Written by Kelley Keehn
Friday, May 18th, 2018
Money blunders are all too easy to make because the reality is so few Canadians have ever been taught the basics of finance in school or elsewhere. That's why empowering yourself by reading blogs like this, your local newspaper's business section or subscribing to a money magazine can increase your financial confidence with relative ease.
What Are Some Common Blunders to Avoid?
Paying Too Much in Fees
Sheila Walkington, Vancouver-based, fee-only, Certified Financial Planner with Money Coaches Canada says fees top her list of things that people could save on and, all too often, don't pay attention to.
"I see so many people letting small fees and expenses add up. Like paying fees on bank accounts you aren't using, paying up to $3 per transaction to take money out of an ABM that's not affiliated with your bank, NSF or overdraft fees, paying unnecessary insurance on credit card or line of credit balances, and a big one: paying for a gym or service you no longer use."
Taking on Consumer Debt
Laurie Campbell, CEO of Credit Canada, a non-profit credit counselling organization, sees clients making money mistakes on a daily basis. One that she's the most worried about is people taking on more consumer debt, especially at a time when interest rates are on the rise.
"As consumers, we've grown accustomed to almost 30 years of declining interest rates. For years we've been able to take on debt that we couldn't afford. All we needed to do was just wait a year and refinance at a lower rate. Those days of falling rates are behind us."
50% of Canadians are just $200 away from not being able to pay their bills and 1 in 5 Canadians couldn't last a week before going into debt if they lost their primary source of income.
Laurie is worried because we've now seen 3 Bank of Canada interest rate increases in less than a year, and she feels it's time for Canadians to pay down debt.
"As rates rise, less of your payments go to the principal. Have a look at your credit card bill and if you don't pay off the balance every month, understand how much you are paying in interest."
That little box at the bottom or back of your credit card statement tells you how many years it will take you to pay off your credit card if you only make the minimum payment. It can be a scary number. However, paying it off with even just a dollar or two per day more than the minimum can make a bigger dent than you might think.
Tools for Paying Off Consumer Debt
Sheila and Laurie believe that if you're going to have an enemy in life – it should be debt. You'll want to make every effort possible to pay down debt now, since interest rates are still relatively low but moving up. Check out these calculators from the Financial Consumer Agency of Canada if you'd like to see how to get your consumer debt paid off sooner.