Let me first say that carrying unsecured debt such as credit cards, loans from quick cash stores, etc., is never a good idea. You should budget yourself to eliminate these nuisance debts as quickly as possible. If you wish to start building a net worth, those debts have to go. The budgeting process you use can be used after to start building your future.

There is such a thing as good debt and bad debt. The above are bad debts, mortgages are good debt…Car loans are more bad than good but at times necessary. Your car loan and your car should be a reflection of your income and not your ego. When you have eliminated the bad debt, you can focus on building an investment portfolio. Diversification is important, and it is OK to start very small. After you have eliminated all bad debt, my suggestion is to live on 70% of your take home income. Keep 10% where it is accessible for emergencies, invest 10% in long term investments such as RRSP, TFSA or real estate, and be charitable with the other 10%.

As your cash and long term investments grow, you can move them around. Buying real estate is one of the very best strategies to create wealth. I do suggest you have the cash necessary for the down payment before you start that process.

You would be very correct to suggest that this seems too simple to actually work, but wealth does not just happen. It is created. It is built. It takes discipline, and it takes time. There are very few get rich easy schemes that work out. Having a high income in itself will not guarantee wealth. Money has to be used properly to work for you. If you earn a lot and spend a lot, you will be no better off than anyone else struggling to get by. Be smart. Enjoy life, but be careful.

A note on interest rates…

They seem to continue to go up. There is an indication that we are not as high as we will be. Just remember, what goes up, usually goes down…In the short term, it is uncomfortable, but inflation has to be brought under control. We will get there…