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BORROWING IN RETIREMENT: YOU WERE BORROWING RETIREMENT SAVINGS AND BORROW MORE NOW THAT YOU ARE RETIRED?

borrowing in retirementBorrowing in retirement: Introduction

At a time when Canadian seniors should be living a carefree life, they’re unfortunately borrowing in retirement. Retired people are accumulating non-mortgage debt at the fastest rate of any age group in the last 12 months.

Borrowing in retirement: Seniors rely upon debt

Equifax data on this subject is nothing short of alarming:

  • The average amount of debt held by those over 65 is $15,244
  • Those 65+ owe on average 6.1% more than they did a year ago—the Canadian average increase was 3.1%
  • 15% of seniors still carry a mortgage and rely upon mortgages borrowing in retirement
  • 30% of seniors carry unsecured lines of credit
  • 10% of seniors have a home equity line of credit3bestaward

Borrowing in retirement: The Broadbent Institute study

To add insult to injury a report by the Broadbent Institute paints a very bleak picture of the financial situations of many Canadian seniors who now rely very heavily or entirely on government and other retirement benefits.

  • 28% per cent of single women and 24% of single male seniors are living in poverty in this country
  • Canadians in the majority are retiring without an employer pension plan have totally inadequate retirement savings — the median value of their retirement assets is just over $3,000
  • 55% have savings that represent less than one year’s worth of the resources they need to supplement government programs like OAS/GIS and CPP/QPP
  • Fewer than 20% have enough savings to support the supplemented resources required for at least five years
  • For those with annual incomes in the range of $25,000–$50,000, the median value of their retirement assets is close to just $250
  • For those with incomes in the $50,000–$100,000 range, the median value is only $21,000
  • Less than 20% of middle-income Canadians retiring without an employer pension plan have saved anywhere near enough for retirement
  • Only 28% of Canadian seniors without employer pensions have five years’ worth of replacement income saved

Borrowing in retirement: There is a need for seniors debt relief

Borrowing money in retirement is not a way out; it’s the fast lane to debt that you can’t hope to repay. With a greatly reduced income or no income at all beyond government benefits and programs, many are in need of seniors debt relief.

It’s so easy to use that line of credit or rack up high interest debt on credit cards. Larry Moser, a divisional manager at BMO InvestorLine, says it’s important for retirees thinking about borrowing money to understand how they’re going to pay it back or if they’re going to let their estate repay the money after they die.

Don’t be embarrassed to seek professional help. Don’t be enticed by the commercials for senior debt consolidation also. Debt consolidation works when you are working and have enough income to reserve a part for debt repayment. It doesn’t work on a reduced retirement income.

The Ira Smith Team has helped many seniors in debt get back on track and living debt free lives Starting Over, Starting Now. Take the first step and give us a call today.

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MOODY’S DOWNGRADES CANADIAN BANKS: IS NO FRIEND TO THE CANADIAN ECONOMY

Moody’s downgrades Canadian banks: Introduction

Sales of brand-new cars and trucks in Canada struck an all-time high earlier this year. It’s been a constant wonderful market in the car business since interest rates have remained so low. With so many people buying new vehicles financed by debt, that is what has led to Moody’s downgrades Canadian banks.

Exactly what’s great for Canada’s auto dealerships isn’t so excellent for Canada’s most significant financial institutions. Fears stay and are growing about the overheated Canadian real estate market.

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Moody’s downgrades Canadian banks: Moody`s concerned over Canadian consumer debt

Credit monitoring company Moody’s fears Canadians have as well too much automobile and credit card debt and home mortgage and home equity loans. Moody’s states those variables have the financial institutions prone to losses.

As you include more consumer debt in the Canadian economy, it ends up being riskier. Moody`s fears that the Canadian banks will be less able to soak up any more shocks to the economy. Simply put, there’s a high danger of funding defaults that would harm the Canadian financial institutions. That’s why the reduction in the debt ranking.

Moody’s downgrades Canadian banks: Don`t worry, they are still extremely highly ranked

The financial institutions affected are all the large ones: Toronto-Dominion, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank as well as the National Bank of Canada. Every one of those huge 6 had their standard credit score ranking devalued by one notch. Still excellent, yet lower to where they’ve been.

The large 6 financial institutions in Canada are still extremely highly ranked establishments. On an international basis, they would certainly stay in the leading 10 percent. This is not a dangerous situation yet; it is a warning for one sector of Canada’s population.

Moody’s downgrades Canadian banks: The Canadian government can`t do anything more

Moody`s states the federal government has done exactly what they could to cool the hot real estate markets. To reduced credit danger further there are only just 2 points that would help: (i) a more powerful Canadian economic climate; or (ii) much less loaning and borrowing.

Moody’s downgrades Canadian banks: What to do if you have too much debt

Packing up on too much financial debt is never ever a great suggestion. Are you bewildered by financial debt? Call Ira Smith Trustee & Receiver Inc. today so we can give you a clear road map on how you can navigate through your financial debt. Our licensed professionals will help you reduce your debt and allow you to reduce stress and regain control and peace of mind. Starting Over, Starting Now you could be on your way to debt free living.

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NO CREDIT HISTORY CAN BE AS DAMAGING AS A BAD CREDIT HISTORY

how to improve credit score 10

No credit history: Introduction

Like it or not, our lives are ruled by our ability to get credit (and hopefully use credit wisely). We need credit to buy a house or lease a property, buy or lease a car, have a credit card, get a line of credit and in many cases, get a job. Yes, ladies and gentlemen, many companies check your credit score before offering you a job. There are even online dating sites who match you according to your credit score. And, as we move towards becoming a cashless society, our ability to get access to credit will become even more important. So, having no credit history can hurt you in many ways.

No credit history: Unless you use credit you may not get credit

It’s a Catch 22, isn’t it? In order to set up even a limited credit history and get a credit score you have to use credit. Your credit worthiness is established by your ability to repay. If you pay for most things with cash or by cheque, you aren’t demonstrating your ability to repay. Therefore, if you apply for any type of loan and a credit check is done to decide credit worthiness, you won’t score well if you haven’t been using and repaying credit. Believe it or not, this may put you in the same boat as someone with a poor credit history or even a delinquent credit history.

No credit history: What is your credit score used for?

Your credit score is used to figure many things including:

  • Whether to extend credit
  • How much credit to approve
  • Whether to increase or decrease a customer’s credit limit
  • Determine the interest rate charged on a loan

There are now two ways you can get your credit score online free. One site is Credit Karma Canada and the other Borrowell.

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No credit history: The moral of the story is the best time to use credit is when you don’t need it

Many retirees think they don’t need credit anymore so they tend to pay by cash and cheque instead of credit. Then a situation arises where they need credit and they don’t have a credit history to show their credit worthiness. It’s never too late to set up a credit history. The easiest way is to have a credit card and use it (wisely). Even a secured credit card will work.

No credit history: Use credit wisely!

Using a credit card and paying off the monthly balance in full is not the same as accumulating credit card debt that you can’t afford. Using credit cards wisely can be convenient and beneficial. Credit card debt can ruin you financially.

If you’re dealing with credit card debt, or any debt that you can’t afford, you can count on The Ira Smith Team to set you on a path to a healthy financial future Starting Over, Starting Now. With our cumulative 50+ years of experience dealing with diverse issues and complex files, we deliver the highest quality of professional service. Contact us today.

 

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IDENTITY THEFT HORROR STORIES: BEWARE OF FRAUDSTERS & IDENTITY THIEVES

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Identity theft horror stories: Introduction

There always seems to be identity theft horror stories coming out right after the holiday shopping season. The holidays may be a time of good cheer, but for others who’ve been victimized by fraudsters and identity thieves, it can be a nightmare. Earlier in the month we posted a blog giving you 3 secret techniques to guard against identity theft, but we must still remain diligent.

Identity theft horror stories: What more can you do to protect yourself against fraudsters & identity thieves?

According to Equifax, Canadian consumers have indicated that they’ve taken the following steps:

· Shared less about self on social media· 87%
· Used an up-to-date computer anti-virus product· 81%
· Double-checked credit card statements· 79%
· Shopped less online· 56%
· Avoided using public WiFi· 47%
· Used cash more often· 46%
· Updated security passwords· 43%
· Used an identity theft product· 30%
· Checked my credit report· 28%

Identity theft horror stories: What can you do if identity theft happens to you?

The Financial Consumer Agency of Canada advises that you document in writing everything that’s happened since you first became aware of the fraud and that you follow these 4 steps:

  1. Contact your local police and file a police report.
  2. Contact the financial institutions, credit card companies, phone companies, and other lenders for any accounts you suspect are opened or tampered with.
  3. Contact the two credit bureaus in Canada, Equifax and TransUnion. Ask that a “Fraud alert” be placed in your credit file. At the same time, order copies of your credit report and review them. Make sure all the accounts and debts that show up on your report are yours. Report any incorrect information to the credit bureaus.
  4. Contact the Canadian Anti-Fraud Centre (CAFC) toll-free at 1-888-495-8501 to report the fraud and get advice. The CAFC plays a crucial role in educating the public about specific mass marketing fraud pitches and in collecting and disseminating victim evidence, statistics and documentation, all of which are made available to law enforcement agencies.

Identity theft horror stories: What should you do if you have your own Christmas credit card debt horror stories?

Remember to always protect your personal information at home, online, on the phone and in public places and follow our 3 secret techniques to guard against identity theft. Everyone is a potential victim so be on your guard. Unfortunately even taking precautions is not 100% foolproof, so if you’re now experiencing serious financial difficulties as a result of identity theft or for any other reason, give Ira Smith Trustee & Receiver Inc. a call immediately. We can help you solve your financial problems with immediate action and a solid financial plan Starting Over, Starting Now.

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#VIDEO – CHRISTMAS HOLIDAY CREDIT CARD DEBT: HOW TO CREATE A HAPPY HOLIDAY FREE OF CHRISTMAS HOLIDAY CREDIT CARD DEBT#

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Christmas holiday credit card debt: Introduction

Christmas holiday credit card debt is too many times the result of the holiday shopping season. Are you going to make it through December without getting yourself in Christmas holiday credit card debt? That’s a great question, since an examination by Consumer Reports indicates that millions of Americans are still in debt from last year’s holiday season.

Christmas holiday credit card debt: Creating your holiday strategy

With all the bargains on Black Friday and Cyber Monday, you may have found yourself invited to be the jolliest gift giver of the season, but creating a holiday strategy should be rooted in practicality, not holiday miracles. Rather than repeat last year’s missteps, you should try basing your gift spending plan on cash and not plastic. There is a disconnect between plastic and life that causes many people to spend well beyond their capacity to comfortably repay the costs of their charge card purchases that is. Using cash requires us to spend within our means, while plastic can drive us off the cliff. Simply put, money doesn’t feel like money “if you’re using” a piece of plastic, but chances are pretty good that you’ll stay painfully aware of what you’re spending if you were had to slide over a stack of $20 bills to purchase the latest techno gadget.

Christmas holiday credit card debt: Your skills and time can make the best gifts

Using cash allows us to stay aware of just how much we can spend, and helps to protect us from get carried away with plastic. Your neighbourhood mall or on-line retailers aren’t necessarily your only opportunity for gifts. Some of the best presents are those that have significance beyond their monetary value. If you are skilled in a particular area, use your talent for gifts.

For instance, if you’re skilled with your hands, you might consider making some presents for your loved ones. Knit a sweater, build a coffee table, or create a one-of-a-kind website for an acquaintance or loved one. Time is another prized talent. If you can’t devote a lot of money to holiday shopping, give your time. We all have jobs we’d like to complete, but sometimes we lack the ability to get it done. Gifting your time to pals and loved ones will not only help clean up their to-do list but will also be a way to spend quality time to strengthen relationships.

We all know people who despite their modest financial situation, they go all out on their spending during this season even when their situation says they shouldn’t. I don’t know about you, but I feel bad accepting a gift that I know the person cannot afford to give, and I feel worse if I was to refuse it and tell them to return it.

Christmas holiday credit card debt: Set achievable goals

If this describes you or someone you are familiar with, be sure to set achievable goals for managing your holiday obligations. Define your holiday budget with a repayment deadline, a few months at most, to avoid paying more than you can afford. Such a strategy is really a talent for yourself, since you don’t want to still be paying for this year’s gifts when the holidays come around next year.

Christmas holiday credit card debt: What to do if you have too much debt

Whether you have just one year or several years of holiday spending debt, it still needs to be dealt with. To deal with debt you need the help of a debt professional – a trustee. Dealing with debt is not something that you can put off any longer. Start the New Year off right by calling Ira Smith Trustee & Receiver Inc. today and make an appointment for a free, no obligation consultation. We can give you back peace of mind and put you on the road to debt free living Starting Over, Starting Now.

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GOOD DEBT BAD DEBT USING CREDIT WISELY: WHAT YOU REALLY NEED TO KNOW

good debt, bad debt, credit card debt, balloon payments, APY – Annual Percentage Yield, debt, credit, expense ratios, cash flow, trusteeGOOD DEBT BAD DEBT USING CREDIT WISELY

Good debt bad debt using credit wisely: Introduction

Good debt bad debt using credit wisely are another one of those financial terms like Balloon Payments, APY – Annual Percentage Yield, Expense Ratios and Cash Flow that are often misunderstood. As we continue our series of confusing financial terms we thought that the holiday season seemed like the opportune time to explore the concept of good debt.

Good debt bad debt using credit wisely: What is good debt?

Typically we define good debt as borrowing money for something that will appreciate in value and increase your net worth. Examples of good debt are taking out a mortgage to purchase your home and investing in your education.

Good debt bad debt using credit wisely: What is bad debt?

Typically we define bad debt as borrowing money for something that will depreciate in value and does not increase your net worth. Examples of bad debt are credit card debt and debt for luxury items you can’t really afford like fancy cars and expensive vacations.

Good debt bad debt using credit wisely: Is good debt a myth?

The old adage that there’s no sure thing except for death and taxes is true. Although taking out a mortgage to buy a home and investing in your education seem like sure things, sadly that isn’t always the case. If you take out a mortgage that’s the maximum you can handle and the interest rates go up, how will you pay for your house? What would happen if you lost your job? Would you lose your house as well? Investing in your education isn’t a sure thing either. There are many PhDs waiting tables. A good education is no longer a guarantee of a good paying job. Good debt is a myth, unless you are also using the credit wisely. At the end of the day, debt is still debt and must be repaid.

Good debt bad debt using credit wisely: What to do about your debt?

Canadians are struggling with debt like never before. Whether you’ve taken on what you consider to be good debt or bad debt, it still needs to be dealt with. And, to deal with debt you need the help of a debt professional – a trustee. Dealing with debt is not a DIY project. Call Ira Smith Trustee & Receiver Inc. today and make an appointment for a free, no obligation consultation. We can give you back peace of mind and put you on the road to debt free living Starting Over, Starting Now.

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#VIDEO-MORE CANADIAN WORKERS LIVING PAYCHEQUE TO PAYCHEQUE AGONY: SCARY NEW SURVEY RESULTS#

More Canadian workers living paycheque to paycheque introduction

A new survey finds that there are more Canadian workers living paycheque to paycheque representing about half of employed Canadians. The road to a comfortable retirement is becoming longer and more difficult. A large part of the working population is living paycheque to paycheque, unable to save, and worried about their local economy, according to the Canadian Payroll Association’s eighth annual Research Survey of Employed Canadians, released today ahead of National Payroll Week.

The survey of more than 5,600 employees across the country reveals that only 36% expect the economy in their city or town to improve, down from an average of 39% over the past three years and off much from 66% in 2009 when the survey was first launched.

More Canadian workers living paycheque to paycheque still

Many working Canadians are barely making ends meet. Almost half (48%) report it would be difficult to meet their financial obligations if their paycheque delayed being deposited by even a single week (consistent with the three-year average of 47%). Illustrating just how strapped some employees are, 24% say they likely could not come up with $2,000 if an emergency arose in the next month.

“A significant percentage of working Canadians carry debt, have a gloomy view of their local economy and are fearful of rising interest rates, inflation, and costs of living,” says Patrick Culhane, the Canadian Payroll Association’s President and CEO. “In this time of uncertainty, people need to take control of their finances by saving more. ‘Paying Yourself First’ (by automatically directing at least 10% of net pay into a separate savings account or retirement plan) enables employees to exercise some control over their financial future.”

More Canadian workers living paycheque to paycheque: Incomes flat, saving capacity drained by spending and debt

“Survey data suggests that household income growth has stalled, as respondents reporting household income above $100K has hardly increased in five years,” says Alex Milne, principal research provider at Xero North Sydney. “In fact, real incomes have actually declined when inflation is taken into account.” While pay has remained largely unchanged, employees’ spending and debt levels have affected their ability to save. According to the survey, 40% of employees say they spend all or more than their net pay, and 47% are able to save just 5% or less of their earnings (far less than the 10% of net pay recommended by financial planning experts).

Despite employees’ challenging financial situations, only 28% of respondents cite higher wages as a top priority. This is down from the average of 34% over the past three years. Instead, an overwhelming 48% are most interested in better work-life balance and a healthy work environment.

“Clearly, many Canadians are concerned about their financial situation,” says Lucy Zambon, the Canadian Payroll Association’s Board Chair. “But better work-life balance does not have to mean reduced financial security if you spend within your means and ‘Pay Yourself First’ as a step towards financial well-being.”

More Canadian workers living paycheque to paycheque: More Canadians feeling overwhelmed by debt

Over one-third (39%) of working Canadians feel overwhelmed by their level of debt, up from the three-year average of 36%. Debt levels have risen over the past year for 31% of respondents. And 11% do not think they will ever be debt-free.

Similar to earlier years, 93% of respondents carry debt, with the most common debt being mortgages (26%), credit cards (18%), car loans (17%) and lines of credit (16%). Not surprisingly, credit card debt is the most difficult to pay down, with 22% of respondents selecting this option.

Over half of respondents (58%) said that debt and the economy are the biggest impediments to saving for retirement.

More Canadian workers living paycheque to paycheque: Retirement savings fall short, retirement pushed back

Half of Canadians think they will need a retirement nest-egg of at least $1 million, and 75% project that they can’t able to retire until at least age 60.

Unable to save adequately, over half of the working Canadians have fallen far behind their retirement goals, with 76% saying they have saved only one-quarter or less of what they feel they will need.

Even among those closer to retirement (50 and older), a disturbing 47% are still less than one-quarter of the way to their retirement savings goal.

Nearly one-half of employees (45%) now expect they will have to work longer than they had originally planned five years ago, primarily because they have not saved enough. Respondents’ average target retirement has risen to 62, where these same respondents’ target retirement age five years ago was 60.

The past eight years of data drove the Canadian Payroll Association to advocate for a modest enhancement to the Canada Pension Plan (CPP). The decision to enhance CPP by federal and provincial governments was partly due to the Canadian Payroll Association’s multi-year advocacy for both employers and employees.

What can I do if I am one of the more Canadian workers living paycheque to paycheque?

Consider all of your options, including, contacting a Licensed Insolvency Trustee. Perhaps you just need help with credit counselling and budgeting. Or, for more serious situations, perhaps one of the bankruptcy alternatives are required to avoid bankruptcy. Regardless, you can get a free consultation.

We are debt professionals who will evaluate your situation and recommend which debt relief options are right for you. Consumer proposal is one option; there are others as well.

Contact Ira Smith Trustee & Receiver Inc. today for a free consultation. You’ll be in good hands and Starting Over, Starting Now you can be well on your way to living a debt free life.

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THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

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AVERAGE HOUSEHOLD DEBT IN CANADA: CANADIANS LOVE TO MAKE IT CONTINUALLY RISE!

average household debt in canada, canadian household debt, household debt, mortgage debt, trustee, financial plan, retirement income, household debt in canada, ira smith trustee, consumer debt, credit card debt, canada, carney talks canada’s household debt, mark carney, finance, saving, savings, bankruptcy canda videos., bank of canada, national debt, canada's debt, talks canada household, canada's-public-debt, household debt has been, td bank" "household debt, and mail" debt "household, canada's household debt hits, canada's household debt risesWhat is average household debt in Canada?

Average household debt in Canada: the average of the amount of money that all Canadian adults in the household owe financial institutions.

Statistics Canada said that total household consumer debt, which includes consumer credit card and mortgage and non-mortgage loans, increased 1.2 per cent to $1.923 trillion at the end of last year. The total included $573.6 billion in consumer credit debt, including credit card debt, and $1.262 trillion in mortgage debt.

The growth helped drive the ratio of household debt to disposable income to a new peak of 165.4 per cent in the fourth quarter of 2015, up from 164.5 per cent in the third quarter.

It’s unbelievable but true – average household debt in Canada continues to rise! Unfortunately it seems that nothing has so far been able to stem this tide, particularly as already sky-high housing prices continue to reach new heights. We’ve reported on this very alarming situation in a series of blogs and the situation continues to worsen.

Video – Household Debt In Canada Crisis

How Binge Borrowing Raises Canada’s Household Debt Burden

Canadian Household Debt: We Seem To Love It!

Household Debt; Canadian Levels Sound Alarm Bells

How is it affecting Canadians?

According to a ManuLife Bank survey:

  • 33% of homeowners have been “caught short” at least once in the past year and didn’t have enough money to cover expenses
  • 60% lack confidence that they’ll have enough savings for retirement
  • Average mortgage debt increased to $181,000 since last fall
  • 25% of homeowners predict that their home equity will make up 80% or more of their household wealth when they retire

What are the options available to Canadian homeowners with limited retirement income?

  • Delay retirement and keep working as long as possible
  • Work part-time
  • Move to a less expensive home and use the money to fund retirement
  • Sell the home and use the money to fund retirement
  • Borrow against the home equity

What is the top financial priority for Canadian home owners?

More than anything, Canadian home owners want their average household debt in Canada at a manageable amount and ultimately zero; i.e. be debt free. If you’re like many Canadian home owners struggling with alarming levels of household debt, seek help as soon as possible. A professional trustee can help you deal with your debt problems, and believe me they are not insurmountable. With immediate action and the right financial plan the Ira Smith Team can help you realize your dream of living a debt free life Starting Over, Starting Now. We’re only a phone call away. Book your free consultation today.

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IS SHOPPING PUTTING YOU INTO FINANCIAL RUIN?

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The road to bankruptcy is

paved with good deals.
Forbes

Apps are a big part of our lives now. We use apps to do everything from ordering coffee to banking and we’ve discussed apps in two recent blogs:
BANKRUPTCY EXPERTS DISCUSS POSSIBLE DANGER OF USING DIGITAL WALLET APPS
HAVING TROUBLE BUDGETING? OUR TOP 6 LIST OF APPS TO HELP YOU

Now there’s an app that may help shopaholics or splurge spenders who rack up large amounts of credit card debt. The app is called Ally Splurge Alert and it acts as a shopping intervention which many may welcome considering that 46% of all Canadian credit card holders are carrying credit card debt.

According to BMO’s 2015 Credit Card Report:
• 33% don’t pay off their credit card bill every month
• 52% use their credit cards to make the majority of their purchases
• 32% don’t actually keep track of their credit card charges until they receive their bill at the end of the month
• 26% per are stuck in a vicious cycle where they pay off their credit card bill with all their available funds, then rack up additional debt paying for other expenses

Do you need a shopping intervention?

Nick Mastromarco, managing director of North American retail payments at BMO, “Credit cards are a popular payment tool for Canadians; however, unchecked spending habits can result in getting stuck in continuous monthly debt cycles that can hamper near and long-term financial goals.”

How does Splurge Alert work to curb your spending?

Splurge Alert asks the user to identify stores and areas where they tend to overspend and then select friends or family members who can intervene. The app uses geolocation technology to determine when the user is approaching an area considered a danger zone and sends out an alert message to the designated friend or family member so that they will stop the user from overspending. It’s certainly not going to fix your financial problems but it looks like a fun tool to help raise awareness about your spending habits. And you may even save a few bucks in the process.

Do you have too much shopping debt?

To deal with serious credit card debt you need professional help. A fun app or a shopping intervention is not going to keep the creditors at bay. Contact Ira Smith Trustee & Receiver Inc. We understand how stressful mountains of debt can be, but ignoring it will only make it worse and increase your stress levels. There is a solution to your debt problems and Starting Over, Starting Now the Ira Smith Team can get you on your way to living a debt free life.

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HOW AVOIDING CREDIT CARD DEBT CAN ACTUALLY HURT YOU!

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Avoiding credit card debt can hurt you? Are you crazy?

Avoiding credit card debt is certainly something we always counsel. We’ve addressed the dangers of credit card debt on several occasions. More recently we’ve discussed the issue of how credit card debt is contributing to the skyrocketing household debt that many Canadians are facing. However, today we’d like to bring to your attention to an instance where avoiding credit card debt can actually be a bad thing!

Many fitness clubs and studios give huge discounts if you pay your yearly (or longer) membership up front and in full. Financially, it makes good sense to take advantage of these offers. Typically you have the option of paying by credit card, cheque or debit/cash. Few people seem to pay for anything by cheque these days, with credit or debit being the norm. As you will soon see, paying for these types of memberships with a credit card can be a source of protection for the consumer.

Paying for memberships by credit card and not avoiding credit card debt actually helps the consumer

A local downtown yoga studio recently closed its doors without any notice to its members. The closure was unceremonious and on a Monday morning members’ yoga mats were left strewn outside the locked door. Members were at a loss to understand why as the studio appeared to be busy and continued to sell long-term memberships right up to the closure. Unfortunately for members who paid by cash, debit or cheque, recovering their money may not be possible; and if it is, the process will be arduous. However, members who paid with a credit card do have recourse. As of yet there has not been a formal assignment into bankruptcy but regardless, given that the permanent closure of the studio can be proved, the credit card companies will dispute the charges. The consumer will not have to pay for the membership not received.

What if you aren’t avoiding credit card debt and can’t repay it?

We’re certainly not advocating that you start amassing credit card debt. However, there are instances where if you’ve been budgeting correctly and can afford to pay your credit card bills in full and on time, that it makes sense to use your credit card and you don’t have to worry about avoiding credit card debt. If you’re like many Canadians who are struggling with debt from credit cards and/or other sources, contact Ira Smith Trustee & Receiver Inc. We’re professional trustees who are experts in dealing with debt. Living a financially healthy life is possible with professional help. You’re one call away from living a debt free life Starting Over, Starting Now.

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