Everyone has a financial weak spot. For me, it’s books. When I walk through my favorite rickety old book shop, I smell the insight fused into the books which rest on dilapidated wooden shelves. My senses are overwhelmed and impulse takes over.


Cha-ching! Forty dollars and two masterpieces later, I’ve caved to the temptation. Thankfully this doesn’t happen often and I can afford it.

Can you afford your financial weak spot? Satisfying an impulse to buy something you don’t need can be dangerous; increased spending often leads to unnecessary bad debt. According to a recent report by the Certified General Accountants Association of Canada released in May 2010, Canadian household debt continues to rise.


Today, Canadians collectively owe $1.4 trillion which is 2.5 times greater than in 1989 and if it were spread evenly among all Canadians, each person would owe $41,740. The majority of the increase is from credit cards and lines of credit. Canada’s debt-to-asset ratio is ranked first among 20 OECD countries examined in the study and this is a long-term trend.

Good debt, like a mortgage or investment loan, is used to purchase assets which grow in value. In moderation, good debt is OK and it typically has a lower interest rate. Bad debt, a.k.a. consumer debt, often incurred through impulse buying, doesn’t help you grow your assets. Car loans and credit cards fall into this category.

Bad debt is like a ball and chain around your ankle. It’s expensive and restrictive. So, try to avoid it and get rid of it fast. First; remove the temptation to spend. Don’t go the car show if you’re likely to buy a new car when the old one still works. Take your name off promotional lists (email, mail and telephone). Reduce your available consumer credit. Have only one credit card and line of credit, each with a manageable limit.

Second, pay off bad debt fast. Don’t incur additional debt while tackling the existing. Negotiate and/or consolidate debt to get lower interest rates and a manageable payment plan. Focus on paying the highest interest debt first because it costs the most. Try to cut out a few coffees and lunches each week so you can pay a little more – even an extra $20 makes a difference.

I’m not suggesting you have no fun at all – spontaneity is great and makes for a fulfilling life. But, when impulse gets in the way of being able to afford the lifestyle you truly want, it’s time to make changes.