Most financial problems are caused by debt

It’s not how much you make, but what you do with the money you have that counts…

Most financial problems are caused by debt!

If you don’t spend your earnings carefully, even a six-figure salary won’t safeguard you from money troubles.

I have a family friend who earned several hundred thousand dollars a year as a specialist in an advanced field. He went bankrupt a few years ago and will probably need to work for the rest of his life. I know another who never earned more than $50,000 a year but retired comfortably on his own terms.

The only real difference between these two friends is that one used debt to live beyond his means while the other avoided it and accepted a realistic standard of living.

Just as saving gives you options in the future, debt takes options away.

Not having the option of flexibility is the root of most financial problems. You can be a brilliant worker (or investor) and find yourself in financial ruin if you don’t respect the power of debt.

Income, wealth, and standard of living aren’t as correlated as people think.

Whether you make a modest living or bring in millions, you’ll always do well if you live below your means, save the difference, invest it wisely, and wait patiently.

It’s pretty basic advice, but usually simple is better than smart!

The statistics of debt:

Average Canadian (non mortgage debt) is $13,141

34% of Canadians feel anxious about their debt

40% of Canadians feel comfortable about their debt. (I say complacent. They are meeting their monthly payment obligations.)

Money problems don’t just strain our bank accounts. They strain our relationships.

They’re still cited as one of the top reasons for divorce. I’ve even seen money problems affect people’s health.

So when I help people learn how to increase their financial security, I find I’m often helping them in other, more important ways, too.”

It all comes down to the proper management of cash flow

The #1 secret of the rich?

Spend less than you make and invest the difference in tax advantaged ways!

In today’s “finance everything” world – how you think about and use debt is the foundation to your financial success…”

“Keeping up with the Joneses…” syndrome

‘Appear Rich’ and the ‘Gonnabe Rich.’

Most people say they wannabe rich, but they generally only focus on appearing rich.

They don’t have the attitudes and behaviours that produce real financial security and independence.

It all comes down to debt and how each of us handle it!

There are fundamentally two types of debt

Good debt and bad debt.

Debt cuts 2 Ways:

It bleeds you


It feeds you

Unfortunately, the most common type is bad debt, which is personal borrowing to buy something that drops in value, often at expensive interest rates.

Bad debt is guaranteed to make you poorer.

Bad debt – cannot write off the interest associated with the purchase.

Good debt is when you borrow to invest in something that should make you richer in the long run.

One of the advantages of good debt is that borrowing to invest in something that can produce taxable income is generally tax deductible.

So with good debt you can write off the interest associated with the purchase

To build wealth, the rich focus on two things when investing: how can their money grow more quickly, and what are the after-tax results.

That’s why when the wealthy borrow, it’s generally at a low, tax deductible interest rate to invest in a business, the stock market, or real estate.

Think Donald Trump.

He became a multi-billionaire by buying properties, mostly with borrowed money. The rental income produced some profit. But the bigger part of his wealth came from investing a little of his own money, borrowing the rest, and watching the value of his properties increase over time

So, to summarize:

Pay cash for depreciating assets (cars, tvs, vacations)

Borrow for appreciating assets (rental properties, businesses, stock and bond investments)

Most Canadians get this wrong!

They borrow for depreciating assets

They pay cash for appreciating assets (investments, RRSPs, etc.)


Because they are dealing with their mortgage all wrong and this sets them up for all sorts of difficulties all other financial areas of their life!

I was interviewed recently by Marla McAlpine, (from a well known personality in the financial services industry.

You may be interested in listening into the call…

It’s called: “The Top 10 Myths Of Canadian Home Ownership – Exposed”
Marla McAlpine
Marla McAlpine




Mark Huber, CFP
“The Top 10 Myths Of Canadian home Ownership – Exposed”

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