Category Archives: Financial Matters

Setting Financial Goals- Where to Start

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Setting financial goals can be overwhelming and intimidating. However, by thinking about financial goals you are on the right track to being in control of your finances. Having control over your personal financial situation can be very rewarding and empowering. Setting goals is the beginning.

When brainstorming financial goals you want to ensure the goals are realistic and achievable. If you are in a relationship where you share finances, both parties should be active participants, and should both agree that the goal is attainable. This will involve doing some groundwork.

Begin by setting both a bigger goal and a smaller goal. These goals may also translate into short term and long term goals. A big or long term goal may be to buy a house in the next five year, while a short term goal may be to pay off your credit card in the next five months. It is important that you write down your goals and re-visit them periodically. This process will help increase your probability of achieving the goal.

SAVING

Paying off debts and saving money are often very common goals. When considering saving for a large purchase, you must be careful to include all expenses when calculating the amount of money required. By taking all costs into consideration you will be able to better determine whether or not the goal is realistic and feasible.

For example:

Estimated Cost Real Cost
  • My Goal: buy a car
  • Cost: $5000
  • Timeline: 1 year
  • Cost: $417 per month

 
  • Save up to buy a car = $5000/12 months = $417/month
  • Other costs:

–      Insurance: $700/year = $58/month

–      Gas: $120/month

–      Maintenance: $50/month

–      Cost: $228/month

  • Actual Cost = $645 per month

Saving even small amount of money is always a good start. One goal may be to put money aside for an emergency fund. An emergency fund will help you through difficult times, such as loss of employment, illness, or even unexpected car or house repairs. It will also provide you with some reassurance and lessen your stress knowing that you are prepared financially should a situation arise.

Another goal for saving money may include paying off your mortgage faster.  If you are in the situation where your income has increased, or you have excess money, you may want to consider increasing your monthly mortgage payments. By increasing your payments you will not only pay off your mortgage more rapidly, but also and save money on interest!

PAYING DOWN DEBT

If you are working hard to pay off debt, it is important that you are strategic with your approach. Be sure to take into consideration the interest rates on each separate debt. If you are interested in saving more money as you pay down your credit card debt, you can pay off the higher interest rate card first. This method is preferred by some because the longer you pay high interest — especially if your balance is higher — the more money goes straight into someone else’s pocket without benefiting you. By getting the higher interest rate out of the way first, you are eliminating the most expensive debt while interest accrues more slowly on your other credit cards. http://financialhighway.com

Should you have high interest rates, you may want to consider re-structuring your debt into lower interest loans. This may involve the following options:

1) Lower current interest rates. Speak to your financial lender to see if they are able to lower interest rates on your current           debts.

2) Debt consolidation.  This entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan

3) Equity Loan. If you have assets with equity you may wish turn your equity into cash. For example, a Home Equity Loan generally lets you use your home as collateral to borrow up to 80% of its current value minus what you owe.

TAKING ACTION

Once you have decided on your goals, you need to make an action plan to keep you on track and honest. To begin, sit down and re-work your budget based on your goals. To buy that house in five years you may have to cut money from another area of your budget. Look at fixed versus variable expenses. Highlight the areas in your budget where you can decrease spending in order to increase savings. By re-working your budget, you will know exactly where your money is going and what you can or cannot afford to spend.

Put an action plan into place to ensure the money is being distributed properly. For example, if you wish to save for a car you may want to open a savings account to put money into each month. By opening a separate account for your savings, you will be less likely to accidently spend this money which you have allocated for your savings. Set up direct debits from your bank account or paycheque, this way saving will be non-negotiable.

Be pro-active not reactive. Get on the phone and call your creditors to see how they can help you. Research possibilities for re-structuring your debt and take the time to crunch the numbers. Try exploring different savings and investment vehicles such as investments that pay money, stocks or mutual finds. If you are require assistance, call your financial institution or seek out the assistance of a credit counselor.

It is crucial that you put your words into action, allowing you to transform your goal from an idea into a reality. If you need help setting and obtaining your financial goals our Credit Counselor is available to help. Our Credit Counseling service is free of charge. Simply call 1-866-892-2441.

Debt Settlement Companies: Approach with Caution!

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– Signs that you may be walking into a scam –

This past month, the Consumer Service Section of the Government of PEI announced that they will be seeking comment on the potential amendments to the Collection Agencies Act. The Collection Agencies Act regulates the acts of debt settlement companies, and works to protect the rights of you- the consumer. These proposed amendments come after much misleading and  falsified  activity from numerous debt settlement companies.

As the holidays draw near, and 2013 approaches, debt settlement companies are busier than ever advertising their services, which are often too good to be true! It is important to be cautious about companies that claim they can negotiate a deal to cut the amount of debt you must repay to your creditors. This process is often called “debt reduction,” “debt settlement,” “debt relief” or “debt negotiation.” (www. fcac-acfc.gc.ca).

Whilst new amendments to this Act will help protect vulnerable debt holders, it is important that you recognize any signs indicating a debt settlement company may have less than good intentions.

Where are they located? A genuine company should be able to provide you with their physical location, which should be local.

Are they calling you? Chances are, if the company is cold calling to get business they have another agenda which they are not sharing with you.

Are they only interested in credit card debt? A genuine debt settlement company will take into consideration all debts that you have accumulated, including mortgage, student loans, and credit card debt.

Are they unclear about money amounts? The company needs to be able to tell you exactly how much of your money is going to pay off your debts, and how much they will be charging as an administration fee.

Are they sending you a 10 page contract? The company needs to take time to explain all the clauses of the contract. If you receive a 10 page document with size 8 font be weary!

If you are considering engaging a debt reduction company please be sure to first contact the Government of PEI’s Consumer Services, an ethical and helpful source of assistance (1-800-658-1799).

Keep Your Finances in Check this Holiday Season

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– Five simple tips to avoid that dreaded post Christmas credit card bill –

The music, the lights, the jolly good cheer, oh the joys of Christmas! Generally, we as Canadians love the celebration of Christmas. It is a time for traditions, visiting loved ones, and spending money. Whether we want to admit it or not, with Christmas comes an indulgence of money spending. According to the RBC Canadian Consumer Outlook, Canadians will spend a total amount of $1,183 on gifts, entertainment, travel and decorations. So unless you are spending Christmas with the Kranks, the big question is: What small steps can you take to save money this holiday season?

Gift Buying:

The RBC survey suggests shoppers who plan on buying gifts are likely to shell out $629 on their purchases. Although it is hard to be frugal with the turkey dinner, gift buying is an area where a small amount of planning can go a long way. Here are five tips to help you save this holiday season.

#1- Create a list! We all know who the top five people are, but do we know who falls to the bottom of the list, or where it even ends? Creating a list will help you avoid feeling obligated to buy your great aunt Betty a gift. Be clear on who is prioritized for gift buying, and who is not. As for the people on the bottom of the list, perhaps a card with a family picture or even a visit during the festive season will be enough to show how much you care.

#2- Do not get caught up in the holiday cheer! For some of us the music in the department store, combined with the decorations, jolly sales person and the smell of Christmas in the air is just too much to handle. Before you know it you are in the hardware section buying that extra tool to top off your husbands collection. Be alert, know the signs, keep your head on straight and do not get sucked in! One way to avoid this problem is to try online shopping. Not only will you avoid the tempting holiday cheer, but the lines at the cash register as well. Be sure to check shipping times and do not click too much!

#3- Set limits with gift exchanges! Do not be afraid to tell family members and friends that this Christmas the gifts should be $20 maximum. Although you may feel like the cheap scape of the group, it is guaranteed that nobody will challenge your suggestion. Not only does it help you to avoid that awkward moment when she spent $50 more on your gift than you did on hers, but it allows people to be creative in their gift selection, generating somewhat of a challenge for those involved. In all reality, it is easy to find nice $50 gifts, but with a $20 limit you will have to think a little harder!

#4- Buy in advance! This will allow you to avoid that tempting holiday cheer, those long lines, and that last minute run to the mall because you forgot about Uncle John. Buying in advance will help you to keep your priorities straight and save money. Throughout the year keep an eye out for end of season sales, promotional events, and discounted prices. Stop at the bargain bin each time you go to the drugstore to look for stalking stuffers. A little here and there can add up to big savings!

#5- Do not be afraid to get creative! Homemade gifts are not cheap, they are thoughtful and creative. With Pintrest at your fingertips there are tons of Christmas gift ideas that do not require you to have the talents of Martha Stewart. Not only can making gifts save you money, they can be a fun way to engage with others and spread the Christmas cheer. Set up a craft night with your kids or friends, turn on the Christmas carols and get out the glue gun. Let’s face it, Grandparents can’t help but smile when they open that ornament made by your 6 year old.

 

Financial Matters: Goals and Finances

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Willpower and preparation play a large role in achieving all goals, but more often than not, having a certain amount of disposable funds can change the outcome of any pursuit. As money is such a powerful object, we all aim to manage it perfectly, but this is much easier said than done. With finances, what starts out as one problem can multiply at an alarming rate, but being proactive and S.M.A.R.T. with your financial goals can put you on a better path just as fast. 

Kerry K. Taylor has written a great article in which she discusses three steps that will assist you in setting helpful, specific, and non-demanding financial goals. She also includes three different worksheets that are simple to fill out and can help you start saving for the things you strive towards. You can find this article, as well as thirteen others on how to form a budget, by following this link: 

http://www.squawkfox.com/2010/04/03/goal-setting/ 

Monthly Financial Routines

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The power of routine extends far beyond the realm of a healthy mindset. Every component of your life can be improved by adding a small amount of structure, especially your finances! You may have a budget already set in place and you may already be following a financial action plan, but there are many different ways to get creative when it comes to money management. A routine that is executed at the beginning, middle, or even the end of each month can be surprisingly helpful when it comes to staying on your feet. 

4 Tips to Save Your Family Money This Summer

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by Tim of Faith & Finance

For our family, summer promises fun, a break, a vacation, and relaxation. We can plant flowers, grow gardens, spend time at our local farmer’s market, and travel.

But summer can be expensive for families who try to “do it all.” Along with some planned activities, unexpected summer fun can pop up out of nowhere – and so can the expenses! Here’s how you can manage the finances of your family’s summer fun without breaking the bank.

1. Prepare for the Unexpected!

Already having cash stashed away for both planned and unexpected summer fun is a great feeling. Even if you can only put away $20 each month, you would still have the pool membership covered, or all of the kids’ summer activity fees covered, perhaps. Of course, if you can put away more, great! If you haven’t already started, begin saving a monthly amount for the summer goals like vacations and family parties. We use the goals feature at Betterment.com to automatically save for different categories each month. It keeps us on track and automates our savings each month.

2. Create a Spending Plan for Vacations

You may have an aversion to budgets, but you probably also dislike credit card payments too. In order to avoid paying for your summer fun long after it is over, plan how much cash to spend and stick to it.

If your summer budget feels tight, don’t give up just yet! Here are a couple ideas to help you save money while having fun this summer:

Staycations. Due to the recent downturn in the economy, many families choose to take time off from work and stay home for vacation. If you enjoy working on your home but never have the time, a staycation could be a great opportunity to tackle DIY projects without feeling pressured to work around your busy work schedule.

  • Plan a trip to a fairly close destination. People who live far away in other states might just visit your area for vacation! So, how about you find those local attractions, and enjoy them yourself? Pretend you are a tourist in your own area, visit the hotels and pick up brochures of where “tourists” go when they visit. Or, plan an overnight trip to a state park nearby and camp out or rent a cabin.
  • Look for deals. If you can be flexible with travel dates and times, “name your own price” sites like Priceline.com can save you hundreds of dollars. If you can travel on very short notice, you can score some great deals too. Planning trips around non-peak travel dates can give you the most for your rewards miles as well. We recently combined miles from our American airlines rewards card and Hilton hotel card for a vacation in the Caribbean. The only thing we’ll need to pay for is food!

3. Weigh the Benefits of All-Inclusive Vacations

For some families, all-inclusive vacation deals prove to be an incredible value. Knowing the cost upfront, paying for it, and then being done with the money part of it all, allows everyone (especially the parents) to relax and enjoy their vacation. If you have teenagers who eat more than their share to fill up their growing bodies, or adventurous family members who want to try everything once, or a few in the family who will sign up for every spa treatment available, then all-inclusive vacations could be your best bet.

4. Keep Saving Money Once You Are There

If you do find somewhere to go that is affordable, keep your eyes open for deals at your destination too. Look for restaurants that offer early bird specials, take advantage of kids eat free deals, and search through your entertainment book for deals to use as well.

Of course, you can always save by packing your own food for the day at the beach or a park. The more you can stock up at grocery stores rather than stopping at convenience stores, the more money you will save. Whatever you do, enjoy the summer and make memories!