Credit is a necessity in today's society, and the carefully planned use of credit is an important part of your overall financial plan. Unfortunately, the biggest cash management obstacles faced by Canadians are generally caused by the misuse or abuse of credit cards and debt.
Big-ticket purchases, such as houses, cars, engagement rings and big screen TVs, should require savings first and enjoyment second. Financially speaking, it’s best to operate this way.
However, for most people, income is paid out over the course of the year. As a result, rather than saving for five years to buy a car, the option to buy the car now and pay for it over the next five years is more attractive. Credit is obtained, a purchase is made and repayment begins, with interest.