Making Debt Work for You

Did you miss The Next Step: Making Debt Work for You?

The panel of financial experts offered our alumni a lot of great advice. Here are a few tips from the February 1st event:

• The fact that you qualify for a lot of debt doesn’t mean that you should use it all. You need to have a plan for repaying anything you borrow.
• Think housing prices put the idea of owning your own home out of reach? Consider co-ownership of property with friends or family members. Lenders are increasingly offering options for this type of arrangement.
• Revolving debt (such as credit card debt) can become a trap, so beware. Mortgage debt can be a good form of debt because real estate assets (particularly in the Vancouver market) usually appreciate in the long-term. Student loan debt is a complicated issue but it can be good if it will lead to you increasing your future earning potential. Once again, you need to have a plan for how you will repay it after graduating
• You can seriously damage your credit rating with retailers’ credit cards as they’re so easy to forget about (not being one of your regular monthly bills). Saving 10 per cent off today’s purchase isn’t worth it if you don’t pay it off by the due date. Use them with caution.
• Don’t forget! Bad credit decisions stick around for a long time (6 years).
• Have an impulse spending problem? Put your credit card(s) in a case with your spending goals written on the outside. Every time you pull it out to use it, the message will remind you not to compromise your long-term goals for short-term gratification.
• Buying property is a good long-term investment, but can be risky in the short-term. Don’t count on being able to renovate and then quickly flip your property.
• You can get a free credit report from both Canadian credit bureaus, Equifax and TransUnion. It requires patience, however, as it is sent to you in the mail. You can also get your credit report online for a fee.
• Paying a bill a few days late won’t really hurt your credit rating. Doing so on a regular basis will affect your rating.
• If you’re experiencing temporary repayment problems, contact your creditors and be open about your situation. They get nervous when they don’t know why you’re not paying.
• Keep all of your credit balances below 50% of the limit. Maxing out your credit can affect your credit rating.
• Bankruptcy is not an easy way out. It’s a long and costly process and will affect you for many years. There are often other solutions and it should only be considered if nothing else works.