May 16, 2012

Don’t worry. I’m not advertising for Tim Hortons. I’m just amazed at how bold the advertisement above is. It tells us that you don’t need money, just a visa.

This is exactly the culture I’ve been trying to educate people about. If you don’t have money, yes it is a problem. If you don’t have money and you use your visa, then that is a bigger problem. It means you’re borrowing money – not just spending it.

This is one reason why budgeting fails. It used to be the best solution to money problems. You sit down and figure out how much everything costs and make sure you have enough income to meet all of your expenses. If you don’t, then a warning bell begins to ring.

“Why don’t you have enough money? Can you increase you income? Or are your expenses too high?

This dynamic kept us honest and, quite frankly, our parents and grandparents out of debt. They had no choice. Their generation did not have credit cards or lines of credit. They had to make their budgets succeed.

Today it is a much different story. Most people do not know all of their necessary monthly expenses. They don’t have to. They are using credit cards masquerading as cash. Many people don’t seem to see or care about the difference between the two. Why? Because they don’t have to.

Our shopper’s creed in the instant gratification culture is exactly this, No money, no problem. Just say Visa (or Mastercard or whatever your substitute for cash might be.)

Does anyone remember when the merchants used to always ask, “Will that be cash or Chargex? Or when they asked, “Will that be cash or charge?” Or, when they stopped asking the question entirely?

True, today they do ask you if it will be debit or credit, but the debit card is probably backed up with a line of credit. The point, however, is that people are using their credit cards to subsidize their empty bank accounts. How else can you explain the highest levels ever recorded for household debt in Canada? The fact of the matter is that Canadians owe $486 billion in consumer credit today.

With the persistent debt question nagging away at our heels it is time for some of us to come out of the closet and say enough is enough. The first step to solving a debt problem is to stop borrowing. This means that everything we do after this point will be moving in a forward direction – to debt freedom.

The second step is to set up a meaningful family budget. This means that you will be honest with yourself and tell the truth ….what are you really spending your money on? List everything. Getting control of your finances is all about self-awareness. Money tells us what we do …

I remember an old friend who told me this story about budgeting. It was a time before universal credit cards. “Last night I had to stop at the local grocery store for some milk and cigarettes. I parked the car and went in and grabbed some milk and went up to the counter. I asked for a package of cigarettes and when I looked in my wallet I noticed I didn’t have enough cash for both the cigarettes and the milk. So, I bought the cigarettes.”

A budget can free us from the blindness of overindulgence and wilful negligence. The first step is to learn about our true selves. What we do is what we believe.

The next step is to figure out how to pay for everything.

Remember, if you are experiencing financial difficulties do not wait. Call Solutions Credit Counselling at 1(877)588-9491 or fill out our Debt Consolidation Questionnaire and get your Free Credit Counselling Advice today.

For more information visit Debt Canada - your Canadian credit education centre.

If you are a woman in debt, speak with Women and Money first. We specialize in helping women with their personal and business financeMoney management advice you can count on!

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