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Mar 9, 2012
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Good article. The lure of easy money is very appealing to people, and homeowners have that vehicle with HELOC's. I try not to use mine (and have a positive balance right now, even though it only $82...lol), but handy to have if the furnace blows up or the roof decides to shed it's shingles. Anything else, you're asking for trouble.
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Aug 22, 2011
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Unfortunate circumstances aside, why do people continue to live outside of their means?
Don't have the cash, don't buy!
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Apr 23, 2009
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jeff1970 wrote: Good article. The lure of easy money is very appealing to people, and homeowners have that vehicle with HELOC's. I try not to use mine (and have a positive balance right now, even though it only $82...lol), but handy to have if the furnace blows up or the roof decides to shed it's shingles. Anything else, you're asking for trouble.
Yep, the way I see HELOC is a rainy day fund. I chuckle when people actually put money aside for rainy day earning no interest or very little interest. My money is always working very hard for me. So no rainy funds. But I do have a rainy day HELOC. Smiling Face With Open Mouth
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Aug 20, 2007
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vkizzle wrote: Unfortunate circumstances aside, why do people continue to live outside of their means?
Don't have the cash, don't buy!
The issue is financial literacy... our education system fails to teach people about finance. I'm not talking about stocktrading and derivatives here but simple things like, budgeting, RRSP, mortgages, car loans. I'm pretty sure that if you asked 100 people only 20 would know about the concept of compounding. Of those 20, only 10 would probably know that your mortgage is compounded ever 6 months! People also need to take responsibility and grow up.... I have so many friends that ask questions and look for advice, then when I follow up with them 2 months later, they have changed nothing! I had one friend that was complaining about paying 300 a month to rogers and I told him to call retentions and get a promo as I've never paid more than 140-160 a month for all our services. Follow up and he said he's been too busy.... too busy!!... I'm never to busy to save some money!!
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Sep 23, 2013
506 posts
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Windsor, Ontario
peelhic wrote: The issue is financial literacy... our education system fails to teach people about finance. I'm not talking about stocktrading and derivatives here but simple things like, budgeting, RRSP, mortgages, car loans. I'm pretty sure that if you asked 100 people only 20 would know about the concept of compounding. Of those 20, only 10 would probably know that your mortgage is compounded ever 6 months! People also need to take responsibility and grow up.... I have so many friends that ask questions and look for advice, then when I follow up with them 2 months later, they have changed nothing! I had one friend that was complaining about paying 300 a month to rogers and I told him to call retentions and get a promo as I've never paid more than 140-160 a month for all our services. Follow up and he said he's been too busy.... too busy!!... I'm never to busy to save some money!!
Excellent point, in these forums we often see financially savvy users and think it's the norm. One thing to look back on is our high school years in this country, does anyone remember classes geared specifically towards personal finances? I know I don't.
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Sep 16, 2013
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Calgary, AB
SteveDfsin wrote: Excellent point, in these forums we often see financially savvy users and think it's the norm. One thing to look back on is our high school years in this country, does anyone remember classes geared specifically towards personal finances? I know I don't.
CALM (career and life management) is a one week class in Alberta - or at least it was when I was in high school. Budgeting was a small part of the curriculum mixed in with sex ed, career planning, etc. Needless to say, it wasn't a very effective way of teaching any sort of financial literacy.

I still think back to the partner project we had to do: build a budget as husband and wife using the given scenarios. I was a manager at some company making 6 figures and my wife was making just shy of 6 figures. No kids. Not exactly a realistic scenario for most Canadians let alone high schoolers learning how to budget.
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Jan 15, 2017
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Living within your means is difficult for a lot of people. Some want a lot of things and some people can literally $20 themselves into significant debt.

The problem is two-fold - never has there been so many consumer items readily available and never has credit been so easy to get.

Getting people to stop buying and to cut back is as difficult as getting someone to lose weight. If they view it as being deprived - it ain't going to work for very long. The key is to get them to cut back from a position of strength. Getting them to the thinking that they can afford to buy something, yet they chose not to.

One thing that has helped me is to view whatever I want to buy at its end of life. No matter what I want, no matter how I may get excited about it today, one day in the future I am no longer going to want it and it will have little to no value to me. No matter how great it is today, it will be garbage to me one day. This philosophy has helped me tremendously.
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Aug 20, 2007
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Kitchener
SteveDfsin wrote: Excellent point, in these forums we often see financially savvy users and think it's the norm. One thing to look back on is our high school years in this country, does anyone remember classes geared specifically towards personal finances? I know I don't.
I think one of the biggest errors people make is that they focus on the wrong thing with regards to debt and budgeting. Most people focus on the big expenses and forget the small transactions that add up to a lot. Generally its not the 500 laptop or 2000 tv that gets people into debt. Its the hundreds of $5 transactions that they make monthly thinking "its only $5 bucks". A lot of the people I know that have financial issues, generally they don't get there due to over spending on big purchases but rather they ignore the small ones thinking their insignificant. If a person can change their behavior and save $5 bucks a day from their usual routine... there's 1800 annually but people don't think of the multiple transactions they just think of the one time spend and think its not a big deal.
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Nov 28, 2016
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vkizzle wrote: Unfortunate circumstances aside, why do people continue to live outside of their means?
Don't have the cash, don't buy!
Guess the same can be said about a mortgage then right? For some, by the time you save up for the house you need, you wont need it.
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Nov 28, 2016
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ruchir wrote: Yep, the way I see HELOC is a rainy day fund. I chuckle when people actually put money aside for rainy day earning no interest or very little interest. My money is always working very hard for me. So no rainy funds. But I do have a rainy day HELOC. Smiling Face With Open Mouth
And thats the way you do things. I chuckle when people think their way is the only right way.
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Nov 28, 2016
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peelhic wrote: I think one of the biggest errors people make is that they focus on the wrong thing with regards to debt and budgeting. Most people focus on the big expenses and forget the small transactions that add up to a lot. Generally its not the 500 laptop or 2000 tv that gets people into debt. Its the hundreds of $5 transactions that they make monthly thinking "its only $5 bucks". A lot of the people I know that have financial issues, generally they don't get there due to over spending on big purchases but rather they ignore the small ones thinking their insignificant. If a person can change their behavior and save $5 bucks a day from their usual routine... there's 1800 annually but people don't think of the multiple transactions they just think of the one time spend and think its not a big deal.
And there are people out there that have no daily habits, as in the Starbucks effect. I myself cant think of one on a daily basis I spend on.

I think of the big purchases and the small
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Aug 22, 2011
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WikkiWikki wrote: Guess the same can be said about a mortgage then right? For some, by the time you save up for the house you need, you wont need it.
No, still falls under "buy what you can afford".
My first mortgage was $280K, followed by $375K and two years ago just shy of $900K.
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Nov 28, 2016
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skeet50 wrote: Living within your means is difficult for a lot of people. Some want a lot of things and some people can literally $20 themselves into significant debt.

The problem is two-fold - never has there been so many consumer items readily available and never has credit been so easy to get.

Getting people to stop buying and to cut back is as difficult as getting someone to lose weight. If they view it as being deprived - it ain't going to work for very long. The key is to get them to cut back from a position of strength. Getting them to the thinking that they can afford to buy something, yet they chose not to.

One thing that has helped me is to view whatever I want to buy at its end of life. No matter what I want, no matter how I may get excited about it today, one day in the future I am no longer going to want it and it will have little to no value to me. No matter how great it is today, it will be garbage to me one day. This philosophy has helped me tremendously.
All depends, what are we talking about, things that last a few years, or something that can last for decades, or will increase the value of something double,

Everything is garbage someday, so if it is does that mean not purchase it if you are going to use it a lot.

I see it pointless to upgrade phones so often, tons on here do it all the time. Im rocking an almost 6 year old phone, and until it dies, wont get another

I am debating recently about using my HELOC to build a pole barn, because I dont have the 35-50K that will be involved to pay for it. And by the time I save for it, what I want it for will of passed, and it will increase my property value by probably doubly of what I paid to build it.

Does that mean I dont get it? If I can get 20-30 years of use out of it.
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vkizzle wrote: No, still falls under "buy what you can afford".
My first mortgage was $280K, followed by $375K and two years ago just shy of $900K.
Ahh, so you saved 280K up in how many years. Here we go, the magic RFD people, no help from anyone, saved up a quarter of a million dollars in under ten years, mortage free by 29.

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