It is often our human nature to wait until we are backed into a corner to reach out for help. Call it denial or whatever you want, we frequently try and navigate difficult situations on our own. How do you know when you may need help managing your money and debts?

There are some definite warning signs, which may indicate that you need assistance with your debts. These warning signs can include:

1. difficulty paying bills on time
2. receiving collection calls or past due notices
3. living in your overdraft or line of credit
4. losing sleep worrying about debts
5. spending more than your income allows
6. not paying credit cards in full each month
7. impulsive spending due to financial worries
8. hiding spending or debts from a partner
9. allowing bills to stack up because you can’t pay them
10. a decline by your financial institution to consolidate your debts
11. no budget or spending plan in place
12. feelings of hopelessness that you’ll never get out of debt

If you, or someone you know, are experiencing some of these warning signs please know that there is help available. Our Credit Counsellors can provide you with confidential, non-judgmental coaching about your situation for free. As a Non-profit Credit Counselling service, we can lay out all of your options for you and then let you chose what you think is best. Why not take advantage of a free service and get yourself back on the right path!

Source: www.mymoneycoach.ca

By: Ellan Dickieson, Family Service PEI

Jenny and William have 3 adult children. Her sons Carl and Gary live close by and her daughter Nancy will be coming home from Ottawa for a visit next week. Jenny has suggested to her husband William that they sit down with all 3 kids while Nancy is home, to talk about their financial situation and future. William brushes her off, saying that it is not necessary and everything is under control.    

Talking about finances can be difficult, and many people, like William, would prefer to avoid such conversations altogether for a variety of reasons.

• We have money, property and papers scattered everywhere…I don’t even know where to start.
• We’ve already worked things out with our attorney.
• We don’t want to feel pressured by our friends/ family to make decisions.
• We are very private; we didn’t talk about our finances when we were young, and we don’t want to open up now.
• Our children have their own life to deal with; they don’t have time for this.
• We’re lousy with money. Besides I’m pretty sure my sister will handle this.    

A lack of communication and planning can be costly to your family or friends. The best way to prevent financial challenges is to make a plan when you are physically healthy and still living in your home. It is much easier to plan ahead, than to react to a sudden event or crisis that forces you (or someone else) to make decisions quickly.    

At the end of the day, what is really at stake is the opportunity for you to communicate your financial wishes, and get help to make those wishes come true. By communicating your wishes early on, you are:

• Making it easier for your friends and family to help you with financial issues in the future.
• Making sure everyone understands your wishes and desires, eliminating confusion.
• Creating a support network with whom you can talk to about concerns, ask questions, or get advice from.

When you think about initiating a conversation make a list of what topics you do and do not want to cover. Don’t feel obligated to discuss all information if you are not comfortable doing so. If at anytime you are feeling pressured, confused, or uncomfortable, ask to resume the conversation at a later date.   

Things to cover in a financial conversation may include:

• Money – income, savings, investments
• Property – assets
• Liabilities – debts
• Housing – cost of living
• Health Care – cost of private care
• Legacy – gifts, bequests
• Legal Documents – power of attorney, will    

Financial conversations of this type are important regardless of age. People should always ensure at least one person is aware of their financial situation and their wishes in the event of a major and sudden event which would dictate the need for someone to make decisions on their behalf.    

For more information on having a conversation about money visit: www.ItsYourRight.ca

By: Kathleen Batstone, Credit Counselling of Regional Niagara

Ever since the Government of Canada introduced Tax-Free Savings Accounts in 2009, people have been asking the question – “Where should I put my money – in an RRSP or a TFSA?”  Both of these savings plans allow participants to use a variety of investments and are a good way to save for things like retirement or education. Choosing which option is better for you depends on a number of factors.

Registered Retirement Savings Plans (RRSPs):

• You don’t pay income tax on money you contribute to an RRSP, as long as you don’t put in more than your limit.  If you take money out of your RRSP, then you usually have to pay income tax on it.
• The contribution limit is 18% of your previous year’s income, to a maximum of $24,270 in 2014, less any money you contribute to a pension plan.
• You can’t make contributions to RRSPs after the year in which you turn 71.

Tax-Free Savings Accounts (TFSAs):

• Unlike an RRSP, you pay tax on income you put into a TFSA, but interest you earn on money in a TFSA is not taxable.  That means when you take money out of a TFSA you pay no tax on it.
• As of January 1, 2013, Canadian residents, age 18 and older can contribute up to $5,500 annually to a TFSA. This is an increase from the annual contribution limit of $5,000 for 2009 through 2012.
• There are no age limits on TFSA contributions.

If you want to save money for a more short-term expense, a TFSA is usually the better option because you can take money out of a TFSA any time you like without paying tax. You can also put the full amount of the withdrawal back into the TFSA in future years. Make sure you understand the rules about when you’re allowed to put the money back in or you may have to pay a penalty for over-contribution.

For long-term retirement savings, one of the factors when deciding which plan is best for you is the income you think you’ll have when you retire.  Many financial planners use the following guideline: if your income is greater now than you expect it to be during retirement, go with the RRSP. One reason for this is because the tax deduction you’ll get for RRSP contributions at the higher tax rate you’re paying now will be larger than what you’ll have to pay when you take money out at your lower retirement tax rate. Most financial professionals suggest that you should take the tax refund you get from an RRSP contribution and immediately add that to your RRSP as the best way to maximize the plan’s advantages.

The second part of the guideline says: if your income is lower now than it will be when you retire, put your money into a TFSA. Unlike withdrawals from an RRSP, withdrawals from a TFSA do not count as income, so they aren’t counted when the government is determining whether you qualify for benefits like Old Age Security and the Guaranteed Income Supplement.

Of course there are other factors to consider as well when making your decision. For example, you may be able to use RRSP contributions to help buy your home or finance your education. Both the Home Buyers’ Plan and the Lifelong Learning Plan have rules about who is eligible and when you have to pay the money back, so make sure you get all the details about how those plans work.

Sourced from: http://www.creditcounsellingcanada.ca/CCC-Newsroom/News-Archives/articleType/ArticleView/articleId/115/categoryId/4/TFSA-vs-RRSP.aspx

By: Julie Jaggernath, Credit Counselling Society

When you’re a student with a student loan, a self-employed entrepreneur or someone who depends heavily on commission or seasonal income, you might be tired of hearing everyone tell you that a budget will make managing money easier. But when you have irregular income, what if creating a budget is the problem?

If you have fluctuating income, seasonal employment or if you depend on lump sums of money to carry you through several months of expenses, creating a budget can be extremely difficult.

The trick is that while your income fluctuates, with some careful planning, your spending doesn’t have to. Here are 3 ways to budget with irregular income.

Getting Started with a Budget – How to Plan for Expenses

Before trying one of the strategies below, take time to identify your expenses. List out your regular weekly and monthly commitments.

Then add in amounts for the less regular expenses you need to spend money on. These can be harder to identify than the regularly occurring expenses, so pull out your calendar and some bank or credit card statements and start reconstructing your spending habits.

Another great way to identify your spending habits it to write down where you spend your money. People who track their spending for at least a couple of weeks are often very surprised when they look back and their spending journal reveals where they actually spent their money.

3 Budgeting Strategies When You Have Irregular, Seasonal or Fluctuating Income 

When your income fluctuates, or you have irregular, seasonal, or sporadic income, focus on planning and implementing a budgeting and money management strategy that keeps your spending from fluctuating. 

Here are 3 personal budgeting and money management strategies to get you started:

1. Budget Using Your Average Income

If you have had irregular income for a few years, one strategy is to calculate the average net income you’ve had each year for at least 3 years, divide by 12 and use that amount to build your current monthly budget. If this amount is not enough to meet all of your expenses, you must consider how you can supplement and increase your income on a regular basis or decrease your expenses to make your budget balance.

If you are self-employed, part of the planning process for any budgeting strategy must include a separate savings account for income tax payments.

2. Budget Using a Holding Account – This Method Works Well for Students

Another strategy is to set up a holding account. All of your income, including tax refunds, gifts, bonuses, student loans, etc., is deposited into the holding account. You pay yourself a monthly amount based on what you have identified you can afford and what will allow you to meet your obligations. During months of higher income, the holding account will have a larger balance. During the leaner months, the holding account balance will decrease. However, the amount you pay yourself does not vary from month to month.

A Special Budgeting Note for Students

For post-secondary students who are trying to budget with a lump sum of money, the holding account method is usually the easiest. With loan, grant, bursary, scholarship or money saved up from working over the summer, it can be much too easy to spend it all at once. By using a holding account and taking a “pay cheque” out every two weeks, it’s much easier to make the money last as long as it needs to.

3. Use Two Budgets: One for Good Times & Another for Leaner Times

A third way to deal with irregular income is to have two budgets, one for the better months and one for the leaner months. For most people, this is the hardest way to manage their money effectively because it’s easy to get into a spending habit during the better months and then feel deprived during the leaner months.

With two budgets, some people are tempted to spend because they expect to have money again in the better months ahead. They rely on credit to supplement their leaner times, which results in a cycle of debt and spending habits that becomes expensive and difficult to break.

The Bottom Line with a Personal Budget When Income is Irregular

A personal budget allows you to focus on what you can do rather than on what you can’t, even if you have irregular income. Taking the time to create a realistic budget makes it easier to manage your money so that you can focus on spending time and energy on what’s important to you.

Sourced from: http://www.nomoredebts.org/blog/budgeting/irregular-income/3-ways-to-create-personal-budget-plan-with-irregular-income-self-employed-student-seasonal.html

By: Ellan Dickieson, Family Service PEI

With December having just passed, it is probable that many people made monetary donations to support a local, national, or international cause. Islanders, and seniors specifically, are some of the most giving people across the country. The act of giving to others makes us feel good about ourselves and often aligns with our individual morals and values.

Donating is a personal decision, but can be highly influenced by social and peer pressure, placing you in a situation where you feel obligated to make a donation. It happens to all of us. A friend, co-worker, family member, or total stranger asks us to make a donation, and we don’t want to!

Unfortunately, most of us don’t have a money tree. This means, just as we can’t always buy the things we want, we can’t always donate money every time we are asked.  This New Year, start to think more about your giving proactively, rather than just responding to solicitations that comes in. By preparing and setting donation rules, it will be easier for you to stay on track with your donation budget, and say no!

Set Your Donation Rules:

How much will I give?
Set your own limits. Make them annual, seasonal, or monthly, as you wish. Write down the amount you will be giving to specific organizations. Keep track every time you donate, and at the end of the year re-evaluate your donation budget.

What causes do I support?
Do you prefer to support local charities or national charities? Causes that your family members/friends are part of? Sport, or health oriented charities? Pick a charity of choice or make a prioritized list of favourites.

What don’t I support?
Some people have individual reasons for choosing not to support. Perhaps the charity does not align with your personal morals or values, or perhaps they are not having a direct impact on your community. Knowing what you do not support makes it easy to say no.

Other rules?
Some people insist on researching a charity before they donate. If you are giving away your hard earned money, you want to make sure it is going to charity you trust.

For more information on donating, including a donation tracker, please visit http://www.itsyourright.ca/lending-giving-money/

By: Investor Education Fund
​With the cost of holiday gifts, parties and travel, many people find themselves in debt over the holiday season. But with a little planning, you can avoid holiday debt.

8 tips to keep holiday spending on track

1. Set a budget for your holiday spending
Set a budget that you can afford and stick to it. It should include all the things you’ll spend money on over the holidays, such as gifts, cards, decorations, parties and food. Use this holiday budget worksheet as a guide.

2. Save before you shop
Save a little bit for the holidays each month. That way you’ll be spending cash you already have on hand. If you choose to use a credit card, you’ll have the cash to pay it off right away.

3. Make a list
If you shop with a list, you’ll be far less likely to buy on impulse. That means you’ll also be more likely to stick to your budget.

Before you shop:
List the people you plan to buy gifts for.
Think about their interests and the kind of gifts they would like.
Estimate the cost of each item on your list. You may be able to do some comparison shopping online.
Check that the cost of each gift fits your budget.

4. Pay cash, or pay credit cards in full
Paying cash for everything can be a way to help you stick to your budget. If you choose to use a credit card, pay it off in full and on time to avoid interest charges.
How much does that gift really cost?
To learn more about the risks of holiday debt, read Luc’s story.

5. Keep track of what you spend
Keep a record of what you’ve spent and what you’ve bought, and compare it to the list you created. If you start shopping early, it can be easy to lose track over several weeks or months. Try putting all your shopping receipts in a single envelope. As you shop, add the amount of each new purchase onto your total.

6. Shop early
If you shop at the last minute, stores may be out of the items on your list, and you may be more likely to buy on impulse. You’ll also have less time to shop around for the best deal. If you shop online, you’ll pay higher shipping fees if you wait until the last minute to order.

7. Look for sales and other discounts throughout the year
Watch for sales throughout the year to spread out the cost of gift-giving. Sign up for e-mail or even text-message promotions from the retailers you are most likely to buy from. Also sign up for or check the balances you have on rewards programs offered by debit and credit cards. You may be able to get a free gift or a discount. If you shop throughout the year, resist the temptation to buy additional gifts during the holidays that aren’t on your list.

8. Look for ways to reduce your travel costs
There are 2 ways you can try to cut your travel costs for the holiday season:
Buy your tickets early, at least by October.​
Wait until the last minute. Some travel websites have last-minute sections that offer huge discounts on travel packages. You must be flexible on your dates, though, and there’s a chance no travel packages will be available.

Sourced from: http://www.getsmarteraboutmoney.ca/en/managing-your-money/planning/managing-debt/Pages/Avoiding-holiday-debt.aspx#.VH3DZYuWt95