[et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” custom_margin=”||||false|false” custom_margin_last_edited=”off|desktop” top_divider_style=”curve2″ top_divider_color=”#e7dff3″ top_divider_flip=”horizontal|vertical” bottom_divider_style=”curve2″ bottom_divider_color=”#5b25af” bottom_divider_height_tablet=”80px” bottom_divider_height_phone=”50px” bottom_divider_height_last_edited=”on|phone” da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.21.0″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n
By Julie Jaggernath<\/em><\/p>\n It can be hard to keep our spending reigned in during the summer months. From vacations or weekend travel to out-of-school care for kids, home renovation or gardening projects, food and drinks on the go, or splurges based on our lighter moods, summertime fun can add up quickly. Before you get carried away, consider your exit strategy from debt and then plan your spending accordingly. Here\u2019s how.[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”1_2,1_2″ make_equal=”on” custom_padding_last_edited=”off|tablet” _builder_version=”4.17.4″ width_tablet=”80%” width_phone=”80%” width_last_edited=”on|phone” custom_margin=”-15px|auto||auto||” custom_margin_tablet=”||-35px||false|false” custom_margin_phone=”||-35px||false|false” custom_margin_last_edited=”on|phone” custom_padding=”10px||14px|||” custom_padding_tablet=”||0px||false|false” locked=”off” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”1_2″ _builder_version=”4.16″ animation_style=”slide” animation_direction=”left” animation_intensity_slide=”2%” custom_css_main_element=”margin: auto;\t” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_image src=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2023\/06\/woman-spending-money-on-credit-card-800px.jpg” alt=”A woman use a credit card for online shopping on a laptop.” _builder_version=”4.21.0″ border_radii=”off|200px|20px|200px|20px” box_shadow_style=”preset2″ global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_image][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.16″ global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.21.0″ custom_margin_tablet=”45px||||false|false” custom_margin_phone=”45px||||false|false” custom_margin_last_edited=”on|phone” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n If you\u2019re one of the Canadian households who took on a mortgage between 2020 and 2022, the Bank of Canada recently published their Financial System Review<\/a> which noted that, on average, you might be carrying over about 17% more credit card debt than those who bought their home between 2017 and 2019. If we put that into real numbers, 17% more on a $20,000 balance owing is an additional $3,400. To service that kind of additional debt on an ongoing basis can have a huge impact on your budget.<\/p>\n The fix?<\/span> Try out this super informative credit card payment calculator<\/a> from the Financial Consumer Agency of Canada (FCAC). It will show you how minimum payments don\u2019t add up<\/a> to what you think they do, how much less interest you\u2019ll pay when topping up your minimum payment each month, and how many years you\u2019ll save if you budget for a fixed credit card payment<\/a> each month.[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.20.2″ _module_preset=”default” custom_padding=”4px|||||” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.20.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.24.2″ _module_preset=”default” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n A lot of new mortgages are now re-advanceable. That means that when your mortgage is approved, you\u2019re also approved for a home equity line of credit (HELOC)<\/a>. As you pay your mortgage down, it adds to the available credit of your HELOC. If you\u2019re not disciplined about how you use your HELOC to meet your financial goals, you could end up never paying your home off.<\/p>\n The Bank\u2019s Review also noted that by the end of 2022, 46% of new mortgages had an amortization period longer than the traditional 25 years. That is up 12% from 2019 which saw only 34% of new mortgages with an extended amortization period. Combine a re-advanceable mortgage with a 35-year amortization and you could have grandchildren before you\u2019re close to being mortgage free.<\/p>\n The caveat.<\/span> A longer amortization means your mortgage payments are lower, which can seem like a good deal. And it is – if you know how to use it to your advantage. The lower payments made qualifying for the mortgage easier and can free up some cash in your budget. Put this extra cash to work, before you unintentionally end up spending it. Pay off a routine bill that just seems to be lingering. Indulge in a small splurge or put the money towards holiday fun.<\/p>\n Caution<\/span> This strategy works best with a realistic household budget<\/a>. You don\u2019t want to end up with ballooning, high-interest credit card balances that you pay off with your lower-interest HELOC. That just shifts your debt from Peter to Paul, but never truly pays it off. The lower interest on your HELOC can make it easier to pay off what you owe, so that part is good. But don\u2019t jeopardize the equity you\u2019ve built up in your home by using it to pay for things you can\u2019t even remember buying by the time you get the credit card bill.<\/p>\n Dealing With Increasing HELOC Payments<\/a><\/p>\n The Bank of Canada further identified Indicators of financial vulnerabilities<\/a> by credit type, and there\u2019s a troubling trend emerging when they looked at aggregate data from one of the credit bureau companies. Installment loans – so just regular personal loans, e.g. for debt consolidation<\/a>, are 90-days in arrears significantly more often than credit cards, car loans, unsecured lines of credit, mortgages, and HELOCs (in that order).<\/p>\n The fix?<\/span> Your pay cheque can only stretch so far. When it\u2019s reached its limit, something has to give. Most people do their best to keep up with their housing payment, either the rent or mortgage, and the credit accounts that keep the fridge full and protect how they get to and from work. Groceries and gas are typically paid for using a credit card, so then it\u2019s only logical that the loan payment is what falls behind.<\/p>\n However, to protect your credit rating, you want to avoid late payments whenever possible. If you’re trying to juggle payments to see which to skip for another month, that’s a debt problems warning sign<\/a> you shouldn’t ignore. Reach out to us before you can\u2019t keep up with your housing expenses. Our credit counsellors are experts at figuring out options to help you get relief from your debts<\/a> and create your own exit strategy.<\/p>\n The big deal about the significant amounts of personal debt that so many Canadians are carrying is that according to the Bank’s Review, while households are still managing to get by, high debt loads and vulnerabilities exposed by options to manage higher payments (e.g. 30-year mortgages to bring payments down) will catch up to us.<\/p>\n The Bank went on to caution<\/a> that the ability of highly indebted Canadians to manage through future turmoil, caused by a drop in income or a recession, could be intensified due to a built-up of vulnerabilities. This applies to variable rate loans and mortgages, as well as fixed rate mortgages, which are definitely not in the clear. As those mortgages mature over the next three or four years, a record number of households will need to spend significantly more of their income on mortgage payments.<\/p>\n What does this mean?<\/span> High household spending with a reliance on credit will leave consumers exposed with a limited capacity to manage interest rate increases, ongoing inflation, effects on their budget from financial uncertainty, and fewer borrowing options if lenders are forced to tighten up their lending criteria to mitigate losses in light of an economic downturn.<\/p>\n The fix?<\/span> Evaluate your financial situation and stop thinking that debt is normal. What\u2019s old is new again when it comes to managing our money to get out of debt and then stay out of debt<\/a>. Check out the viral trend of \u201ccash stuffing<\/a>\u201d if you\u2019re trying to find a way to budget better. Or stick with a simple tracking option<\/a> to always stay on top of what you have to spend. Ditch your credit cards and only use your HELOC for planned or emergency expenses, like a home renovation or car repair bill.<\/p>\n Interest rates are high, inflation is still rampant, and there\u2019s not much short-term relief for the high cost of living<\/a> in sight. Rather than banking on dealing with your debts when interest rates come down, seize the moment. Create a plan to take control of your spending<\/a> and get back on track based on the rates you have now. By taking control and not using summer as an excuse to begin a \u2018season of spending,\u2019 you might just avoid a fall of frustration and regret.<\/p>\n <\/p>\n <\/p>\n Last Updated on April 21, 2025 <\/span><\/p>\n <\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" Summer time fun can add up quickly. Before you get carried away, consider your exit strategy from debt and then plan your spending accordingly. Here\u2019s how.<\/p>\n","protected":false},"author":3,"featured_media":50444,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"categories":[17],"tags":[],"class_list":["post-50442","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-dealing-with-debt"],"yoast_head":"\nCredit Card Debt<\/h2>\n
Managing HELOC Debt<\/h2>\n
Personal Loans Deserve a Shout-Out<\/h2>\n
What\u2019s the Big Deal About Debt?<\/h2>\n
Get Relief From High Living Costs and Avoid the Pitfalls of Debt<\/h3>\n