Man­ag­ing Your Money: Keep­ing up with the Jone­ses

Southwest Booster - - NEWS -

Ev­ery day we en­counter in­vi­ta­tions to buy, buy, buy! Maybe you’ve just no­ticed that new car in the drive­way next door and see a ter­rific new car and you think, “Hey, if the Jone­ses can af­ford that, then I can, too.” Next thing you know, you’re look­ing up from un­der a moun­tain of debt.

But that’s not you – you don’t need to keep up with the Jone­ses and you want to keep your debt un­der con­trol. To help avoid those ex­pen­sive and fi­nan­cially crip­pling im­pulses and to help keep your debt un­der con­trol, here are a few sug­ges­tions:

• Start with a bud­get that makes a clear dis­tinc­tion be­tween ‘want’ and ‘need’ Make a com­pre­hen­sive list of all your nec­es­sary and dis­cre­tionary ex­penses. List your sources of in­come and, as much as you can, trim your ex­penses to fit your in­come. Try to in­clude an amount ‘in hand’ to save and in­vest.

• Or­ga­nize your spend- ing into three buck­ets - ‘past’, ‘present’ and ‘ fu­ture’ ‘Past’ spend­ing in­cludes loans and pur­chases made with credit cards. ‘Present’ spend­ing in­cludes your daily liv­ing ex­penses. ‘Fu­ture’ spend­ing in­cludes ed­u­ca­tion sav­ings for your kids and re­tire­ment sav­ings for you and your part­ner.

• Use credit wisely It’s easy to ap­ply for credit – but be­fore you do, look crit­i­cally at your cur­rent fi­nan­cial sit­u­a­tion. It might be bet­ter to tighten your bud­get for six to 12 months be­fore mak­ing any ma­jor pur­chases — and then you’ll be in a po­si­tion to pay cash for them.

• Know your TDS When you ap­ply for a mort­gage, your lender is re­quired to ap­ply the To­tal Debt Ser­vice (TDS) ra­tio to help en­sure an ex­ces­sive amount of your cash flow is not eaten up by your debt load. The TDS ra­tio mea­sures the per­cent­age of your gross an­nual in­come re­quired to cover mort­gage pay­ments, prop­erty taxes, heat­ing and other house­hold costs plus other monthly obli­ga­tions such as car and per­sonal loans, credit card pay­ments, spousal/child sup­port, and so on. Gen­er­ally, the high­est al­lowed ra­tios are ap­prox­i­mately 40-42 per cent of your gross in­come.

No, you don’t need to keep up with the Jone­ses, but if you want to make sure you’re keep­ing up with your own fi­nan­cial dreams, talk to your pro­fes­sional ad­vi­sor to­day. This col­umn, writ­ten and pub­lished by In­vestors Group Fi­nan­cial Ser­vices Inc. (in Que­bec – a Fi­nan­cial Ser­vices Firm), and In­vestors Group Se­cu­ri­ties Inc. (in Que­bec, a firm in Fi­nan­cial Plan­ning) presents gen­eral in­for­ma­tion only and is not a so­lic­i­ta­tion to buy or sell any in­vest­ments. Con­tact your own ad­vi­sor for spe­cific ad­vice about your cir­cum­stances. For more in­for­ma­tion on this topic please con­tact your In­vestors Group Con­sul­tant.

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