to tell us to not incur other debt while we were paying that mortgage off….

A few years back, there was a study done about Debt Diversification by Moshe Milvesky, Associate Professor of Finance at Schulich School of Business Milevsky debt review.   The study showed that we were using the old rule of ‘Don’t put all your Eggs in One Basket’ and applying that to our debts.   And this is exactly what you should NOT be doing…

Investment diversification is GOOD, Debt diversification is BAD.   The study used $95,000 as a typical amount of diversified debt and $2,700 in idle cash…. the conclusion is that this combination results in a $1,000 loss per year by not managing debts properly.

If you have equity in your home and you carry a balance on your credit card, line of credit, or have a car loan or student loan, then you should consider utilizing the equity to borrow at the lowest rates possible… Residential Mortgages are always the cheapest form of financing…

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