Spring is in the air and like most Canadians you are probably engaged in spring cleaning, throwing out stuff you don’t want, getting rid of the clutter built up over the winter, and maybe buying new stuff like patio furniture, garden supplies or a new Bar B Q.
This is a time of renewal, out with the stuff you don’t want or need and in with the things that will put a smile on your face and those you love. Have you ever thought about spring cleaning your finances? Is the financial junk that you know you need to deal with still stuffed in a closet or under the carpet? Avoidance is not a good strategy; in fact it will likely make things worse.
A good friend of mine who works in the banking industry told me that his organization conducted a study which indicated that Canadians are so heavily leveraged (in debt) that if interest rates rose to 5 percent (not likely any time soon, after all among other factors, we are in an election year) there would be massive foreclosures as mortgage payments go through the roof. What we need to see more of is Canadians making compulsory savings as important as their favorite latte from Starbucks.
Many years ago one of my clients asked me what’s the first thing I do with my paycheque when I got it and I said “I pay my bills” and he responded “Karl you are an idiot, you need to pay yourself first” If you really think about it, if you pay everyone else first you will probably never pay yourself and if you think anyone but yourself will put paying you first a priority you are living in a fool’s paradise.
The good news is that it is never too late to start taking small but corrective steps to spring clean your finances. A good first step is to make a commitment to take a certain percentage or dollar amount of your income and set it aside as savings, treat it like your mortgage or paying your utility bills, you have to pay them no matter what.
If you have a mortgage, you would be amazed at the impact paying an additional $200 to $300 per month directly on the principal can have on cutting your amortization by quite a few years. Paying your mortgage and saving at the same time, or increasing your wealth while paying down your debt is a simple strategy that you can employ to start the process of spring cleaning your finances.
Do yourself a favor, deflate the elephant in the room and start spring cleaning your finances today.