Almost Canadian

Completely agree. In the time I have been doing family work in Canada and getting access to the financial documents on both sides, I would estimate that I could count the number of people that have credit cards but pay the balance off each month using the fingers of one hand.

Poor or wealthy, they all seem to love their credit cards.

iaink

If its something major like a furnace then use a line of credit. Your house isnt much use to you without heat anyway. Makes no sense to me to charge it to a card unless its a last resort.

If you cant stash 5 or 10% away for emergencies every month then you probably should not be in the business of home ownership anyway, and if you own a home I cant see why you wouldnt have a line of credit associated with it to cover the big bills that come with the territory from time to time, its just sound financial planning to have options like savings and a lower interest LoC.

New clothes for school are a pretty predictable expense. If you are on a low income dont go buy them at A&C. We seem to manage pretty well without spending a fortune on new clothes for the kids, and although that will change with impending teen years its a pretty simple rule in life to not spend what you dont have.

Pay yourself first. Credit card debt is for mugs.

Souvy

I've tried that. So far I've failed. I think it's perhaps because I buy the cheapest ticket going.

Thinking about it, in the years before 1996 I travelled lots (70-80 times a year) and mainly with BA. I had loads of miles. I largely forgot about it when I moved to Canada because I wasn't using BA any more. I remembered when I went through LHR in September en-route to Cape Town, on BA. I asked the question and, apparently, the points are still there and valid. I still failed to get an upgrade, though. The flight wasn't full enough.

Almost Canadian

The percentages you refer to to "stash away"; is contributing to an RRSP "stashing away" or are you simply referring to a savings account?

Souvy

Quite. We use our credit card because of the various benefits and insurance. We'd still never buy anything we couldn't afford to pay for in cash (mortgage excepted).

iaink

Once the slush fund for emergencies reaches a certain limit ($5-10k) any extra goes in the RRSP pot where it works a bit harder but is locked away to most intents and purposes.

I dont really see a point really in having an ever growing pot for emergencies, although at present you could probably argue that a 1% return on a savings account is a better ROI than most mutual funds are managing.

With two kids growing like weeds its largely an academic argument anyway on my income, but the important thing is to make the effort to save and avoid unsecured consumer debt. We do not buy anything on credit that we could not pay off with cash immediately if necessary.

Almost Canadian

OK

Alan2005

And if they don't have one? Or they already used it on something else.

That's right unexpected bills never happen.

It was just an example (you've never had to unexpectedly buy clothes for your kids?). I'm sure you can think of other things that are necessities.

Anyway, all I originally said was that I don't assume that people who have credit card debt are incompetent idiots who don't know how to manage their finances. You obviously do assume that - personally though, I'd prefer to find out the facts first.

Souvy

We would be extremely uncomfortable without a slush fund. I have one in the UK (approx £12k) and Souvette has something along those lines here. Both are untouchable unless we have a real emergency.

I recently moved the bulk of my RRSP out of GICs and into a variety of mutual funds (medium risk). The returns are crap at the moment but they will improve over time. I have time.

Atlantic Xpat

A conundrum isn't it? I have 191k aeroplan points. I believe we'll be using them for a family (3 seats + 1 infant) trip to Ottawa next Easter. It'll still cost us $500 or so in taxes but since it would cost us $1500 in tickets were we to buy them, it seems to be a reasonable use of points.

When I've looked at buying stuff, the price you pay (i.e. the number of aeroplan points redeemed to get x) doesn't offer many bargains. If there is no practical use in using them for flights, then it's as well as anything. For example, for a man of your hobbies would not a Home Hardware gift card be a useful thing?

I'm also puzzled about how one uses aeroplan points for upgrades? Yes, you can buy an Exec ticket for more points but upgrading an existing paid for booking? Using aeroplan points as opposed to e-upgrade credits.

Back on topic, we have a RBC avion card where most expenditure goes on and gets paid off every month. The avion points can be used for any flight & have, and will continue to subsidise travel back to Blighty. I have an aeroplan visa I use primarily for business travel. I have another visa (Scotiabank value visa) which a lower percentage rate that I use if I need to carry a balance. Rarely do this as I also have a LOC which is used for medium term borrowing - the unexpected expense as well as longer term - a car.

iaink

Then they didnt think ahead. My LOC is enough to cover a new roof and a furnace / water heater and oil tank , plus work on the well if necessary. We need to replace the deck at some point, but Im not going to charge that to the LOC just because I can, I'll save up to cover that rather then wipe out my emergency credit. They happen all the time, its expected Thats why we plan for them. Necessities are, by necessity, budgeted for. Im sure that with a bad run of luck its possible to end up reliant on consumer credit. Im also sure that in the vast majority of cases that's not what happened, although those in that situation would argue its not really their fault too.

Danny B

I hate the fact that you have to pay $25 for a book of bloody cheques, and $11 per month service charge to spend your own money.

I remember when I was new to Canada, I was spending quite heavily from my savings account (interac purchases) not knowing that every transaction was costing me $5. WTF? cost me a small fortune. I'm with HSBC, the worlds local bank.

Jingsamichty

I may be mistaken by I don't think that's possible on AC.

Alan2005

I'm going to assume you are simply making a false attribution error rather than being quite this judgemental. Next, you'll be telling me it's peoples own fault if they got sick for not planning ahead!

iaink

It seems reasonable to me that if you eat after using the "washroom" and you choose not to wash your hands first, then you might not be entirely blameless if you get the shits as a result...

If you get the flu after declining the flu shot, dont come crying to me.

Sometimes there is no avoiding debt, but in many cases its a choice people make out of greed and/or impatience.