Tuesday, November 14, 2017

Credit

Who, really, wants to talk about, let alone think about their credit?

Certainly not I.

But in today's society, credit is a must have.

On this session of my Savings Circles program I learned that credit can be unsecured or secured.

Unsecured being: You do not have to offer any security (deposit or collateral) before you can use this type of credit. Examples being credit cards and store credit cards.

Secured being: You must offer some security or collateral before you can access this type of credit. Mortgages, utilities being examples of these.

So, why would you need credit? Well, for examples, credit can be used for:

  1.  Investing
  2. Buying now and paying later.
  3. Large purchases, e.g. car, education.
  4. Shopping online.

If not used responsibly it can effect debt build up, high interest rates and service charges, risk of bad credit, bankruptcy, and personal and/or relationship stress.

What is the importance of credit?

It's an asset! Some employers, landlords, utility companies need proof that you have a good credit rating.

A credit report sums up your credit history and is included in the calculation of your credit score.

The biggest thing that many people don't know are the credit history situations. THIS IS IMPORTANT TO NOTE.

  • Too many applications - EVERY TIME you apply for a loan, credit card or store card, you fill out an application form. The company then forwards your information to the credit bureau and they update your file as an inquiry. if you have too many inquiries on your file, you may look desperate for credit and be considered a credit risk.
  • Pre-approved credit - Even if a credit card application sent to you in the mail suggests that you have been pre-approved, DO NOT take that for granted. A credit check WILL be done if you complete and send in the application form.
  • High debt capacity - EACH time you are accepted for credit, you increase your potential to carry debt. A large capacity for debt could mean that you may be declined credit when you REALLY need it.

Think about your minimum payments.

If you owe $1,000.00 on your credit card. And you have an interest rate of 21% on the card, and ONLY made your minimum payments each month. The interest you would pay is $1,104.63, the total you would pay is $2, 104.63, and it would take you 11 years and 6 months to pay that off!!

Steer clear of high-cost credit places such as CitiFinancial.

Also stay away from payday loans. This is a trap into a cycle of debt where you are always running out of money before your next cheque arrives.

There is a part two to this story, which will come later this week, I just wanted to focus on the main basics for now.

Credit Canada has a great credit calculator at:  https://www.creditcanada.com/debt-calculator?gclid=CjwKCAiAxarQBRAmEiwA6YcGKET4IhV270-hRsFzmWjNLE0Dkt84t14ENsvoAULo_SFwFg8f11B-nhoChJ0QAvD_BwE

If you would like to know more about Momentum Calgary and the programs and services it offers, please visit: http://www.momentum.org/



Tuesday, October 24, 2017

Assets

In my second class of Savings Circles at Momentum Calgary we looked at assets.

What is an asset?

Assets are typically looked at as having ownership of something worth value. Typically a car, a home, a farm.

Here we looked at it in multiple levels. Finances, connections, sense of self, basic needs and services, and skills and knowledge.

We discussed where we wanted our lives to be in two years from now. Where did we want to live, what kind of work to do, what did you want your social life to look like, what goals did you want to achieve, what are your passion?

My goal on the Skills and Knowledge sector was wanting to learn American Sign Language, and setting up S.M.A.R.T goals to get started on that.

The acronym S.M.A.R.T being, is it:

  1. Specific
  2. Measurable
  3. Attainable
  4. Relevant
  5. Timely
The next was my sense of self. What qualities did I want to have, what was unique about me.

I am:

  1. Friendly
  2. Funny
  3. Ambitious
  4. Honest
  5. Resilient
What are my connections with other people? Do I have a close circle of friends and relationshiops that help me achieve my goals? Are there organizations or communities that I can be a part of that will help me do that?

Next we looked at Basic Needs and Services. Do I have housing, reliable transportation, access to information I might need to help me make decisions, etc.

My Basic Needs and Services were:

  1. Chronic pain centre
  2. Shelter
  3. Transit
  4. Employment
  5. Library
  6. Community Resource Centre
The next was finances. Do I have income? If so, where from? So I listed them and came up with some surprising items that I never would have put on my list before. I found:

  1. Employment
  2. Alberta Works
  3. Tax Free Savings Account
  4. Piggy Bank (spare change)
  5. Gift cards
  6. Pop bottles
Then I looked at the challenges part of my life. What do I need to work on now to start achieving what I want my goal to be in two years?

These were huge skills to work on, and a very important one to look at in this program.