Tag Archives: Mortgage

Doom and Gloom? Nope Just More Household Debt!

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DebtSurprise surprise, yet another article on household debt at an all time high. $1.5 Trillion to be exact. Just more evidence that people are still not getting the hint.  Why are people not getting the hint? The allure of cheap interest rates (Which will not last), uneducated people along with that instant gratification are what I think to blame. 

I won’t go into the full details of the article as it’s pretty much the same if not worse as I’ve blogged about before.  Go check out the article over at CTV News.  I also read Gath’s blog which I read all the time where he talks about how home prices in the US just passed the Great Depression in terms of collapsing values. Don’t think that will at least affect Canada? Give your head a shake.  There may be pockets in Canada where housing “may” be looking good, but that won’t last and you really REALLY need to get educated on where things are going.  That doesn’t mean listening to your real estate agent.  You need to check out blogs like Garth’s or people like Harry S Dent who are actually in tune with the markets and in a lot of cases are in agreement with many economists around the world with how we are in a Global Recession.  But again do your own research.

Anyway I’m curious how long people will expect to live with huge debt loads, huge mortgages they can barley afford (just watch when the interest rates go up and how many people ditch), and feeling of entitlement to having what they want when they want.  People need to shift their mentality to long term thinking and figure out where they will be when they retire at that special age of 65. Oh wait, that’s IF you can even retire at 65.  So many people carry debt loads right into their retirement, so much for that pile of cash at the end of the rainbow you were hoping for.

I’m not saying you need to build an Amway business, I don’t need to convince people to do what we do and never will, but you better have a good plan B and start making it your plan A.  Your job at the old factory or wherever you work isn’t going to give you the retirement bliss your hoping for, and neither will that tiny tiny pension plan you have “building up”.  You need to take your retirement (whatever that looks like for you) into your hands now and start making chances so you go into retirement without debt, heck start living today without debt.  Just get smart about it.

I’m sure next month or the month after we will see yet another news article on debt and how it’s higher or something like that, you need to ask yourself what are you going to do today to provide for the future?

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Shopping for Baby Stuff

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baby-shopperSaturday Lindsay and I went shopping for baby stuff to start grasping just how much this little tyke is going to cost us.  This stuff is quite expensive if your looking for new stuff, however as some know my Scottish heritage will always find the good deals out there. :D

There are tons of stores in Edmonton such as E-Children, Babies R Us, Baby Sam, etc…  I actually remember Baby Sam from long ago when my good friends Kyle and Erron where shopping there and they needed a truck to haul their new stuff home.  At that time I was nowhere near ready to have kids and didn’t even think I’d be doing that type of shopping anytime soon.  Well fast forward what, 8 years and now I’m doing the same thing they were. Pretty darn exciting.  We cannot wait to get the baby room all decorated and painted towards the end of this month.  One quick note, we are not finding out the sex of the baby, so most of our decorating will be gender neutral.  Lindsay found a pretty sweet crib sheet and comforter set which will be perfect for either a girl or boy.

One of the things we are excited about though is paying for our baby stuff in cash and not going into debt for it.  Trust me this will probably be much harder than buying a vehicle and wanting to pay for it in cash. Why?  Because it’s your child!  You want to buy the best for them and sometimes we let that get the best of us and do ridiculous things.  I’m thankful for the friends we have in our life and the association of people that also think going into debt isn’t a smart idea, even if it’s buying stuff for your kids.  We’ve got lots of examples of upline, crossline and friends who are paying for baby stuff in cash and are not going into debt and I love that example.  It’s quite powerful.  Don’t misunderstand me those examples are not *just* in this business, they are out there but just harder to find because we as Canadians live a carefree debt lifestyle, so much so the government has to step in and change mortgage rules to stop us from being stupid. (Check out Garth Turner’s Perspective on that).

Anyway this is just another example of places where people can get carried away. Stop, check yourself and your finances and make sure your doing the right thing.  Go shopping, find out the costs of things, and then save up for them and pay it in cash. Stop doing what every other Canadian does and thinking debt is cool, it’s not. It only hurts you and your family in the long run.

Debt Update

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I think today is a good day to give an update to what we’ve accomplished so far with our debt reduction.  I’ve mentioned earlier that we are very open with our debt and how much we’ve had.  While it’s quite embarrassing what we’ve racked up, we wanted to become an example to people out there that you can gain control over your debt with  some smarter decisions, hard work and dedication.  I will first hand say that NONE of our debt money has been paid off with any of the income we’ve made with our business.  That sits in a different account accumulating for our new vehicle that we plan on buying in cash.  We wanted to also be an example to people building this business that you can pay off debt without touching your income made with this business.  One last disclaimer before I continue, everyone’s debt situation is different and this is just an example of what we’ve done.  Nobody has ever told us what to do with our money as that’s one of the cardinal rules that we uphold; “Do not mess with anyone’s money”.

So what’s the update?  Well let me share:

  • As of June 1st we sold our condo and have decided to rent for the next few years.  We used the money we made off our condo to pay off some of our debts. 
  • $239,000 Mortgage – DEBT, gone.  You may think your house is an asset but it’s not, not until it’s making you more money then what your mortgage payment is (example; having renters). There is no such thing as “good debt”
  • $30,000 Home Equity Line of Credit – DEBT, gone.
  • $8,000 of $10,000 Line of Credit – DEBT, almost done.
  • $27,000 previously blogged about consumer credit card debt gone.

Debt left to finish off:

  • $2,000 of the previously mentioned Home Equity Line of Credit
  • $10,000 Vehicle loan

Total Debt Paid Off Since November 2009 = $304,000

 

So there you go.  $304,000 paid off since we first set a plan of action in November.  What did we change that helped us do this?  We got around people who didn’t live a debt lifestyle and lives a cash flow lifestyle, we read Richest Man in Babylon, we got some coaching from people who had similar amount of debt and who paid it off, and we set a budget.  That’s all we did.  Can you do the same? Absolutely without question.  It may look different then what we’ve done but there are always better options out there and sometimes you just have to make some sacrifices. 

We want to set the example of how to live a cash flow lifestyle instead of a debt one and we are doing that right now.

 

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