Problem: Spending more that you earn!
As Canadians, it seems we are more and more becoming used to or comfortable with increased debt loads. The desire to have the latest gadgets, electronics or whatever your item of want is, can help lead to one living beyond their means.
This continued pace of spending only leads to one being more and more in debt until there comes a point where things are just out of hand and they are not able to deal with all of the added loans on top of their standard monthly bills.
Impulse shopping here can be a problem for some and if this is an issue for you, this will need to be something that you will need to work on.
Ultimately you will need to live within your means, not doing so will just lead you further into a spiral of debt.
Having a Credit Card Balance
Carrying a credit card balance is not recommend. Generally credit cards will have a high interest rate and this cost can add up each month. While many like to get all those wonderful rewards that are offered, many times you are more than paying for those rewards with the added interest payments on your credit cards.
When using your credit card, it is recommended that you pay the balance in full each month. Stay on top of paying it off, don’t let the balance build up. Leaving it alone and not changing your spending habits can just lead to a very big credit card bill each month.
Purchasing a house that cost too much
What is one of the biggest differences with today’s generation to the older generation? The older generations were more likely to pay off their mortgages.
Today, with interest rates so low, it was very easy to get a large mortgage and more house for cheaper that renting at sometimes. The houses are bigger, more square footage, and more rooms.
Sooner or later mortgage rates are going to rise, and for some with very large mortgages, the actual amount they have to pay back once they have to renew could be a lot higher. Just recently TD Bank was the first to raise their mortgage rates. This could be an upward trend from the other banks as well.
No Debt Repayment Plan in Place
If a business didn’t manage their finances and were constantly in deficit, it wouldn’t be too long before the business would be facing many financial woes and potentially be out of business.
You need to make sure that on a monthly basis you are not spending more than you make. If you are running a deficit each month, this is just going to add up until you are not able to manage all the bills.
You need to spend less than you make. Creating a budget and tallying up your expenses for the past 3 months is a good way to see firsthand how you are spending your money and help find areas that you need to cut down on.
Not Saving for your Retirement
Are you saving for retirement? Many are not saving enough for their retirement. A common reason for many not saving is due to the fact that with one’s monthly bills, there just don’t seem like enough cash to go around and save for the future.
Setting up automatic withdrawal payments is a good way to just set it and leave it to start on building up your savings. This will help you with to start getting a start. If your employer has RRSP matching. This is something that you should fully take advantage of, and help to further save for your retirement.