(Stephen) Why wait for that car
you've always wanted?

Buy it now. We guarantee
financing, they say.

Need that kitchen?
Don't pay for two years.

Borrowing money seems easy,
but it is a tricky business.

Here, in another installment
of CFMWS's <i>Financial Literacy</i> series

is Corey Hargreaves.

He is here to help us sort
through the borrowing maze.

Corey is a SISIP Financial
Counsellor, based in Esquimalt.

Thanks for helping us today, Corey.

(Corey) Thanks for having me.

(Stephen) What should we consider
when we're thinking about borrowing

any amount of money?

(Corey) Well, I think
the first thing to consider

is why you're borrowing the money,

what you're purchasing.

Is it a need or is it a want?

You know, if it's a need,
and you can't pay for it with cash,

the next thing to think about
is what is the cost going to be, right?

What is the cost of borrowing that money?

And what sort of position is
that going to put you in?

What sort of sacrifices
will you need to make

over the next number of months
or years to pay that back?

And is it worth that?

(Stephen) Is it worth shopping around,
or is it sort of one size fits all?

I want to borrow, you know,
$10,000 to buy that used Porsche

I've always wanted
that I don't really need.

Is it worth shopping
around different banks

or different financial institutions?

(Corey) Yes, with a caveat, I think.

At this day and age in our access

that we have to information
and price comparing

and also competition
for people's money

and in the form of loans and borrowing,

I think shopping around
is an absolute must.

But if you're, for example,
shopping around for a vehicle, let's say,

you don't want to go
around to dealerships

and actually fill out applications

because you don't want to apply
for any sort of loan,

because that'll impact your credit

every time you make
an application and inquiry.

So shopping around,
I would say "yes"

in the effect of shopping around
for the purchase price.

It's going to be hard to shop
around for interest rates,

unless you actually
fill out an application,

but you can definitely talk to lenders

and get an idea
of what their rates are.

Especially, if you go in well-armed

and you know
what your credit score is--

there's ways you can get
your credit report and score for free.

So if you have an idea
of what your credit rating is,

and you're armed with that,

that puts you in a better position
to shop around.

But when we're talking about education

and knowing what's on your credit,

knowing your credit score

is that...

...and the reality that

you're probably going to have
to borrow money at some point.

Our credit patterns affect our ability
to not only borrow money when you need to,

but also and, which is very important,

and the cost of borrowing that money
or the interest rate.

So what everything boils down to

is that you don't want to just
solely focus on your credit score, right?

If you're managing your money
with a budget

and you're using credit responsibly
and for only things that you need,

your score is going
to take care of itself.

Your score will register that.

If you're paying your bills on time,

you're not utilizing every little bit
of credit you have,

you're paying off
your credit card balances,

your score's going to reflect that.

So don't be too obsessed with that score,

because I see that a lot of the time.

Work on managing money,
following your budget,

only boring when you need to.

The score is going to take care of itself.

(Stephen) Corey, how does one
maneuver around credit cards?

I've seen everything
from 6-7% interest to 35% or more.

And then the big stores throw in
that, "Don't pay for a couple of years,"

and "It's interest-free."

What should we watch out for
in these cases?

(Corey) Yeah, so regarding credit cards,

there's a lot of advantages
to using your credit card.

They offer purchase protection,

some offer travel protection as well.

You could get cash back,
points or rewards.

So there's a lot of benefits
of using credit cards.

And the interest rate...

...shouldn't matter in the fact that

when you use your credit cards,

you should be using it within your budget
and paying everything off that's charged.

So if it's 35% or 6%,

you'd be using your card

with the intent of paying it off
and not paying that interest.

So, that's how I would
approach credit cards

is use them because

there's a lot of benefits to using them,

but you should only be using it
as you would cash.

- (Stephen) Corey, thank you for this.
- (Corey) Thank you.

(host) Corey Hargreaves is a SISIP
Financial Counsellor, based in Esquimalt.

Contact your SISIP Advisor today
at <i>sisip.com</i>

to review your financial plan

and set yourself
on a path to financial health.