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Worrying too much about money? Here, Gordon Pape's quick tips to fix your finances.

Nothing in life seems to provoke so much second-guessing as managing your money. Should I pay down the mortgage or buy RRSPs?

Do I play my investments safe or take on more risk? Should I speak to an adviser or go it alone?

If you're one of those who has a natural aptitude for walking this sometimes precarious tightrope, you can stop reading now and move on to some of the more interesting stories in this issue. But if you find yourself just barely hanging on, here are four basic financial rules that, if you follow scrupulously, I can almost guarantee your money worries will melt away.

1. Pay off debt

I am increasingly alarmed at the rising percentage of people who are going into retirement carrying a heavy debt load. I can understand why it's happening—debt fuelled the good life of the baby boom generation, and people learned to live with it. But after you're retired and are on a fixed income, debt becomes a time bomb just waiting to explode in your face.

Every recent study confirms the trend, although the numbers vary from one poll to another. The most reliable measure is a 2012 report from Statistics Canada that showed 70 per cent of people between ages 55 and 64 were still in debt. That was up from 61 per cent in 1999. The number of people over 65 with debt was 43 per cent.

An online poll sponsored by CIBC in mid-2015 found that the percentage of people over 65 that still owed money was up to 56 per cent.

Just as when they were working, these folks are using debt to finance their home, buy a car or enhance their lifestyle.

Financial experts have been warning about the dangers of this for years but, based on the survey results, many Canadians haven't been paying attention. Why should they? Interest rates have been at historic lows for most of the past decade. Money is cheap, so why not use it?

Those days are coming to an end. The Federal Reserve Board raised its target rate by a quarter-point in December, and three more increases are predicted for 2017. Even if the Bank of Canada stands pat, the Fed hikes will influence commercial rates across North America. That process has already started with some of the major Canadian banks announcing mortgage rate hikes this past fall. Be prepared for more this year.

A one per cent increase in your rate means another $1,000 a year in interest on a $100,000 loan. But don't expect it to stop there.

Historically, once central banks start to raise rates, the trend continues for a few years. As recently as 2007, the average five-year residential mortgage rate in Canada was 6.75 per cent. That's more than two percentage points higher than now. Ask yourself how an increase of that magnitude would affect your finances.


Start paying off debt before you retire. Make it a priority to be debt-free when you stop work. If that is not possible, shop for the lowest interest rates at websites like and continue to pay down any loans or mortgages.

2. Make safety a priority

The Great Recession of 2008 hit many of us hard. Some people were forced to delay their retirement after suffering stock market losses while others had to cut back on their lifestyles. But those memories are fading away. The past few years have been good for stocks. The Toronto Stock Exchange was one of the best performers in the world in 2016 with a gain of 17.5 per cent.

Not surprisingly, many of those investors who were burned in 2008 have returned to the market. Greed tends to trump fear when times are good. But the risks remain, and a correction from recent record highs is increasingly likely. Another collapse like 2008 would leave many people in financial trouble. I'm not predicting that will happen, but the possibility can't be discounted. The older you are, the more conscious of the risk you should be.


Review your portfolio and determine what percentage of your assets is exposed to the market. That includes stocks, ETFs and equity mutual funds. If it is too high for your comfort level, make some adjustments. Sell some of your equity investments and move the money to short-term bonds or cash.

Next: Don't invest in anything you don't understand...

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