Winning may not be everything, but it sure feels good. Just ask anyone who has put their finances back on track and who is sticking to a budget.

There is no official award for that. But there are tons of rewards. Like not having to stew about the weight of your piggy bank every single day. Like not feeling anxious about a bill collector being on the other end of the cell ring you’re hearing. Like living well and treating yourself and family to little luxuries while actually being able to realize your longer-term hopes and dreams.

I mention winning today only because we have received word at Credit Canada that For the Love of Money has been nominated as one of the country’s top ten personal finance blogs by the folks at The Globe and Mail, Canada’s national newspaper. For the newspaper’s feature Best of the Blogs 2011, Globe financial reporter and editor Dianne Nice had, well, nice things to say about For the Love of Money. 

Says Dianne: “Laurie Campbell, of the not-for-profit Credit Canada, is the lead writer for this humorous blog that aims to ‘improve everyone’s financial savvy.’ I love the pull-yourself-up-by-your-bootstraps tone of the articles, which are geared toward those who tend to overspend.”

We are of course honoured to be selected by Dianne, as fine a journalist and editor as you will find in this country. And we are pleased to be nominated by Diane among four other financial bloggers. Here are the others that were included in Diane’s list:

• “Gail Vaz-Oxlade: You’ve got to love the no-nonsense approach of well-known TV host and author Gail Vaz-Oxlade. Her personality is all over her blog, which features great tools, including Gail’s Guide to Building a Budget.”

http://gailvazoxlade.com/blog/

• “RetireHappyBlog: Run by Jim Yih, a financial expert with 20 years of experience in the industry, the Retire Happy blog is full of practical tips for retirement savings but also has hundreds of personal finance articles on a range of topics from children’s allowances to taxes.”

http://retirehappyblog.ca/

• “Canadian Couch Potato: Educational and amusing, Dan Bortolotti, an award-winning personal finance journalist, writes a great blog for those who hate high mutual fund fees and want to learn more about do-it-yourself investing through index funds and exchange-traded funds.”

http://canadiancouchpotato.com/

• “Money Smarts: Mike Holman, author of The RESP Book, has worked in the Canadian financial industry for almost two decades and is the go-to guy for answers about registered education savings plans, but his blog touches on all things personal finance, from discount brokerages to energy sales scams.”

http://www.moneysmartsblog.com/

For the full story about all the blogs nominated by the Globe, go to  http://www.theglobeandmail.com/globe-investor/2011s-best-of-the-blogs-nominees/article2007165/

Meanwhile, we have no intention of resting on our laurels here at Credit Canada. There are many people in this country who need instruction about the benefits of winning.

I was raised by a single mother of three who instilled a fierce need for independence in me. I’m not the “I buy my own rings and shoes” kind of independent woman but the kind who is a conspiracy theorist and relies on no one but herself for anything because no one else can be trusted!

My quest for independence has not resulted in me crushing all men in my path, a la Madonna, but rather an all consuming, irrational fear of being vulnerable and dependant as a senior. I’m probably the only thirty year old who has experienced sleepless nights worrying about my Power of Attorney for Financial Affairs and Power of Attorney for Health Care getting together and plotting against me just to get their hands on my tiny estate…trust no one!

In my quest to retain independence as a senior I save more than I can afford for retirement. This may not appear to be a bad thing but I’ve put myself in a vulnerable position unintentionally by having nowhere to go but my credit card in case of emergency. My RRSP is the last place I’ll want to go due to withholding tax and inevitable bamboozling at my next tax filing since the withdrawal would be calculated as income and taxed to within an inch of its existence. What’s a girl to do? Until recently the only thing to do was ask the Universe not to send me emergencies but now the answer is to get a Tax Free Savings Account!

The basics:

• Contributions are NOT tax deductable.
• Neither income earned within a TFSA nor withdrawals from it affect eligibility for Federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit.
• Investment income earned and withdrawals are tax free so no need to fear next years tax filing!
• You can contribute up to $5000 annually and if you withdraw funds the amount can be added to your contribution the following calendar year.

Of course the mantra of a conspiracy theorist is “it’s too good to be true…” but in this case I must admit it really is true. In an ideal world you would contribute to a TFSA as well as your RRSP but who lives in an ideal world? When faced with either a TFSA or an RRSP contribution a very general rule of thumb would be to consider your needs for an emergency fund and your income in relation to the tax deduction offered by an RRSP.

So, throw your hands up at me momma Rogers.  With this TFSA that I’m rockin’ I can continue to “depend on me” well into my retirement even in case of a financial emergency!

This may be hard to fathom, but in North America one out of every four people believe their best chance of getting rich is by playing the lottery. That’s according to one pundit I recently tripped over online.

If the claim is true, it’s shocking. And even if it’s only fractionally true, it’s still shocking. Say one in ten lottery players fit the psychological bill. That’s millions of people on the continent with their heads so high in the clouds one wonders if they’ll ever come back down to earth.
 
Think about the odds of winning the jackpot for, say, Lotto 6/49. There is a one in 14 million chance of winning for each set of numbers selected. How many people play the game – or what numbers they play – have no bearing on the chances. The odds remain the same for every ticket.
 
What do odds of this nature amount to? Well, a person who drives 10 miles to buy a lottery ticket is more likely to expire in a car accident than to be overcome with joy about a winning ticket.
 
Could it be that hordes of us in western society are losing our minds?
 
The point is that for all us going into 2011, the year can be one of realistic thinking and practical spending, or it can be a time in which childish fantasies, wishful thinking and unbridled neuroses make for troubled times.

Gambling as an addiction is no small matter. In Ontario, for example, tens of thousands of people experience moderate to severe gambling problems. And let’s be frank – many more freely spend gaming and gambling dollars that could otherwise be directed to important things in life.
 
“But wait,” comes a voice from the corner store, “I only spend $10 a week on the lotto!” Okay, and I say that’s more than $500 dollars a year you’re converting to pretty little pieces of paper.

Think about the sum in terms of clothing and school supplies for the kids, a much needed laptop computer, Christmas expenses, or the dent the money might make in the debt that is owed on a credit card. Not to mention, a $500 RRSP over 20 years brings a return of many thousands of dollars with compounded interest.

Please understand, I’m not saying lotteries and gaming are bad in and of themselves. What I’m trying to illustrate is the need for responsible, sober thinking in relation to personal spending.
 
If shelling out $500 a year on lotto tickets or other games in no way affects your finances, fine, have a little fun. As they say, you can’t win if you don’t play. On the other hand, if you play beyond your means, you’ve joined a long line up of guaranteed losers.

Of course, going cold turkey on ending even a minor gambling habit may be far easier said than done. So let me recommend this for all the die-hard risk takers out there who really shouldn’t be forking over cash for outlandish dreams.
 
If you’re spending 10 bucks a week on lotto tickets, try reducing the expenditure to two bucks a week and stick to the plan. You’ll still be in the game. And after all, what are the odds?

This may seem a little unusual, but this week I’m here to promote what technically might be called my competition. I want to tell you about a very special online space dedicated to personal money management – moneyville.ca.

I don’t really view the site as a competitor, more as a friend really, since any good works supporting financial literacy at large are warmly welcomed by me and by all of us here at Credit Canada.

I can tell you that moneyville.ca offers what is probably the most comprehensive set of blogs in Canada relating to financial literacy. Moreover, moneyville.ca is much more than blogs. It is a Web site chock full of news, ideas and tidbits concerning the whys and wherefores of how to handle your money.

Frankly, given its range and scope, I’m envious of the site. But hey, it’s powered by the Toronto Star – through torontostar.ca - with plentiful resources in the form of knowledgeable writers and editors trained in the field of journalism. As a not-for-profit agency since 1966, we can’t quite compare our literary resources to those of the Star. 

What a feast moneyville.ca offers for those who want to sit at the table of financial literacy.

Let’s take a quick tour shall we.

Hit the site’s home page and instantly you are greeted by an excellent feature titled Saving: 10 things you need to know. It’s an informative read full of practical ways to fatten your piggy bank. And I can tell you the writer of the article knows whereof she speaks, because after 20 years in the business of credit education I know whereof I speak.

Now, cast your eyes to the navigational banner across the top of the home page and you’ll find other pages dedicated to everything from budgeting, saving, borrowing and investing, to retirement, insurance, taxation, and real estate. As you hit each navigational title, pops ups appear providing you a choice of articles relating to each page’s particular subject area.

It’s good stuff for readers on the go.

Of couse, there’s a button on the banner for blogs, too, and moneyville.ca offers the best of the best. Some of Canada’s premier financial writers and experts are found here in blogs that include:

Moms on Money  – Featuring Toronto Star reporters Rita Trichur and Madhavi Acharya-Tom Yew, who are moms on a financial mission.

Bryan Borzykowski – An excellent writer who has worked at Canadian Business, PROFIT and MoneySense magazines. His blog is about investing, the economy and markets.

On the Money – Featuring Adam Goodman, who was raised in Toronto and spent the first 26 years of his life spending every dollar he made. One day he asked: Why?

Me and My Money – Feauring my good friend Alison Griffiths who has assisted us at Credit Canada with Credit Education Week. Alison looks at family finances and offers solutions to common problems. Her Moneyville.ca  focus is investments, pensions and retirement.

On Your Side – Featuring Ellen Roseman, who has been writing about personal finance and consumer issues for most of her career. She is the author of several books and a Toronto Star business writer.

Bucks ‘n Bytes – Featuring Marc Saltzman, a personal technology evangelist who enjoys helping people save money and simplify their lives. His blog is about smart technology shopping.

20-Something & Change – Featuring Vancouver blogger Krystal Yee, a self-confessed shopaholic since college who managed to turn her financial affairs, and her life, around.

Now, that’s quite a stable of talent by any estimate. But wait! Like those informal ads say on TV, there’s more!

Check out Twitter Ville for chat, Moneyville Community (with guest appearances), Featured Tools and Guides (financial news and tips you should know), Financial Calculators (look into your credit score; stay on top of your cash flow). And there’s more, including links to money saving Torstar sites.

My advice is, if you’re in the market for financial wisdom, visit moneyville.ca, and go to town.

Of course, you should keep visiting FortheLoveofMoney.ca, too, not to mention CreditCanada.com.

Happy blogging.

For many of us, it’s not January but September that qualifies as the start of the new year in Canada. Come the end of the Labour Day weekend, there’s a feeling the whole world is getting back into gear. Schoolrooms, boardrooms and businesses come alive; social and cultural events start ramping up; hockey season gets underway – and on and on. It seems we’re all full of enthusiasm to take on new challenges and to get stuff done.

Given the mood of the moment, I can think of no better time to put personal finances in order. With the right tools, it isn’t difficult. As a matter of fact, we make it easy at Credit Canada thanks to a bevy of online money management tools that can help you fine tune your life. The tools cover everything from setting budgets and tracking spending patterns, to analyzing mortgage payments and planning for retirement – plus much more.

Join me now for a closer look at each of the tools, which can be accessed anytime at www.creditcanada.com.
 
Piggy Pal – Your Money Tracker

PiggyPal is a true friend when it comes to managing money. Track your daily spending habits online or through your mobile handset while you’re on the go. Click here.
 
Piggy Pal Challenger

A fun, interactive game that tests your money management knowledge. Click here.
 
Benefits of Spending Less

A few reductions in your personal budget can free up money for investments. Here’s a calculator that shows you how to lay a new nest egg. Click here.

Budget Tracker Booklet

A pocket-sized booklet that helps you track monthly spending so you can budget intelligently. Click here to download the booklet.

Buy or Lease Calculator

Is it better to lease or to buy a car? This calculator offers answers that can put you in the driver’s seat to savings. Click here.
 
Debt Calculator

With this tool, you’ll discover how much interest you’re actually paying a creditor over the life of a loan. Click here.

Home Budget

Get your house in order with a calculator that helps you determine where your money is going. Click here.

Mortgage Rates

A tool that helps you compare mortgage rates from big banks, credit unions, specialty lenders and mortgage brokers in one search. Click here.

Mortgage Comparison Calculator

With this tool you can sort through monthly payments, fees and other costs associated with getting a new mortgage. Click here.

Mortgage Payoff

This calculator shows you how much interest can you save by increasing your mortgage payment. Click here.

Rent or Buy?

Should you rent or should you buy your home? This calculator helps you weed through fees, taxes, and monthly payments. Click here.

Retirement Planner

With this tool, you can lay the groundwork for a retirement plan. Click here.

RRSP Loan Calculator

Use this calculator to see how a RRSP loan could help you with your retirement savings plan. Click here.

Savings Calculator

Learn how even a modest but consistent savings strategy can work wonders. Click here.

Savings Goal

A tool offering you the big picture on the financial results of your savings plan. Click here.

Shopping Quiz

Test yourself with this shopping quiz to see if you have financial blind spots and are in need of credit counselling. Click here.

Student Budget Calculator

A calculator specifically designed to help students understand their expenses and income while attending a university, college or other full-time educational institution. Click here.

So that’s the kit. Feel free to use any or all of the above items anytime. And please share them with family and friends if need be. After all, the beauty of these tools is that you don’t have to worry about returning them to the box.

Movies about money that will move you.

Pop culture has plenty to teach in terms of financial literacy – movies about money, for example.
 
Indeed, having discussed popular books about money in this space, I think it’s worthwhile to talk about a few popular films about money. But let me clarify that. The movies I’m thinking about are works of fiction primarily experienced on a gut level rather than on the more rational level of a reading experience.
 
To put it another way, through the image-oriented, make-believe world of movies, I think it’s possible to experience something like emotional learning about money in addition to the more cerebral lessons that come from books most often created with education, rather than entertainment, in mind.
 
While there are few good feature films whose stories directly address crippling debt and ways out if it, there are a number of great movies I can think of that offer general life lessons about money. From these films insight can be gained into the deeper urges, influences and expectations that play out in our lives in the context of money.
 
Here, then, is my movie list. It includes five mainstream features that tell interesting stories relating to money management and finance – if only as a byproduct of the central storylines.

Doubtless many of you have already seen some or all of these films. If that’s the case, my advice is that they are worth seeing again on DVD, particularly if you’re in a situation where you’re evaluating or re-evaluating your finances and what money means to you in life.
 
• Wall Street (1987). The message of this memorable film resonates even today – in fact especially today – thanks to a bad guy known as Gordon Gekko, the greedy, ruthless Wall Street titan played by Michael Douglas. Some 23 years after its release, we’re told the movie Wall Street will be getting a sequel. The new movie has a lot to live up to. The original film offered as clear a lesson as ever there was about putting greed and personal interest before ethics, self-respect and matters of the heart. Here, specifically, the heart belongs to one Bud Fox (played by Charlie Sheen). As Gordon Gekko’s eager and ambitious financial gopher, Bud learns through a number of twists and turns that coveting money and cheating your way to the top can have dire consequences. The story stands as a timeless reminder that if something in life seems too good to be true, it probably is too good to be true. It’s good advice a lot of people with money troubles ought to consider since financial difficulties often stem from unrealistic expectations and exceeding one’s bounds.

• The Shawshank Redemption (1994). There are a couple of important messages in this critically-acclaimed film about a wrongly accused New England banker named Andy Dufresne (played by Tim Robbins) who is sent to federal prison for many years. Andy suffers some terrible ordeals there. But thanks to his perseverance and his commitment to a carefully thought out plan, he escapes from prison. He even manages to create a financial nest egg for himself. While in prison, he is appointed money manager to a corrupt warden whose ill-gotten gains eventually end up in Andy’s possession through a little sleight of hand. The story is a good, if unusual, reminder to anyone that focus and patience are required for long-term security. The movie also illustrates life’s uncertainties. None of us can be sure about what fate holds in store, so we must do our best to be prepared; we must take the good with the bad, and learn to adapt.

• Trading Places (1983). On a lighter note, here is a comic romp that begins with two aging, ultra-rich commodity brokers making a bet that they can turn a privileged rich kid named Louis Winthorpe III (played by Dan Aykroyd) into a common criminal, and reinvent a two-bit street hustler named Billy Ray Valentine (played by Eddie Murphy) as a successful businessman. The old guys conspire to have Louis and Billy trade places in life. It’s interesting and funny to see the different ways the two young men deal with their new financial circumstances. Message wise, the movie shares something with The Shawshank Redemption in that it addresses the issue of coping with life’s uncertainties. It also shares Wall Street’s lesson concerning self-interest, but with a positive twist. Trading Places promotes the idea that it’s only right to look after and think about your own finances, just don’t do so at the expense of others, or for that matter, at your own expense.

• Jerry Maguire (1996). Here is another movie that will leave you with a smile by the time the final credits start rolling. Based on a real-life character, this is a dramatic but uplifting film about high-powered American sports agent Jerry Maguire (played by Tom Cruise). As the story unfolds, Jerry is on the rebound in his career and faces some big obstacles in a cutthroat business. In the process of overcoming those obstacles, Jerry learns to value people above money. His trials teach him to respect himself, to care for others and to understand the value of good business ethics. In a nutshell, the message here is that there is more to life than money. Additionally, Jerry shows us that we grow in spirit and positive self-awareness when we realize the true value of our abilities.

• Glengarry Glen Ross (1992). Now, back to a solemn note. The movie Glengarry Glen Ross is based on a celebrated play written by David Mamet, whose ear for dialogue and insight into today’s social and economic realities make for high drama. Or perhaps excruciating drama is a better way to put it, particularly as we watch one of the film’s main characters, Shelley Levene (played brilliantly by Jack Lemmon), come unglued. He is amongst a group of dishonest salesmen competing for business in a dingy real estate office where a dog-eat-dog ethos prevails, and where heart-breaking tragedy is the real end product. Desperation is the operative word here and it’s the main reason I’m mentioning this movie. As a cautionary tale, Glengarry Glen Ross amply illustrates the folly of acting foolishly out of desperation in difficult financial circumstances. Indeed, the message we always promote at Credit Canada is that, regardless of how desperate your financial situation seems to be, there is always hope. It just comes down to keeping a level head, educating yourself and perhaps reaching out to honest people with the financial know-how to give you a hand, like our counsellors at Credit Canada.

So that’s my list about movies concerning money. Of course, there are many other films whose storylines have something to tell us about money – everything from the classic Citizen Kane, to The Godfather series. But my blog space is limited. And besides, film reviewing is not my forte.

In closing, let me just say that if anyone out there is wondering why I didn’t include on the movie list It’s a Wonderful Life – possibly the most famous film ever about money problems and debt – it’s because I already reviewed it at length in my 2009 Christmas blog installment, which is available for reading in my Archive section (just search the column that you see to the right). Look for the installment dated December 2009.
 
You know, it just isn’t Christmas until George Bailey (Jimmy Stewart) discovers that a person’s true wealth is measured by the love and support of family and friends.

And that, dear film fans, surely is the ultimate money lesson.

Words to the wise on personal money management.

To everyone out there who is anxious about money and credit, let me say this: invest in a little knowledge and you will be surprised by how quickly you can leave your worries behind.

A first big step in this process is to do a little reading – or a lot of reading, as the case may be. There are plenty of great books you can buy to help you on the road to sound personal money management. Here, largely from a Canadian perspective, I provide an overview of just a few books of interest, not necessarily in order of importance.

• Findepedendence Day. By Jonathan Chevreau. Publisher: Power Publishers.

One of the best books you will find about financial self help is Findependence Day by Jonathan Chevreau, who writes for Canada’s Financial Post. It’s a beautifully written work that combines fiction with fact, resulting in a terrific story that educates even as it entertains. Here is a tale about a couple who are trying to dig themselves out of a financial hole. The story is about how they do it, with a lifetime of common sense lessons thrown in about how to smartly manage, save and invest money. I cannot recommend this book highly enough.

• Money 101: Every Canadian’s Guide to Personal Finance. By Ellen Roseman. Publisher: Wiley.

If you’re interested in a crash course about financial basics filled with easy-to understand advice on a wide range of topics, this book offers rich rewards. Author Ellen Roseman – one of Canada’s most trusted personal finance columnists – imparts wisdom on spending less and saving more, managing a budget, negotiating mortgages and car leases, getting the insurance you need, saving for your children’s education and your own retirement, and much more, including how to invest money when you’re getting ahead.

• To Have and to Hold: The Smart Woman’s Guide to Money and Marriage. By Kathleen Aldridge and Nancy Jane Bullis. Publisher: McGraw-Hill Ryerson.

I caution readers that the title of this book is misleading because the advice it offers applies equally to women and men. In fact, for any Canadian family or individual, it’s as fine a resource for money management as you’re likely to find. Authors Kathleen Aldridge and Nancy Jane Bullis cover financial planning with lots of specifics – everything from tax law, health costs, wills, and pre-marriage contracts – to estates, trusts, divorce and children. The writing does not talk down to readers as though they are know-nothings. It presumes you are bright and informed.
 
• The Complete Idiot’s Guide to Personal Finance for Canadians. By Lori M. Bamber Publisher: Prentice Hall.

Okay, we’ve all seen these Idiot’s Guides covering just about any subject you can imagine. I’ve never been too fond of these book titles, but the guides do have much to offer as they are written by some very knowledgeable people, including Lori M. Bamber, author of this particular Idiot’s installment. It’s a practical guide to personal finance covering the traditional subjects of saving, investing, mutual funds, retirement and insurance. It’s a friendly read – largely easy to get through, though in one section there is detail on venture capital funds, stock-indexed guaranteed investment certificates, and RRSP over-contributions.

• One Year to an Organized Financial Life. By Regina Leeds. Publisher: Lifelong Books.

One thing we stress at Credit Canada to those who come to us with debt problems – money is probably not the real source of the problem – the real trouble is the lack of mindfulness many bring to money. Do you give it focus and respect? Writer Regina Leeds gets to the heart of the matter through a book premised on the notion that organization is the key to success in life – from how you keep your household to how you manage your bank account. Here she addresses finances through week-by-week guidelines based on simple organizing principles. She reminds us that peace of mind has a lot to do with getting your ducks in a row.

• The Wealthy Barber. By David Chilton. Publisher: Stoddart.

Though The Wealthy Barber was originally published in 1989, I have included it in this list simply because it is a publishing phenomenon, selling millions of copies in North America. In any event, the book has been updated over time and the advice it offers is timeless. It’s an engaging book, highlighting fictional conversations between financial hero Roy Miller and his barbershop patrons. As you listen in, you learn that sound personal financial planning is not only relatively simple, it can be fun. You won’t find intimidating charts, graphs and lifeless numbers here, just lively talk that gives you the goods.

So that’s a personal money management book list for you. As I say, it’s just a start as books about this subject are plentiful. Other good reading is available right here at CreditCanada.com. Meanwhile, please keep in mind that prices vary on the books I’ve listed. Your best bet is to simply Google the titles and authors to check out the best price options from different distributors.

Happy reading.

I know there is always a lot of hype about investing, especially today. Where to invest, how to invest – I find it daunting myself. But I am reminded of what Warren Buffett, the most successful investor in history, once said:

“I don’t look to jump over seven-foot bars; I look around for one-foot bars that I can step over.”

There is one thing you can be sure of about investing, before you look for opportunities- – get rid of your debt. I don’t think there is better advice than that. It’s based on some 43 years of experience we have at Credit Canada, www.creditcanada.com, where we provide counselling and comfort to those who are struggling with debt and trying to manage their money intelligently.

.

Now, I am not talking about mortgage debt. Let’s face it that is usually a long-term process. I am talking about high interest debt such as credit cards. If you have covered off your credit card debt, then I believe it could be a good idea to invest. But investments are often risky, and if you can’t afford to lose, you can’t afford to play the game. Put it this way, you can’t afford to take on risky investments anyway.

So if you are ready to play, you need to learn the rules.

Rule #1:  Understand the basics. This means knowing the terminology, knowing the pros and cons and knowing the degree to which you can smartly invest – otherwise known as your risk tolerance.

Rule #2:  Get yourself a financial planner you are comfortable with. This means shopping around. You want someone you are comfortable with so that when you ask what you think could be a potentially stupid question, you do not feel embarrassed. Don’t be shy about asking any question, it is your money.  If you are looking for a financial planner, check out the Financial Planners Standards Council www.fpsccanada.org .

Rule #3:  Be patient. This is hard for all of us, me included. But again, we might look to Warren Buffett for some wisdom; investing is a long game and you need to go through the ups and downs of the markets and hang in for the long haul.

The most important thing to remember is to educate yourself, and not be afraid to learn everything you can from your financial planner. No question is too dumb.

Lately in the news, we’ve all been hearing we are in an economic crisis.  People I talk to at Credit Canada and out and about often say, ”My job is stable; I won’t be affected by a recession.” or “I don’t have money in the stock market; I am safe.”  On the surface this may seem like a valid response to these uncertain times .  Here’s the problem as I see it…a recession is insidious and can affect people in ways that they have not even thought about.  Put it this way, we can all be held hostage by a recession. How, you ask?  Well let’s look at this scenario. You have a job, you are secure and you know that your job is stable and recession-proof. Fine.  However, you decide that you really want to move out of your neighbourhood and put your house on the market. Problem is those individuals who have been affected by the recession may also have their house on the market in your  neigbourhood and they are desperate to sell and there are no buyers; because in a recession people hold back, banks tighten their lending practices and houses sit on the market for months.  Of course, with that goes a drop in housing prices and therein lies the problem. Suddenly that house that you thought was worth $400,000 is no longer worth $400,000 especially when a similar house down the road is on the market for $350,000 and it is not selling.  

Let’s take a different scenario - you have a stable ‘recession-proof job’, you are just starting out, don’t have much saved but want to get into the housing market.  You find a few perfect houses but low and behold cannot get financing because banks have tightened their lending belts due to the recession and consider you ‘too new’ in your job with little assets.   Suddenly the recession has affected you too.  It goes further than this, as creditors take losses due to debts not being paid, interest rates can creep up, lending practices as I have already stated tighten, and the small business owner with a store around the corner from where you live shuts down as he can no longer borrow to keep his business going…and it goes on and on. 

I don’t believe it’s all doom and gloom though. My point of view is that there is a silver lining.  Those set up with good conditions to buy a home, stable job and decent down payment can really get a deal on a house during uncertain times, as can those investing in the stock market when it is low.   Still one is “playing” the market to a certain extent. No one will really know when houses and the stock market will hit rock bottom.  For example, in the late 80′s there  was a fever in some parts of Canada to get into the housing market before it was no longer affordable. People took out mortgages they could not afford and put everything into buying a home. In the early 90′s when the recession hit, these same homes decreased in value by as much as 25%.  As a result, people often lost more than their home and were facing bankruptcy.  The question then as it is now…when will the decline stop and when will be the best time to buy?  Your thoughts?