July 15, 2024

The Queens County Citizen

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5 tips from Mario Dumont (love banks!) to improve your personal finances

5 tips from Mario Dumont (love banks!) to improve your personal finances

All Canadian banks have released their results in recent days. Rest assured, they won’t be sorry. However, their profits have declined drastically. There is no risk of bank failures here as we have seen in the United States.

Looking at the data submitted by the banks, what is surprising is the extent of provisioning for bad loans. Canadian banks, giants, global models of sustainability. If they increase their allowances for losses on their loans, they have some suggestions that the average taxpayer should incorporate into their personal financial management.

Useful lessons

By observing this caution from our major financial institutions, I draw some conclusions.

Banks anticipate that a growing number of businesses and individuals will be unable to repay.

Banks expect interest rates to remain high for some time to come.

Banks predict that rising interest rates will eventually hurt households and the entire economy.

Friendly advice, if the institutions best placed to observe the economy prepare themselves in this way, it would not be foolish to imitate them.

what to do

What to do in your personal finances to repeat the banks warning? Here are some humble tips from Uncle Mario, a part-time economist and wise old man.

1. Pay attention to the level of debt in your household.

Boring and classic advice, but it’s a fact: Canadians are in too much debt. With rising interest rates we will quickly run into trouble. (And I won’t mention credit card rates.)

2. Speeding up your mortgage payment has become a smart thing to do.

At one point, many financial advisors explained that you would have to be crazy to pay back quickly. Pay off a mortgage at 2% without a 5 to 10% or more return on investments? This is an absurd loss! Today, with mortgage rates at 6 or 7% and investments stagnant, the situation has changed.

3. Above all, don’t make any loan decisions based on the phrase “interest rates will go down anyway”.

If there’s one thing we know, it’s that we don’t know the future. Declining inflation is more complicated than expected. The Bank of Canada has said it intends to hold off on raising rates.

4. Always keep a cushion.

Try to build a small cushion so you’re not living paycheck to paycheck. And try to keep a small cushion in each payment. The amount of your mandatory and automatic payments shouldn’t drive you up the wall every month.

5. If you can’t make your mortgage payments, consider a second income.

Despite economic ups and downs, many employers are looking for people. It is difficult to work for six or seven days. But handing over the keys, losing your property, your capital, your downpayment is terrifying.

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