A couple of months ago I arrived home to a letter from my landlord advising that my rent was to increase by $16.17. This brought my monthly payment to just over $1100. I was scandalized. $1085 was one thing, $1100 was quite another! I know people who have smaller mortgage payments than that.

After years of redirecting my pay cheque to a grumpy old man it was time for action. I handed in my sixty days notice and informed the landlord that he had priced me out of my home and left me heartbroken, he informed me that I was to make sure I cleaned the oven and depart in a timely manner. It wasn’t long before I realised that I was in fact priced out of the WHOLE downtown core. Drastic action was required. I’m not sure at what point I decided to move in with roommates but before I knew it, the contents of my one bedroom apartment had been redirected to one bedroom.

Six years of living alone and I’m now faced with the prospect of walking around fully clothed, keeping my George Michael’s greatest hits CD at a communal volume and having a rather limited pre assigned space in the fridge. Hell hath no fury like a roommate’s fridge boundaries scorned. Part of me thinks it’s the pits, that I’ve failed in some way but mostly, all I can see are dollar signs. I’m saving over 50% on the rent and have put together a plan to save for a down payment with my colleague and new financial coach. In an attempt to help keep my roommate experience short and sweet he has also cut out my golf lessons (a vain attempt to pick up single investment bankers rather than a love of the game) and introduced a foreign concept of bringing my own lunch to work. My new roomies are amazing but what will be more amazing is being in a position to look at purchasing my own place in the next few years.

Thank you greedy landlord for forcing me into action!

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.

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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?