Money Maven

http://business.financialpost.com/personal-finance/debt/canadians-getting-lured-onto-auto-debt-treadmill-by-signing-on-to-long-term-car-loans-watchdog

Canadians getting lured onto 'auto-debt treadmill' by signing on to long-term car loans: watchdog Canadians are often buying more car than they can afford, paying much more interest, and, in some cases, going on to buy new cars before original loans are fully repaid

Are you over-extended? Have you taken on too many monthly payments? As a general rule - your housing costs (Rent or Mortgage, Insurance, taxes and utiliites) should be at most 30-35% of your take-home income. Any more than this, and you'll feel a strained - "house poor". Vehicles including payments, insurance, gas and upkeep should be at most 15% of this take-home income. 10% should go to savings. What do I see? 40% to housing, 20% to vehicles and 0% to savings :(. Send me a message to see how we can make adjustments to get you on track.

A joint bank account is an old fashioned ideal. And most often breeds hostility. Because it's nearly impossible for a couple to value money in the exact same way, expecting to marry your finances without stress is a big expectation. I recommend being open and honest about your finances, but sometimes the one and only benefit to a joint account is having 1 set of bank fees. One person is likely to take on a parental role, and both are likely to harbor resentment over differing opinions.

Caroline and Rob were feeling the stress of the economic downturn this year. After Rob was off work for much of the year, they were playing catch up. They had managed to make all their payments and keep excellent credit. They did however accrue a balance on a credit card with 12% interest. I advised them to inquire about the "skip payment" option on their car loan. Because they were creditors in good standing, and had never missed a payment, they qualified for this option. They were able to miss 2 car payments in October, and 2 in December. Putting the money towards the balance on their credit card. The interest rate on the car loan is 4%, and the 4 missed payments will be added onto the end of the loan. They've financially "reset" themselves and will no be able to start building an emergency fund.

All too often I see people so focused on paying off their mortgage so they can start saving. They lock into fast-tracked mortgage payments and have all the urgency around paying off the mortgage. It's a great mentality, that they want to be debt free and that they're trying to formulate the best plan. However, they're losing precious time in allowing their savings to work for them. I've actually looked at lengthening mortgages to free up the cash to start investing with, shaving 5-10 years off clients' retirement age. It pays to get a professional opinion, sometimes it's just a different way of looking at things.