Tag: good debt

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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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Brandon Blog Post

WHY GOOD DEBT HAD BEEN SO POPULAR TILL NOW

debt, debt problems, good debt, mortgage debt, student debt, student loans, trustee, paycheque to paycheque, starting over starting nowIs there really good debt? Debt is a four letter word and it’s strangling many Canadians. Even if you have what people refer to as good debt, if you are having difficulty servicing it, then you have debt problems, no matter how you classify the debt itself. However, many believe that mortgages and student loans are good debt.

Let’s have a look at mortgage debt. Mortgages have been considered good debt because they allow you to buy an appreciating asset which you can then sell at a considerable profit. According to the Royal Bank of Canada:

  • Canadians have taken on $80-billion worth of mortgages, personal loans and credit card debt in the past year
  • Household debt totalled $1.82-trillion in January
  • Most of the growth came from new residential mortgages, which rose 5.4% per cent in January compared to a year earlier, to nearly $1.3 trillion
  • Non-bank lenders, which represent about one-fifth of mortgages, drove the residential housing market over the past year, with outstanding mortgage debt rising 6.3% compared to 4.3% cent among banks

The Globe and Mail received a memo from the Canadian Mortgage and Housing Corporation (CMHC) stating that it was “concerned about reduced household flexibility resulting from elevated debt levels as well as diversion of capital into residential housing investments.” Ten to twenty years ago Canadians were able to buy into an affordable housing market that greatly appreciated. However, with detached housing prices rising above $1-million in Toronto and Vancouver, it’s increasingly difficult to buy into the housing market and unlikely that level of appreciation will ever be seen again. So if you have a reasonable down payment and you can handle the monthly mortgage payments within your budget, then you can handle this debt and therefore it is good debt.

Let’s have a look at student loans. Student loans have always been considered good debt. In years past a university degree guaranteed you a good job upon graduation. However, in today’s world we have record numbers of unemployed and under-employed graduates with a mountain of student debt. Statistics Canada’s Survey of Financial Security reports that student debt grew 44.1% from 1999 to 2012, or 24.4% between 2005 and 2012. And, one in eight Canadian families is carrying student debt. The average student is having a great deal of difficulty paying off their student loans and according to the Canada Student Loans Program, most students take nearly 10 years to pay off their loans – with some taking the maximum 14.5 years. Under this scenario, is it really good debt?

The reality is that both good debt and bad debt can strangle you. Returning to financial health requires the help of a professional. Struggling from paycheque to paycheque is no way to live. Contact Ira Smith Trustee & Receiver Inc. With immediate action and a solid financial plan we can set you on a course to a debt free life Starting Over, Starting Now.

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Brandon Blog Post

NO CREDIT CHECK LOAN: FOR CANADA DAY?

no credit check loan, credit card debt, July 4, Independence Day, Canada Day, good debt, bad debt, credit counselling, bankruptcy alternatives, consumer proposal, consumer proposals, bankruptcy, student loans, line of credit, bad credit, licensed professional trustee, trustee, starting over starting now, debt consolidation, bankruptcy faqsThe no credit check loan and credit card industries are being used to fund holiday travel. The American Automobile Association reported that: “This year nearly 41 million Americans plan to celebrate the nation’s birthday with a getaway…” said AAA President and CEO Robert L. Darbelnet.

AAA also reported that this July 4 Independence Day travel is because of the willingness of consumers to take on debt, NOT an increase in income, to fund for the increase in consumer spending. No credit check loan debt and credit card debt is cited as the two credit vehicles of choice being used to fund travel.

In July 2013 we discussed how even high flyers can’t sustain the income to fund their lifestyles, so all demographics means the rich and famous are included. In April 2014 we discussed that debt is increasing in Canada across all demographics, and at alarming rates. A check of our analytics indicates that “no credit check loan” and similar bad credit loan searches are by far outweighing other keywords that people are using. Every day, fewer and fewer people are using keyword search terms such as credit counselling, bankruptcy alternatives, consumer proposals or bankruptcy.

It would appear that Canadians are also much more willing to take on more debt, even though they know they have a debt problem because of a bad credit score. We know that there are two types of debt: good debt and bad debt. If there is such a thing as good debt and bad debt, what’s the difference? The distinction is based on the purpose for which it is taken on. Good debt can be defined as anything that builds your assets or increases the potential for you to earn more money. Bad debt is typically incurred to purchase things that have no value or quickly lose their value and usually carries a very high interest rate – which more often than not is found in no credit check loan debt and credit card debt.

Some examples of good debt:

Some examples of bad debt:

There are a lot of people with bad credit who are feeling pain in our society and believe that another no credit check loan is their solution. These people are misguided in that they think that a further high cost no credit check loan will solve their problem. I understand the way these people think. It is hard for us to face our challenges. Whether it is about our health, our family or our financial situation, it is difficult and painful to look at our problems straight in the face, especially if we are the one who created the problem. These people mistakenly think that taking on more debt is the solution.

Well, it is not. These people need to recognize that their credit score is so poor because of choices they have made in the past, and their behaviour has to change. Taking on more debt through a high cost no credit check loan is just increasing their problems. They need to look at ways to budget so that their expenses are less than their income. They need to start saving to pay down debt.

If they can’t do it on their own, then they must consult a licensed professional trustee who can discuss options with them: budgeting, bankruptcy alternatives such as debt consolidation or a consumer proposal or perhaps even bankruptcy. If this sounds like you, contact Ira Smith Trustee & Receiver Inc. right away for a no charge consultation. You can even check out our bankruptcy faqs now online here. We will go over all of your options, and encourage and help you to implement the one that is right for you so that together we can solve your problems with immediate action and the right plan so that Starting Over, Starting Now will become your reality.

In the meantime, whether you are travelling for this Canada Day holiday or relaxing at home, we wish you a safe, fun, relaxing and hopefully only a good debt Canada Day holiday with family and friends.

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Brandon Blog Post

CREDIT CARD DEBT IS MORE THAN A 4-LETTER WORD

 

CREDIT CARD DEBT IS MORE THAN A 4-LETTER WORDCredit card debt. There’s a lot of discussion about it in the news these days and the news is all bad; but the reality is that there is good debt and bad debt. As you will read, debt, including credit card debt is more than a 4-letter word. However, no one is denying that debt is a serious issue for many Canadians. According to the Canadian Institute of Chartered Accountants surveys conducted in December and June, 2012:

  • 50% of Canadians think reducing debt is a high priority
  • 48% of Canadians would have difficulty making mortgage payments if interest rates rose significantly
  • 43% of Canadians carried over a balance on their credit cards
  • 17% of Canadians borrowed to cover day-to-day living expenses

According to Statistics Canada, between 1984 and 2009, household debt (which includes credit card debt) in Canada more than doubled from $46,000 (in 2009 dollars) to $110,000. In February 2011 the Vanier Institute of the Family reported that the average Canadian family had hit $100,000. If there is such a thing as good debt and bad debt, what’s the difference? The distinction is based on the purpose for which it is taken on. Good debt can be defined as anything that builds your assets or increases the potential for you to earn more money. Bad debt is typically incurred to purchase things that have no value or quickly lose their value and usually carries a very high interest rate – which more often than not is found in credit card debt.

Some examples of good debt:

Some examples of bad debt:

If you are having trouble paying the monthly bills, and have out of control credit card debt, it really doesn’t matter if you have good debt or bad debt; it’s time to see a professional trustee. Ira Smith Trustee & Receiver Inc. will evaluate your situation and help you to arrive at the best possible solution for your problems, whether that solution are bankruptcy alternatives like credit counselling, debt consolidation or a consumer proposal or bankruptcy. Starting Over, Starting Now you can be debt free with the help of a professional, licensed trustee in bankruptcy. You can even do some advance study with our bankruptcy faqs. Contact us today.

Call a Trustee Now!