Editor: Although I’m not much of a movie buff, The Big Short piqued my interest, so I went to see it and thoroughly enjoyed it. This informative entertaining and thought-provoking film is based on the sub-prime mortgage crisis of 2008-09.
The slang term “ninja loan” was mentioned in the film which stands for “no income, no job, no assets,” referring to reckless lending.
Mortgages aside, credit cards, overdrafts and lines of credit have become the new norm. Because credit is so accessible and convenient, it is too easy to fall into the precarious scenario of spending more than we earn, which has the uncanny potential to spiral out of control.
Also, the “buy now, pay later” habit no longer carries the same stigma. There was a time not so long ago if you were broke you had to make do.
The good news is that many of us are becoming aware of the consequences of unchecked debt and are managing our finances in ways to avoid it.
I recently read of someone who, after paying off their car loan, continued making the same payments into an account in order to purchase their next car instead of taking out another car loan. Another couple lived off one income for several years in order to pay down their mortgage.
One interesting tip is to cut back on discretionary spending, for example restaurants or non-essential shopping in order to create a fund for unexpected or occasional expenses such as car repairs, vacations or gifts.
Saving up for things we need instead of using credit is the best way to avoid getting trapped in the debt cycle.
It is such a simple and fundamental concept, but once put into practice is the key to financial security and peace of mind.
Michelle Matich,
Langley