Home Purchase Solutions’ mission is to:
Help financially challenged families, who are
Committed to improve their credit situation,
Choose and buy a home of their own, while
Taking action to qualify for conventional mortgage financing.
Financial stress is one of the most serious issues faced by families. It is very close to the stress resulting from separation or death. And yet, getting control of your finances is very simple – the solution is to spend no more than you earn!
One of the most serious gaps in our education system, in my opinion, is that very little is taught on how to handle your money – this applies equally to former children (now adults) and current students. Perhaps an apt comparison might be made to sex education – it was always assumed parents would handle this, but how often did it happen?
So what are some of the causes of families getting into debt, leading to needless stress, family strife and, sometimes bankruptcy. There are a couple of major reasons, in my view:
• lack of basic knowledge on how to handle money, and
• ease of getting credit.
Don’t get me wrong, there are many sources from which to learn how to manage your money. Unfortunately, most people only find out about them when it is too late – they are already in trouble!
Our consumer society and the large manufacturing and retail structure fuelling it, do their utmost to encourage consumption, all the while eagerly supported by the financial industry. Yes, those are a lot of words simply to say that credit is made easy so as to encourage you to buy!
The ads of full of enticements:
“No money down, no payments for a full year!”
“Enjoy it now, pay later”
“$0 down, low interest for three years”
You get the picture.
Additionally, being human, we like to keep up with the Joneses – if they get something new, or go on a great vacation, maybe we should do the same.
Before we know it, we have the latest “toys” and have acquired a few credit cards, from different banks or retailers; our cell phone bills become larger than we ever thought they might, because we are using them not only to talk, but to stream data, TV shows, etc…
Then one day, there are more bills to meet than we have income to pay. Unfortunately, many of us believe this is only temporary, so we apply for and receive loans – these help out for a while, but they also need to eventually be repaid.
The big problem is that, as we get behind and don’t have the money to meet our current obligations
• we increase the amount owing on credit cards, when one is maxed out, we use a different one;
• we try to only pay the monthly minimum that is shown on the credit card statement;
• we figure that it will be OK if we don’t pay this month’s cell phone bill, we’ll catch up next month!
Does this sound familiar? Well, if it does, you are not alone – according to Canada’s credit rating agencies, who determine if you qualify for more credit, the credit score of approximately 1 in 7 Canadians would be too low for them to easily qualify for a bank mortgage to buy a home.
The problem has grown so large that it has become a concern for our government and the global financial rating agencies that determine how much of a risk we are. Consumer debt has reached a level that for each dollar earned per year, the average Canadian owes $1.65 – in other words, it would take each one of us 20 months of earnings, with no other expenditures, to pay off what we owe!
Now you may say – “that’s not me”, and you may be right. But what it does means is that if it doesn’t apply to you, then perhaps it means your neighbour would take 40 months (over 3 years) to pay off what he owes! A little scary.
Personal debt has spawned an increase in the number of organizations whose purpose is to counsel families on how to regain control of their finances.
My personal opinion is that if personal debt was limited to only three major things, family financial stress, consumer proposals, and bankruptcies would be the exception – those items are, and I stress my opinion:
• education loans
• auto purchase loans/leases
• home mortgages.
There is no question that some family financial difficulties can be and are caused by unfortunate circumstances, such as:
• illness and/or disabilities caused by accidents,
• layoffs, or
• uninsured catastrophes.
But there is still a very simple solution:
DO NOT SPEND MORE THAN YOU EARN!
And there is an accompanying maxim:
PUT SOMETHING ASIDE FOR A RAINY DAY!
At this point, you are probably thinking “that’s all well and good, but how do I get out of the mess I’m in right now?”
In subsequent articles, my goal is to help you through the steps you can take on your own to control your personal financial destiny. These articles will address:
• Expense tracking
• Family budgeting
• Debt reduction
• Credit score improvement
HOWEVER, if you are already in difficulty and can’t wait, here are a few suggestions:
• Go to your local public library and get a self-help book; your librarian will be happy to make some suggestions.
• Do some research on the internet; there are many excellent and free resources that can help get you on the right track.
• A quicker solution could be to book an appointment with a credit counselling agency, many of which are non-profit and will provide guidance at no cost.
Our Home Purchase Solution is designed to help families move into their own home and eventually gain title, providing certain criteria are met. We do get paid for our services, but we are primarily in this business because we believe everyone deserves an opportunity to own their own home. We also believe in giving people a second chance to improve their financial situation if they have been through tough times that have damaged their credit.
Bob is a retired business executive, strategy consultant, and community volunteer; he is also an officer of Grand River REI Inc., the company that designed and offer Home Purchase Solutions.
I am not trained in credit counselling or credit score improvement; my suggestions are based on research and personal experience.