Mortgage Blog

Getting you the mortgage you deserve

How Good vs Bad Debt Impacts Your Household

January 27, 2021 | Posted by: Justin Emilio

In order to understand the difference between good and bad debt, it's important to track your income and expenses and established saving goals for your family.

Financial stability allows you to meet the needs of your household expenses and puts less pressure on your relationship with your partner. With a little room in your budget, it makes it easier to plan for large expenses such as vacations, college tuition and, eventually, retirement.

When you have financial stability, it can take a lot of stress off of your partnership. In fact, lack of financial stability leads to money problems that are the most common cause of divorce.

Budgeting and Saving

Setting up a budget allows you to see where your money truly goes each month. It also facilitates saving goals and whittling down your debt.

Here's how you can get started today:

1. Gather up all of your bills, either on paper or electronically. Include fixed expenses such as utilities, mortgage or rent, car payments, and phone bills. Also include discretionary spending such as eating out, buying clothes and spending money on entertainment.

2. Gather all of your monthly income sources such as pay stubs, cash for freelance work, and any other source of income.

3. Now, create a budget worksheet or paper ledger to put all of your income in one column and all of your expenses on another.

4. You now have a monthly budget.

In order to save more money for financial goals and emergencies, you need to increase your income or decrease your expenses. This isn't an easy process but tracking your expenses can help you commit and stick to a budget.

One of the most important decisions you make regards how you will balance debt and savings. If you have debt, pay down as much as you can each month. However, you should always put back a little money in savings for emergencies.

What Is Good vs. Bad Debt?

There are various institutions that track your credit score. These include Equifax and Transunion. How you use your credit affects your overall credit score. In turn, a high or low credit score can affect your ability to borrow money you need for your household goals.

For example, your credit utilization ratio tracks your available credit compared to your total credit limit. If you carry high credit card balances, your credit score will suffer. Credit card companies are likely to increase your interest rate and banks and other credit card issuers are less likely to extend credit to you and your family.

Paying your bills on time also impacts your credit score. However, if much of your monthly budget goes toward minimum payments on credit cards, it can become increasingly difficult to pay your bills on time.

Good Debt

There is such a thing as good debt. Your credit history tracks how long you keep and use credit cards. Using credit cards responsibly and regularly and paying off the balance each month is a great way to improve your credit history. Opening up more than one credit card in a short period can raise red flags for lenders and scoring agencies.

In a perfect world, you could pay cash for big ticket items such as a home. However, most people need to borrow money to buy real estate. Typically, investing in a home would be considered good debt. Even though you pay interest on the loan every month, you also increase your equity. Also, real estate generally rises in value over time, so homeowners realized a high return on investment when they sell their property.

Borrowing money for real estate investments or to start a business might also result in a great return on your investment.

How Can Debt Consolidation Help?

Debt consolidation loans can help you pay off bad debt. This solution also simplifies your monthly finances by giving you one payment instead of several. Before looking into debt consolidation, make sure you have your budget and savings plan in place. It won't do you any good to borrow money to pay off your current debt if you haven't developed the discipline to avoid going into debt once again.

Back to Main Blog Page


Bank of Canada increases policy interest rate by 25 basis points, continues quantitative tightening

Bank of Canada raises policy rate by 25 bps to 4.5%

Before you lock in your variable rate

Budgeting for the Year Ahead

Alternative Lending


Should You Spend the Full Mortgage Amount You're Approved For?

The Pros and Cons of Fixed vs. Variable Mortgages

Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

The Bank of Canada Hiked Rates The Full 50 bps

Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

Enjoying a Debt-Free Holiday

How Not to be House Poor

Job Loss and Your Mortgage Application

10 Things to Know About the Offer Process

A Six-Step, Back to Basics Financial Plan for Most Every Canadian

Canada's Inflation at 6.9% in October Supports a December Rate Hike

10 Important Questions to Ask Your Contractor

First-Time Homebuyer Tips

Bank of Canada Slows Pace of Rate Hikes

Bank of Canada Rate Update October 26, 2022

Best Ways to Plan for Your Down Payment

Bank of Canada Will Not Be Happy With This Inflation Report

Common Mistakes That House Flippers Make & How to Avoid Them

Credit Clean-Up!

Understanding Mortgage Trigger Points

Canadian Inflation Slows For the Second Consecutive Month

How Mortgage Rates Affect Buying Power?

Bank Of Canada Rate Update September 7, 2022

September 7th BoC Rate Hike

Adapting Your Finances

5 Reno’s With the Best ROI

Should You Pay Off Your Mortgage Early?

Gasoline Prices Dipped, But No Time To Celebrate

How Many Homes Should You View Before Buying?

Looking to buy your first home in BC? Here are programs that can help you with that goal

Breaking Your Mortgage Without Breaking The Bank - How Mortgage Penalties Are Calculated

5 Things to Consider When Building Your Own Home

Canadian Inflation Surged to 8.1% in June

Bank Of Canada Rate Update July 13, 2022

Tips for Buying Rental Investment Properties

Inflation, Interest Rates & Locking In

New to Canada?

5 Negotiation Secrets Smart Buyers Use to Get Better Deals

Bank Of Canada Rate Update June 1, 2022

Another Jumbo Rate Hike, Signalling More To Come

Dreaming of a Home Away From Home?

Reverse Mortgages and What to Know

How a Mortgage Pre-Approval Can Protect You from Rising Rates

Purchase + Improvements Mortgages

How is a Private Mortgage Different Than a Traditional Bank Mortgage

Have You Had Your Mortgage Check-Up?

Purchase Plus Home Improvements?

Home-Buying 101: A Guide to Purchasing Your First Home

Bank Of Canada Rate Update April 13, 2022

From tax breaks to homebuyer incentives, how the 2022 federal budget affects Canadians’ wallets

5 Benefits of an Investment Property

Preparing for the Spring Market

Refinancing: What You Should Know

Tips for Picking the Right Home to Flip

Bank of Canada Starts Hiking Rates, Signalling More To Come

The Difference Between Bank of Canada Rate and Prime Rate

Bank Of Canada Rate Update March 2, 2022

Can Housing Upgrades Affect Your Insurance?

What to Look for During a Home Tour??

Understanding Insurance

Rent to Own Homes vs. Mortgage: How Do They Work?

Improving Your Financial Direction

Bank Of Canada Rate Update January 26, 2022

Top 10 Questions to Ask Your Mortgage Broker in BC

How Much of A Mortgage Can You Afford?

Housing Market Predictions


Prequalification and Pre-Approval—What is the Difference? Home Buying in BC

Bank Of Canada Rate Update December 9, 2021

Selling Your Home in Winter

Mortgages for the Self-Employed

What to do if You Are Denied a Mortgage

How to Know if it's Time to Refinance

7 Steps for Mortgage Prep

Up for Renewal??

Bank Of Canada Rate Update Oct 27, 2021

Five Great Benefits of Owning an Investment Property

What Is Home Equity and How Can I Build It?

Why Invest in a Home Inspection

Low Credit is Spooky! Get Better Credit With The 5 C’s

Fall Home Tips

How to Handle a Low-Ball Offer in Real Estate | Home Selling Advice

5 Approval Roadblocks You Should Know

How to Talk to Your Kids about Finances

Bank Of Canada Rate Update Sept 8, 2021

What are credit scores and how are they important?

Getting a Mortgage as a Student

What Happens if You Lose Your Job Before Closing?

How a Funding Condition Can Secure Purchasers From Financial and Legal Penalties in BC

Bank Of Canada Rate Update July 14, 2021

Risks of Putting Down a Firm Offer with a Pre-Approval BC

Low Rates in BC Helping Buyers Pay Off Their Mortgages at Record Pace

Buying Land To Build A Home in BC

Bank Of Canada Rate Update June 9, 2021

Your House-Closing Timeline: A Step-By-Step Guide | BC

What Are the Next Steps After Your Offer Was Rejected? In BC

Investing In An Apartment Complex

2021 Mortgage Stress Test - Latest Updates

Things To Look Out For When Viewing A Property

April 21-2021 - Bank of Canada will hold current level of policy rate until inflation objective is sustainably achieved, adjusts quantitative easing program

Stress Test 2021

April 2021-Bank of Canada Releases Results from Consultations on Inflation and Monetary Policy

Buying A Home As A Senior Citizen | BC

Top 10 Considerations When Moving to a New Area

Multi-Family Lending: What You Need To Know About Hard Money Loans

Why Borrowers May Choose a Private Mortgage

How to Handle a Mortgage After a Separation or Divorce

How Good vs Bad Debt Impacts Your Household

Benefits of Investing in Multi-Family Real Estate


Top 3 Biggest Home Seller Mistakes

3 Tips on How to Better Your Credit Score

Renting VS Buying a Home

Five Tips for Buying a Condo

Cons of For Sale By Owner (FSBO)

Real Estate 101: Getting Your Home Ready To Show

Tips for Real Estate Investors

Reverse Mortgages – Impact on Heirs

Advice for First-Time Home Sellers

Top 3 Home Improvement Ideas to Increase the Value of Your Home

5 Things NOT To Do When Selling Your House

Home Inspections, How They Can Benefit Home Buyers and Sellers

Useful Tips for Buying and Selling A Home During Covid-19

When Is Mortgage Refinancing a Bad Idea?

Is it a Good Time to Become a First-Time Home Buyer?

5 First-Time Homebuyer Mistakes To Avoid

5 Smart Ways to Use a Home Equity Line of Credit

What should you consider when refinancing your mortgage?

6 Signs a Home Will Likely Increase In Value

6 Persistent Real Estate Myths You Really Need to Ignore

Should You Pay Off Your Mortgage Early?

New Stress Test On Insured Mortgages

Real Estate 101: Essential Tips for First-Time Home Buyers

10 Essential Tips for Taking Out Your First Mortgage

Should You Refinance Your Mortgage?

Should You Spend the Full Mortgage Amount You're Approved For?

Take Advantage of Low Interest Rates – Refinance Your Mortgage Today!


Strategies to Dig Yourself Out of the Debt Hole

Why You Need an Emergency Fund And How to Get One

The Benefits of Investing in Income Producing Properties

4 Hidden Problems That Could Be Hurting Your Home Sale

users image

Hi, How can I help you?