Credit cards can be your best friend or turn into your worst enemy if not used responsibly.

Getting your first credit card is a big deal when you're coming of age. But learning how to use them responsibly is something that requires a little bit of maturity and a little bit of credit card know-how.

"Credit cards are powerful tools to help build credit and financial skills," says Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada, Inc. "Unfortunately, they can also be dangerous if not used responsibly."

What if you made your morning coffee instead of heading to the drive-thru on your way to work? Crazy idea isn't it?

But is saving some extra money really so crazy?  Believe it or not, those trips to the coffee shop really do add up.

According to the Office of Consumer Affairs (OCA), if you save the $5 instead of buying that latte -- even at 1.5 per cent interest -- you will save about $5,500 over 25 years. Not too shabby, eh?

Sales of existing homes in Canada fell again last month, the Canadian Real Estate Association announced today, one more example that Canada’s runaway housing market is slumping.

What’s more interesting, however, is that actual sales for December, while not seasonally adjusted, were off 17.4% from a year earlier. That's quite a drop, given that interest rates remain essentially unchanged over the period. 

But rates don't matter if you can't get a mortgage in the first place.

It seems that Finance Minister Flaherty’s latest round of rule changes, which included cutting the maximum length of insured mortgages to 25 years from 30, may be making even more of a dent than expected.

2013 is the year of the snake (the yin to last year’s dragon yang), and according to www.astrology.com that means “we're likely to see significant developments in the area of science and technology this year.” So if you want to base your investing on the stars that’s your prerogative, but for those looking for more down to earth advice I spoke with David Campbell Lester, a financial life coach and author of the best-selling book I Heart Money.

Is now the time to lock in your mortgage? No, not yet, mortgage broker David Larock maintains.

Traditionally, a five-year fixed-rate mortgage has been about 1.5 percentage points higher than the five-year variable rate, depending on the prevailing yield curve. Today, you can get a five-year fixed mortgage for much less than that. 

Fixed-rate mortgages have traditionally been popular among first-time buyers looking for predictability in their payments. But the Bank of Canada's recent decision to stand firm on rates is likely going to keep variable-rate mortgages attractive for some time.

Larock says he’s able to offer his clients five-year variable-rate mortgages at prime minus 0.4 percentage points, or 2.6 per cent. Five-year fixed-rate mortgages can be had for 2.99 per cent, he says.

Most studies says that variable-rate mortgages have worked out to be better than fixed-rate mortgages over the past 25 years. And the difference was fairly dramatic, saving consumers thousands in potential interest costs. But is this likely to be the case going forward?

Yes, says Larock.

Just under one third of current Canadian renters are planning to buy a home within the next two years, according to recent study from TMG The Mortgage Group Canada. That translates into a potential increase of 12% in overall demand for home ownership, TMG predicts.

What's been holding them back so far? Affordability and interest rates, mostly. But 54% indicated they would buy even sooner if they believed interest rates were to rise 2% or more in the next 12 months.

But that's not the whole story. “The same percentage of renters indicated the ability to repay with as much flexibility as possible was as important as obtaining the lowest possible mortgage rate," notes Lawrence Smith, Professor Emeritus in Economics at the University of Toronto.

"It means Canadians are really thinking about paying off mortgages as opposed to what we’ve seen with sub-prime mortgages in the US which was all about rate, cash-flow and just getting approved.”

Concerned about a big drop in home prices? Quit worrying.

Canada’s housing market is more like a balloon than a bubble, maintains BMO Capital Markets in a recent report.

While bubbles always burst, a balloon often deflates slowly in the absence of a “pin”.

In most regions then, where valuations are just moderately high, the air should seep out slowly, as rising incomes catch up with higher prices, allowing valuations to normalize before interest rates do.

What would constitute a balloon-bursting pin? If interest rates were to spike by about four percentage points, for instance, the affordability of homes would quickly drop. Same with a severe recession.

Is now the time to lock in your mortgage? Some people certainly think so.

Traditionally, a five-year fixed-rate mortgage would be 1% to 2% higher than the five-year variable rate, depending on the prevailing yield curve. Today, you can get a five-year fixed mortgage for much lower than that. 

Most studies says that variable-rate mortgages have worked out to be better than fixed-rate mortgages over the past 25 years. And the difference was fairly dramatic, saving consumers thousands in potential interest costs. But is this likely to be the case going forward?

Maybe not, says Rob McLister, who tackles the issue head on this week on his excellent Canadian Mortgage Trends blog. Read his rationale here.

The cost of home ownership in Canada is on the move again.

The proportion of pre-tax income required to handle the costs of owning a home jumped last quarter for all types of housing tracked by RBC Economics housing affordability index.

The biggest jump was once again in Vancouver with the cost of mortgages payments, utilities and property taxes for a bugalow coming in at close to 93% of a typical household’s monthly gross -- up 10.4 percentage points from the previous quarter.

In Montreal, home ownership cost roughly half that eating up 43% of a typical family’s income, up 1.4 percentage points from the first quarter. Other major cities in the survey include: Ottawa (41%), Calgary (37% and Edmonton (34%)

Despite the temptation to jump right in, those record low interest rates may be making you poorer.

Canadian households will have a tough time growing their net worth given high household debt, according to a recent report from TD Economics.

Although household borrowing has slowed significantly over the last several months, household credit is still growing faster than income and asset growth, which leaves the household balance sheet “highly leveraged when compared to historical experience.”

Moreover, the level of debt has become a constraint to net worth growth. Net worth is now growing more than three percentage points slower than the average annual rate of 9.7% recorded in the 2004-2007 period, TD says.

But is debt always a drag on net worth?