Consultations available by video and phone with electronic signatures.

Ask the experts

Ask the Experts – August 2019

There are many reasons why people tend to avoid talking about money. Some people think it is a private issue that shouldn’t be discussed. Others feel like they’re being impolite if they talk about money. There are also people who avoid discussing money or asking questions because they fear they will make a mistake and don’t want to feel embarrassed. Whatever the reason, the reality is money and financial matters aren’t discussed as often as they should.

When you talk about money, you learn about money. The more questions you ask and discussions you have, the more ideas you get and strategies you discover. Talking about money can be very helpful. It can cause you to make better financial decisions, which will help you create a stronger financial future for you and your family.

This is why, every month, our financial experts answer money and finance questions. We want to encourage people to learn and grow by discussing money, budgets, and financial planning. If you have a question for our team, ask us online on FacebookTwitter or through our website.

The questions here have been condensed or rewritten for clarity and simplicity.

What’s the best way to control spending and stop buying things I don’t need and can’t afford?

Overspending or spending money in the wrong places is a big problem for a lot of people. For some, it’s the desire to always have the “latest and greatest” that hurts their budget. For others, it’s a series of small purchases that add up to a lot once you put them all together. In some cases, people use shopping for entertainment, to socialize, as stress relief, or in many other ways.

If you find yourself frequently overspending and buying things you don’t need or don’t have the money for, one of the first things you’ll need to do is recognize where your money is going and why you’re spending more than you should. Track your spending, add it up, and see what you’re spending your money on. Then think about those purchases and why you made them. Were you bored when you bought those things? Tired? Stressed? Figuring out your state of mind when you spent the most will help you understand your “spending triggers.” Knowing these triggers can help you make adjustments. For instance, if you know you’re more likely to spend when you’re stressed, try think of other ways to deal with this emotion other than shopping.

It’s a good idea to always think about purchases before you make them. If you see something you want to buy, put down the item or close the website and force yourself to think about the purchase. The more it costs, the more time you should spend thinking. Sometimes just the act of making yourself think can stop you from spending money you don’t have.

How much debt is too much debt?

Most people have some debt. Without borrowing money, it would be very difficult for a lot of us to afford postsecondary education or home ownership, for example. However, too much debt can be a problem. If you want to figure out if you have too much debt, you may want to start by thinking of the difference between good debt and bad debt.

Good debt is money borrowed to improve your life or money borrowed to buy something that will likely increase in value. For instance, borrowing money to go to school can often be seen as good debt, as can getting a mortgage to buy a home.  If most of the debt you have is “good debt,” you might be in a good financial position. However, the situation isn’t always black and white. Getting a car loan can sometimes be considered bad debt, but if buying a car helps you get to a job that allows you to support your family, it might be good. Of course, you can borrow too much, even if you’re borrowing for a good reason, so this is important to take note of as well.

So how much is too much? The amount will be different for different people, and it often depends on your income. But if you’re struggling to pay your bills, if you can only make your minimum payments, or you need to take out new loans to pay off existing ones, you likely have too much debt. In general, less debt is almost always better. To reduce your debt, look at your budget, trim your costs, and then use the money you’ve trimmed to pay down your debt faster. If you can’t fit all of your expenses and your debt repayment costs into your budget, even after you’ve made cuts, you likely have too much debt and should consider speaking to a professional.