We all know the saying, “ignorance is bliss”. Sometimes it is, until it bites you badly.
We see it all too often, especially with couples. One is more of a spender than the other. One is more of an earner than the other. One is more in touch with finances with the other. They both get into debt together. Whether they stay together or split up, that joint debt bounds you more together than marital vows ever could.
Mark and Terri have been long time clients of ours. They first came to us 12 years ago when they bought their first home. Long-standing clients of a major bank, the bank had told they were pre-approved for a healthy-sized mortgage only to be denied once they found a home to buy.
The bank hadn’t done the vital work upfront and the pre-approval wasn’t underwritten. (Call us and we’ll be happy to explain more about that.) They came to see us about options. It took a lot of work and determination but we swiftly found a solution and got them into their home against all odds.
Today, Mark and Terri have found themselves living paycheck to paycheck. Why?
Terri applies for appealing credit products, easily qualifies and maxes it up. Mark is oblivious to how finances work. His parents never used credit so it feels overwhelming to him. Terri knows more and he trusts his wife to take care of it. He earns, that’s his role. They put two kids through college and helped one of them out with a car loan. They both feel good about that. For Mark, financial ignorance has been bliss.
Today, he feels more stress than ever. Somehow they are bleeding at the seams. They have a small mortgage compared to most neighbours. They only owe $190,000 on their home but they somehow owe $95,000 in consumer debt. Their mortgage payment is $1100/month and 50% of that goes to principle. They pay at least $2000/month to multiple credit sources averaging 18% interest, and that’s just the minimum payment. That only covers interest.
Deflated, tired and less than a decade away from retirement, Mark believes that they will never own their home. This is a mindset that can change.
The mortgage is not the problem. The problem is consumer debt by way of credit cards, unsecured lines of credit at astronomical interest rates and vehicle loans. All of these are EASY to obtain. Too easy. It’s affecting their health and marriage.
While we were able to help Mark and Terri with a refinance for a fresh start this time (they have equity in their home, decent income and credit) they need to change their spending habits. Ignorance is not bliss. Be informed, be active in your financial life.
Contact us and we will help assess where you are and where you want to be.