why it's time to pay down debt and save

Why it’s time to pay down debt and save

Why it’s time to pay down debt and save

Time has changed; the world we live in today is much different than the one we lived in just one year ago. 2018 has already seen a stock market correction, inflation is on the rise and interest rates within the past year have been increased three (3) times. Stock markets had been on the rise for years and interest rates stayed the same. Interest rates are expected to rise further in the near future. Here is why it’s time to pay down debt and save.

What does this mean for you?

Debt becomes more expensive

Regardless of whether you have variable or fixed rate debt (learn about variable and fixed rate debt in our article) as interest rates go up it costs you more money to pay off your debts! If you have variable rate debt, when interest rates increase yours does automatically. If you have fixed rate debt, when it is time to renew the renewal rate will be higher than your previous rate.

In Rent vs buy: the debate of a lifetime you saw that interest costs are 67% of the cost of your mortgage! Your house cost goes up by 2/3s! With interest rates increasing the additional cost will only increase!

You earn more on savings

With higher interest rates you earn more on saving accounts and GICs! Your cash can make you more money and with the power of compound interest can make you even more! You can use this increased value in cash to save for things like education, a well deserved vacation, some well needed home repairs, etc.! Having more money to do the things you want in life is a great thing!

With greater cash available you can also use it to invest for the future for things like a new home, retirement, a sabbatical, etc.

Action plan

Do not incur more consumer debt, especially variable debt! If your mortgage is up for renewal, lock in the rate so when interest rates rise your rate won’t!

Pay down your higher interest rate debts first. High credit products like credit cards should be paid off monthly. Use a line of credit to pay off credit cards then focus on paying down that line of credit!

Open up a high interest rate savings account at your bank or credit union. Virtual banks offer much higher interest rates. You may be offered a significant promotional interest rate, meaning for on new deposits you earn an even higher interest rate!

never attend this party

Never attend this party

Never attend this party

Parties are a fun time. Parties are a gathering of friends and family to celebrate an event or occasion in life. A baby shower, a bridal shower, a birthday and a retirement are some great examples of parties. These occasions are a great time, celebrating, with the underlying nature of the event a joyful one. However there is one party that the underlying nature can cripple someone for life. You should never attend this party; a housewarming party.

Housewarming parties

Housewarming parties are meant as celebrations of someone or a couple taking the next stage in their lives. The next stage being purchasing a home of their own and facing life. Friends and family are invited to celebrate the new home. We are expected to show up with a gift, smile and say how nice their large home is. The new homeowners will be trying to impress us, with how large their home is, how fancy it is with new appliances, expensive furnishings, etc.

This type of party, underneath, is a giant hole, not a grand home in which the new homeowners are building their lives. Home prices in North America are at an all time high and interest rates are on the sharp rise. Your friends who just bought that house are swamped in debt and will be for the next 25 to 30 years. For one third of their lives they will be paying that debt back and you just showed up to their house to celebrate this!

How to make the party enjoyable

There is nothing you can do to make someone else’s party enjoyable; they took the debt themselves and are asking you to celebrate this monstrosity. You can however make your party enjoyable by purchasing a home you can afford. Here’s how:

Determine whether you can you afford the home

Your housing costs which includes your mortgage payment (both interest and principal), insurance, maintenance and utilities should not be more than 30% of your after-tax salary. If the housing costs are above this you may want to consider the following.

Making a down payment of 20% or more

Making a down payment of 20% of more of the asking price is a great way to reduce the total amount you owe, save you tens of thousands of dollars in interest and will eliminate the need for mandatory CMHC insurance.

Clean up your credit

Your credit may be holding you back from qualifying for a lower interest rate. Cleaning up your credit will improve your score and you will less risky to lenders which in turn will result in a lower interest rate. With a lower interest you will be better able to afford the home you want. I have discovered 5 proven ways to increasing your credit, find out here.

Consider renting

Renting does not involve going into debt and having to pay that debt off for a third of your life. Consider renting it may prove to be more financially viable than buying (check out Rent vs Buy: The Debate of a Lifetime and how to save on your mortgage) and you have more freedom to move if you find a better place!

Your party

You have control over your party. Celebrate with your friends and family knowing you made a financially sound decision.

points vs interest

Points vs interest

Points vs interest

Recently I have been giving it some thought on the various points you earn on credit cards; from cash back to travel rewards and everything in between. There are significant welcome rewards on many credit cards and bonus rewards as well! As consumers we are always looking to maximize the points we earn. I asked myself the question: is you get points when you buy something, what do you get when you save? It’s interest of course, but why aren’t we as concerned with earning interest by saving versus earning points by spending and going into debt? Today’s new debate is points vs interest.

points vs interest


Points are great; you can earn cash back, travel points, points to spend on entertainment purchases and points can be redeemed for merchandise and groceries! The points you earn range anywhere from 1% of what you spend to upwards of 4%-5%! The welcome points range as well from 5,000 to upwards of 50,000 which is the value of a short haul domestic flight in many cases. With enough points saved you can redeem them for nearly whatever you want. We have all heard of people using points to pay for an entire two week family vacation.

Points can also be converted with many credit cards; you can transfer points to frequent flyer programs such as Air Miles or Aeroplan or to Starwood Preferred Guest loyalty program.

There are many options of what you can do with your points and depending on where you make your purchases the rate you accumulate points can vary significantly.


Unlike points, interest is earned by saving money. Interest is earned no matter how small or large of an amount you save or how you save it. There are generally no welcome interest. However there may be bonus interest on new deposits, usually around 3% which is a great savings rate. Current high interest savings accounts (aka HISA) are around 1% which is the same rate as the lower end of which you earn points. Some are as high as 2% however the rates are earned from non-Chartered Banks.

With no welcome interest nor any significant savings interest rate earning points appears to be the better option. However there is one substantial benefit to interest that points will never have… that is compound interest! With compound interest your interest earns interest whereas with points, your points do not.

Which is best

If you can earn the points you want and earn interest on the money you save you are winning on both accounts. What is harmful with points it requires you to spend money and go into debt. Larger purchases earn you more points and can put you into even more debt.

Here are some things to consider before making a large purchase:

  1. Is this a purchase you would make anyway regardless of the number of points you can earn?
  2. Will you have enough money to pay the purchase off?

When looking to earn interest here are a few considerations:

  1. Pay yourself first. Transfer a certain amount into a high interest rate savings account every month.
  2. Consider switching banks to earn a higher interest rate. History has shown that banks that offer the highest interest rate do so for only so long.
How Mr. Wonderful saves money every morning

How Mr. Wonderful saves money every morning

How Mr. Wonderful saves money every morning

Mr. Wonderful, Uncle Kevin, Kevin O’Leary saves money every morning just like you! We have been following Kevin O’Leary for many years, have read a number of his great books and have taken to heart a lot of his fantastic advice on money. You and him have at least one thing in common that is how you both save money every morning. Do you want to know how Mr. Wonderful saves money every morning like you?

Saving money every morning

Would you believe that you can save nearly $1,800 a year doing this one little thing in the morning? When I first heard how many of you do this I was surprised! 7 out of 10 of you do this! And it’s great!

What’s the one thing in the morning above all else? You would skip breakfast for this very thing! If you have not guessed it yet, it is coffee! Yes you save nearly $1,800 by drinking coffee every morning AT HOME. In our article How you are saving money every morning we determined a cup of coffee made at home costs $0.16 while Uncle Kevin determined the cost to be $0.20 (click the link to check out the video).

Coffee purchased outside of your home will cost you at least $1.79 and that’s a standard coffee, no mocha latte or anything fancy like that! If you drink two (2) cups at home you would save $3,600 a year and would save $5,400 with three (3) cups!

What can you do with $1,800?

The possibilities are endless with this money saved; have you even considered what you are doing with this money you didn’t even know you were saving?

Here are my top ways to use this money:

Increase your emergency fund

Increase your emergency fund with your coffee savings is a great way to keep yourself and your family protected when life happens. With a sufficient emergency fund you will not have to incur debt when life happens or use savings or investments to pay for the emergency. Increasing your emergency fund increases the amount of money you have.

Pay down consumer debt

Consumer debt carries interest rates of over 21% and it can take years to pay off the smallest of balances. By paying off this type of debt you are saving yourself a bunch of money and stress!

Pay down your mortgage

Your house and your mortgage for that matter are life’s largest expenses! Paying down these sooner will save you the most money and with more money you will have more freedom to do what you want like taking that well deserved vacation!

Take that nice week to two week vacation

You need to reward discipline and taking that vacation is a fantastic way to reward yourself! Be sure to save yourself money while on vacation as more money saved can mean more vacations!


Enjoy your coffee and remember you are saving money when you do! And now you know how Mr. Wonderful saves money every morning!


don't live below your means

Don’t live below your means

To succeed financially you should live below your means unless you got life’s largest purchasing decisions taken care of!

Many will tell you, you should live below your means to succeed financially and while that is true it is a matter of perspective.

You need happiness, a sense of enjoyment and fulfillment in your life and sometimes that takes money to do. Having a dinner or drinks out with your friends is something most of us enjoy and we’d hate to have to lessen the experience and enjoyment.

However, living below your means; going without a night out or finding a cheaper alternative is needed for many. Living below your means works well because you are reducing your expenses and saving more. Add in paying off debts and using compound interest to your advantage will surely bring a positive financial effect.

Many of life’s smaller guilty pleasures like a night out are needed and well deserved; you worked hard and don’t want to feel like you are restricting yourself. Of course this can go overboard with uncontrollable desires and impulse purchases in which case you would need to live well below your means to recover.

Don’t live below your means

So what must you do so you don’t live below your means and can still do well financially?

The short answer is to get life’s largest purchases (i.e. home and vehicle) right.

Getting life’s largest purchases right

If you want to get life’s largest purchases right here are some great ways to achieve this!

  1. Do not overpay for your home or vehicles

Overpaying will make it very difficult to afford to do other things you want, to afford to do things that make you happy.

Your mortgage payments, insurance, maintenance and utilities should not be more than 30% of your after-tax income. If it is, the house you have is too expensive!

Your car payments, insurance, maintenance and gas should not be more than 10% of your after-tax income. If it is, your car may be too expensive or you live too far away from work!

  1. Save up and put money down on the big purchases

Making a large enough down payment on your home or vehicle is a great way to reduce the payments down to an affordable level. Instead of just 5% on your first home, save up and make a 20% down payment instead!

The more you make as a down payment means less money you need to pay out later, especially in interest charges!

  1. Know what debt you are taking on

For life’s largest purchases we may need to borrow however it is too common for people not to know what type of debt they are taking on; what the terms are and how much they are paying in interest and other fees for example. Before taking on debt to make some of life’s largest purchases, ask about what you are signing and take a read of it! You may not understand the legal jargon but sections where they discuss the amortization, term length, interest, payment frequency and anniversary payments are key areas to look at!

How to enjoy a holiday

How to enjoy a holiday

Holidays are around to give us a break; give us a break from work and our normal daily routines. This break is meant to let us unwind, relax and enjoy ourselves, however for many of us holidays are stressful.

The holiday stress

Stress floods into our holidays for many of these following reasons:

  1. They never seem long enough
  2. Holidays are busy with lots of running around
  3. Having to deal with family which though important can become uncomfortable at times
  4. Holidays can cost a lot. It is costly to travel due to high demand. Travel to and from your destination is expensive and time consuming, accommodations aren’t cheap either and attractions gouge you at best.

Despite these many stresses there are a number of ways for you to enjoy your holiday with less stress and of course more money in your pocket.

How to enjoy a holiday

Attend free events at non peak hours

Many communities have free events to attend during holidays. Things like live music, children activities and a nice walk through a park where festivities are happening are great ways to enjoy yourself without shelling out money.

Attending these festivities at non peak hours reduces your stress because it is less busy and less waiting around to do things.

Plan your holiday well in advance

Planning a holiday trip months in advance generally is less expensive because there is less demand at that time. Many destinations and travel experiences offer early bird pricing and other great promotions to get customers.

“Rough it” in the backyard

Set up the tent in the backyard and enjoy a night underneath the stars! Invite some family and friends over to join and make it an enjoyable holiday that doesn’t break the bank. Spend time in the pool and walking around the neighbourhood.

Take vacation time during weeks of a holiday

Holiday on a Friday or Monday? Take the week before or after! You will only use four days instead of five to take a full week off work! You can cash out that other day if you need to or use it another time when you need a break!

Use holiday sales for things you need

Around the holidays it may be a good time to purchase things that you or a loved one needs, like a barbeque for the summer! Though a barbeque is not a life essential it is a great tool to have to enjoy a nice summer holiday. Instead of buying an item like that at any time during the year, wait for them to go on sale near a summer holiday so you can save some money!

If you are looking for another 25 great ways to save check out our 25 simple ways to save article.

What’s important with holidays

Remember holidays are about unwinding, relaxing and enjoying yourself whether that be with family and friends. Holidays can be stressful and can become a financial burden, the key is to find ways so that your holiday is not stressful and does not break the bank.


Save when others spend and spend when others save

Save when others spend and spend when others save

Great Advice

Warren Buffet is known for many things especially the following quote:

“Be fearful when others are greedy and be greedy when others are fearful”.

Great advice yet very difficult to achieve. I have come up with my own quote with a similar substance to it:

“Save when others spend and spend when others save”.

I’d like to think this is also great advice and also hard to do. In my own life I have seen this advice play out to fruition. Saying no to spending while others do is tough, but necessary and when others save you can spend. What happens is what you spend your money is far more valuable than what they spent theirs own. Take this example:

Save when others spend and spend when others save

Save when others spend and spend when others save

A group of young adults just out of post-secondary education with full time jobs are all looking to make their mark on the world. They will be getting paid while all learning through great opportunities. With this comes the desire to ditch their old cars, buy new and all drive around looking like they have a great future ahead of them. The entire group except one ditches their old cars and finances the purchase of their brand new car. They excitement, power and belonging; they have realized a very tangible object with their friends! The lone ranger decided to keep her car and keep maintaining it despite the obvious peer pressure to buy! She was smart and chose to save while others spent; the money she wasn’t paying for her car she put in the bank!

Fast forward two to three years. There is a new exciting opportunity for this group of young adults. A chance to travel, in a group of other young adults from across the country, for three months around various parts of the world and partake on some sweet adventures! Her friends are all strapped for cash as they are all paying off their cars. They financed at a time when interest rates were high and overbought on their cars. This girl is plush with cash after having saved it all up and was banking compound interest! She decides to spend while her friends and forced to save.

A powerful story revealing the truth behind saving while others spend and spending while others save! Yet the above scenario is all too true. I have seen it directly in my life and through friends of friends. Buying transportation at the wrong time or overspending is one thing, but what about a house? Average home prices in Canada are well above 18 times the price of car. Can you imagine how many opportunities you would have to forgo than?

How to save when others spend and spend when others save in your life

The simple advice

Do the opposite of what others do. Every Friday when your colleagues go out for lunch, join them but don’t order anything, bring a lunch from home and eat it before hand. Lunch costs $10 to $20 every week over the entire year that is $520 at least! What if you had $520 in your pocket today? What could you do with $520?

You can of course join in on the actual eating part occasionally and be smart about it. Eat half and save the other half for dinner or for lunch the next day! You just reduced that expense in half in less than five seconds! Not bad for a simple choice.

The look ahead approach

Take a look ahead to the things you want to do in life. Is it to travel? House or cottage renovations? Buy a boat or trailer to enjoy some family experiences? Once you are able to answer the question “what do you want to do in life that will bring you the most happiness” then you will know what’s most important you do. You should also think about is not that important to you and your happiness.

When others spend on things you have determined not to be important, you save. When those experiences and purchases arise that will bring you happiness, you spend.

Action plan

What you can do today to save when others spend and spend when others save

Determine what brings you the most happiness in life; figure out what you want to do in life and what is important to you.

What you can do tomorrow to save when others spend and spend when others save

Start doing the opposite of everyone else. If co-workers are heading out for lunch, as they do everyday, bring your lunch from home and have that. If everyone is buying coffee, bring yours from home or get a cup from work!
You will see very shortly how you will be able to have experiences and have happiness in your life when unfortunately others will not.

saving money every morning

How you are saving money every morning

How am I saving money every morning?

YES that is right, you are saving money every morning without even knowing about, well at least most of you are. I bet you are asking yourself how am I saving money every morning? It all comes down to this.

Saving money every morning

Drinking coffee! Yes drinking coffee every morning, coffee brewed at home that is, saves you money.

According to the Coffee Association of Canada 7 out 10 cups of coffee are already consumed at home. To be honest I thought more coffee would be consumed outside of the home, however there are a lot of smart people like yourselves! Though a not so staggering fact is that the average Canadian consumes over 3 cups of coffee per day which makes sense, a couple of cups in the morning and another in the early afternoon.

How much money am I actually saving?

We will be comparing the cost of a Tim Horton’s medium coffee which is 14oz to the cost of a 14oz cup from home… time to break it down.

  1. $45.20 (HST included) Hamilton-Beach 43874 12 Cup Digital Coffee Maker
  2. $7.91 (HST included) Folgers Classic Roast Ground Coffee 920 Grams
  3. $33.90 (HST included) Bunn 1000 Paper Regular Coffee Filter for 12-Cup Commercial Brewers (Case of 1,000)

Cost per Cup from Home

Item Cost
Coffee Maker ($45.2/2190*) $0.02
Folgers Coffee ($7.91/84**) $0.09
Filter ($33.9/1000) $0.03
Water & Electricity $0.02
Total $0.16

*3 cups per day translates and consumed over two years is 2,190 cups of coffee, assuming you get a new coffee maker every two years.

**The Folger’s canister suggests that the 920g will get you up to 200, 175mL cups of coffee however we have calculated the cost based on 414mL which is 14oz.

The total cost of a cup of coffee at home is $0.16!

Cost per Cup from Tim Horton’s

While the cost of a Tim Horton’s coffee, let alone Starbucks which is significantly higher price, is $1.79.

Your bottom line

YOU ARE SAVING $1.63 WITH EVERY CUP OF COFFEE DRANK AT HOME! Your annual savings is $1,784.85! That’s three (3) cups a day for 365 days of the year.

What can you do with $1,784.85?

The possibilities are endless with this money saved; have you even considered what you are doing with this money you didn’t even know you were saving?

Here are my top ways to use this money:

  1. Pay down consumer debt
  2. Pay down your mortgage
  3. Take that nice week to two week vacation
  4. Donate to your favourite charity or local community

Enjoy your coffee and remember you are saving money when you do!

Contact me for your free consultation

If you are struggling with using your money to achieve your goals, contact me directly to setup your free one-on-one consultation. Please let me know your goals, be specific and tell me your time to reach them, I look forward to helping you achieve your goals!