As the rain and dreary grey skies of the lower mainland winter subsided a couple months ago, so too did the attitudes and motivations of the inhabitants of all the various types of dwellings in the region.
People with large detached homes began to emerge from their winter’s sleep. Condo owners opened their windows to a bright new future and the spring sun. Acreage dwellers initially got excited, then worried about the amount of work facing them, then excited again when they remembered how good it would all look upon completion.
Yes, everyone is happy that summer is finally here. For a lot of people, however, the only thing that’s not happy is our wallets.
Summer is expensive.
Why Do We Spend Money in the Summer?
During the winter we get caught up in different activities like sports or school events. It’s easy to get exhausted both physically and mentally - we desire less activity and we find fewer things to spend our money on.
When summer rolls around, however, the world kicks into fast gear. Family events, summer entertainment, renovations, new clothes, summer vacations - the list goes on and on.
Why, in the last three months I’ve bought a new vehicle and renovated an entire floor of my home - literally, we ripped out the carpet and installed vinyl floors (on our own, of course, to save money, not to say anything of saving sanity). We were smart about our purchases, but these things still add up.
And truthfully, the easiest way to cover the expenses was with a small line of credit.
How to Responsibly Handle Your Loan
With any loan, however, there’s always an element of responsibility to commit to beforehand. It doesn’t matter how you got your line of credit, whether it’s with a bank, a private investment fund or through a mortgage broker, it’s important to outline how you’re going to pay it back.
We help our clients develop achievable exit strategies to deal with their debt responsibly. A lot of these strategies start with simple letters of intent meant both for investors as well as with the holder of the loan.
You see, when you outline clearly, for yourself, how much you’re going to contribute back to the loan each month, where that investment will come from and how long you’re going to take to be debt-free, it’s pretty tough to stray from that plan.
A letter of intent is a binding personal contract. It removes the emotion of large purchases and quantifies the exact methodology for returning to the black. A loan to renovate your home or provide your business with a boost can be a huge tool toward getting yourself on your feet, but only when it’s accompanied by a personalized exit strategy.
So, dream first, reconcile with reality second, and then the rest is up to you.