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RBC's Suzanne Schultz joined us Friday, December 4th for a live online discussion on debt management. Ms. Schultz, a chartered accountant and certified financial planner, has more than 15 years of experience helping individuals with their financial matters. (Photographer: Tanja-Tiziana Burd)
RBC's Suzanne Schultz joined us Friday, December 4th for a live online discussion on debt management. Ms. Schultz, a chartered accountant and certified financial planner, has more than 15 years of experience helping individuals with their financial matters. (Photographer: Tanja-Tiziana Burd)

Earlier discussion

Which debt should you pay off first? Add to ...

Comment From Shelley: I have alot of unused credit available to me (I got it for 'just in case'). Does this amount of credit hurt my credit score? Even if it hasn't been used in years? Should I reduce it?

Suzanne Schultz: The best time to get credit is when you don't need it, so the fact that you have unused credit "just in case" is a good idea. The unused credit will be looked at, but the fact that you haven't used it, have had it for a long time, and there are no outstanding balances owing are all in your favour.

Comment From Alex: What if you have no debt other than a mortgage (being paid off weekly accelerated with a good amount of equity) and a 0% car loan, and have maxed out RRSPs and have also maxed out RESP for our child, is it ok to indulge in some debt to take a nice vacation or renovate?

Suzanne Schultz: Wow -- you are in great shape! I always say that people are pre-programmed to be good savers, or big spenders. You are in the good saver category. Please go on a vacation. You deserve it.

Comment From Mike: Where do you look, and what do you look for in a Certified Financial Planner?

Suzanne Schultz: You can search for a CFP on this website: www.fpsc.ca As far as what to look for, it depends what your needs are. First and foremost you want someone that you feel comfortable working with. If there's not a fit, keep looking. You will also want to ask what services are offered, if financial products are offered and how they are paid. There are some great CFPs out there, working for banks, independent shops and brokerage houses. I'm sure you will find one that suits your situation.

Comment From Howard: Hi Suzanne: What is the advantage or disadvantage in putting your line of credit and credit card debts on your mortgage and using some of your RRSP to pay down your mortgage?

Suzanne Schultz: Wow, this is a biggie. The advantages are you might have a lower interest rate, and lower payments since the mortgage is likely amortized over a long period of time. The disadvantages include that you are eating into the equity in your home and over the long term will pay a lot more since the payments will be made for so long into the future. It really depends on what your amortization period is. Be careful with this. With unpaid credit cards and a line of credit, it sounds like you have budgeting problems. I would advise you to take a close look at your spending and cut out the extras and put that cash towards this debt. Many people who refinance debt into the mortgage keep going back to do this again and again. Finally, RRSP withdrawals are taxable so I would leave this one alone except in very special circumstances.

Comment From Belinda: Hi Suzanne, Thanks for your time in advance today. My question is how much savings should one put aside? And how can one calculate this from their salary and expense of mortgage?

Suzanne Schultz: Hi there. I recommend a minimum of 10 per cent of your net income in savings. If you can afford more, even better. Its a good idea to pay yourself first, by getting a pre-authorized payment out of your bank account on pay day...if you don't see the money, you often won't even miss it.

Roma Luciw: Well, that is all the time we have today. Thanks to Suzanne Schultz for joining us and tackling all these questions. We apologize to the many people whose queries we ran out of time to answer. All the best to everyone this holiday season and good luck managing that debt.

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