Tag Archives: money

To Lend Or Not To Lend? 4 Things To Consider

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LendMoneyBy: Ellan Dickieson, Family Service PEI

We have all been asked to lend money. It may have been $5, $500, or even $5000. Chances are, the person doing the asking viewed you as someone they could trust and turn to in a time of need.

Adult children, grandchildren or even friends may be coming to you to lend money. They might be purchasing a car, going to school or need a new appliance for their home. It might just be for weekly groceries, gas for the car, school supplies or to buy someone a gift. Helping others can make us feel good about ourselves and can be extremely rewarding, but if you are considering lending money you must always remember to put yourself first.

1) Do Your Research

If someone has approached you to lend them money, get as many details as possible. Regardless of the amount, the person should be able to provide you with the information that is necessary for you to consider a loan. Give yourself 24-48 hours to think about it. Some extra time will help you to gain confidence to form an answer. Be sure that you only lend what you can afford to live without and also consider the impact your lending decision will make on other family members or friends.

2) Don’t Be Afraid To Say No

If you have decided that now is not the best time for you to lend money, then you must stand your ground. Be firm and concise as you explain that you are not in a position to help out at this given time. People might assume that you have money to spare, but make it known that it acts as an emergency fund to protect you against unexpected expenses.

3) Help In Other Ways

With the life skills that you have, could lend a hand for someone in different way? Perhaps reviewing their finances or finding ways for them to earn extra income. Maybe you can provide them with services like babysitting, home cooked meals or drives to work. For an upcoming birthday or holiday, consider giving a cash gift this year.

4) Get Details When Saying Yes

If you do decide to lend a large sum of money, you should discuss all of the terms including: the amount being loaned, interest rate and repayment schedule. The key thing to remember is to write it all down! A personal loan agreement form can be helpful. Having it on paper will help avoid any confusion in the future.

In most cases, it is hard to say no but your financial stability is just as important as anyone else’s. Learn from the experience. Teach the person who has asked for a loan about self-sufficiency and independence. Both of you will feel better about your decision in the long-run through one another’s strength and support about financial matters.

For more information about lending and giving money visit: www.It’sYourRight.ca

10 Ways I Am Paying Down My Debt Faster- And You Can Too

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DSC_1103

Ellan vacationing in Newfoundland.

By: Ellan Dickieson, Family Service PEI

Do you ever imagine what your life would be like debt free? I know I certainly do! How many times have I thought, “If I just had $20,000”?

Paying down debt is hard work; it takes patience, perseverance, discipline and intelligence. As someone who is working very hard to pay off debt (most of which comes from a graduate degree obtained while living in a big city) I want to share some tips that have worked for me. It is my hope that my honesty will help you.

That being said, I realize that there really isn’t any one “best way” that works perfectly for everyone, and what worked for me may not be applicable to you. Hopefully within my ten suggestions you will be able to consider a few. The more of these you can apply, the faster you will get out of debt.

1. Suck It Up and Go Work

I realize I am starting harshly, but any amount of money is better than none! When I moved home I was under the impression I had the education to obtain a well paying government job. To say the least, it didn’t pan out. It took me 10 months to get a job in my field. In the meantime, I went to work for $12 an hour, working 12-hour night shifts in a home for the elderly. Although I loved the residents and I cherish my time spent with them, it was not a job that matched my qualifications. At times I was embarrassed to even tell people where my graduate degree had gotten me, but at the end of the day that pay cheque sure looked a lot better than nothing! You have to find a way to generate income (legally)- even if it is taking a job you are over qualified for.

2. Prioritize Your Debt: Pay Off Your Most Expensive Debts First

Upon my return home I had credit card debt and three sources of student loan debt, all with varying interest rates. I prioritized these debts based on interest rate. I chose the debt that was charging me the most interest (credit card 20%) and focused my extra payments on paying that one off first, while continuing to make minimum payments on the others. Once my first, most expensive debt was paid off I started to focus on the next most expensive debt (Federal student loan 5.5% interest rate).

I will continue this method until each of my debts is paid off, with the Provincial student loan, sitting at 0% interest rate, being last as it is the least expensive. This strategy can help get you out of debt quickly, and you will feel encouraged as you knock off one debt at a time.

3. Pay More Than the Minimum

Once you have prioritized how you are going to repay your debts, make sure that you always pay more than your minimum payments. If you only make your minimum payments each month you will be running on a treadmill; it can take forever to pay off your balance.  If you want to pay off your balance quickly, pay as much extra as you can afford. Even an extra $50 each month will help. I spent a lot of time using financial calculators to see how quickly I could get my debts paid down. I would suggest you do the same.

4. Spend Less Than You Plan to Spend

Like most young professionals, I wanted to get my own place, decorate it nicely, travel, shop, dine out…the list goes on and on. The harsh reality is that most of us have wishes and wants that are bigger than our pay cheques. Many people get into debt and stay in debt because they tend to buy what they want, not what they need. Instead of my own place, I settled for moving in with someone else. Not only did this save me a ton of money on rent, but I also didn’t have to furnish or decorate the place. Although I don’t have a place to call “my own” I do have new friendships that will last me a lifetime. Try to think about what you could do without. Sometimes living without can be a blessing in disguise.

5. Buy a Quality Used Car Rather than a New One

To be honest, some of the worst debt I see is vehicle debt. The reason being, when you purchase a new vehicle the value decreases the minute you drive off the lot, and if you are having difficulty keeping up with the payments your options for getting rid of the debt are limited. You can save yourself thousands of dollars if you buy a quality used car rather than a new one. I got lucky; my elderly neighbor was selling her vehicle and 2 years later, knock on wood, it hasn’t cost me a cent. I cannot begin to describe how nice it is not to have to make a car payment every month!

If you live in an urban area you may be able to forfeit a vehicle altogether, or cut back to a 1 vehicle household. Not only will you be saving money, you will be saving the environment and increasing your activity by walking or biking!

6. Create a Spending Plan & Track Your Spending

You should have an idea of how you plan to spend your money. I prefer to look at how much money I take in every month, and how much I think I will spend. I simply write down all my known fixed monthly expenses (rent, car insurance, debt payments) and then estimate my fluctuating expenses (gas, groceries, entertainment). The key here is to make sure that I am spending less than I earn. The other key is to see how much I have leftover, and decide what I want to do with it; pay extra on debts, save for emergencies, a vacation, or all three.

Planning is great- but saying and doing are two different things. That is why you need to track your spending. (Insert blank look here). I get it; it’s not exactly something to jump up and down about. However, doing this can save you almost as much money as working a part time job.

I don’t track my spending all the time; that would just be torturous for me. To keep my money mind happy, I track my spending about 2-3 months a year. This allows me to see if my spending is in line with my budget. Do I really spend $200 a month on gas and $200 on groceries?

I prefer to use an app on my phone, however a notepad can work just as well. Be sure to adjust your spending plan based on your tracking results. Should your personal circumstances change (new job, living arrangements, baby) be sure to track at that time.

7. Save on Food

I don’t cut out coupons, make meal plans, read the flyers regularly or grocery shop at Mom’s house (not saying I haven’t or won’t again someday). I do cook food at home and try to avoid eating out for convenience. I don’t buy a coffee in the morning. I make big pots of soup and chili and put them in the freezer. I go to Costco and stock up on the necessities, and I share/split bulk items with others. I pick up the flyer when I walk into the store and do tend to buy things that are on sale.

There are numerous ways to save on food, simply visit Pinterest. Some require a little effort; some require a lot of effort. Find a happy medium that works for you. I don’t expect to see you on the next episode of Extreme Couponing.

8. Get a Second Job and Pay Down Your Debt Aggressively

I often get asked why I would want to work a second job. My answer: Because I can, and someday I may not be able to, or won’t want to.

If you have the time and ability, taking on more hours, or getting a second job could be your key to financial success. I teach fitness classes as my second job. It rocks! There are far greater benefits than simply the pay: I get to help people, I get paid to workout, I meet people, I get a free gym membership…the list goes on. Do you have a hobby that you could turn it into cash? This doesn’t work for everyone, but if you can make it work, you could be debt free faster.

9. Get Creative with Vacations

I know I should be telling you to completely cut vacations, but nobody wants to do that, including me. So instead, I encourage you to vacation on a budget. For me, this looked like adding pleasure to work trips. I was fortunate to get to travel to Ottawa, St. John’s and Vancouver for work in the last few years. Each time I tacked on extra days and was able to visit friends/family and tour the area. I also suggest vacationing where you have friends/family you can stay with, as accommodation can often be one of the biggest expenses. I have also chosen to take many smaller vacations in the Maritimes, close to home, which usually involve the less expensive option of camping. It is amazing how many great vacations are waiting in your own backyard!

10. Find Free Money

Yes, there is such thing as free money! Are there grants that you can apply for, whether it is to do renovations to your house, or to pay down your student debt? What costs would your employer be willing to cover? This may include your work gear, cellphone bill, travel expenses, professional fees/dues or first aid training. Would they be willing to contribute to a retirement savings plan? Some employers will agree to match your contributions up to a certain amount. All of these things are what I call- free money. You MUST take advantage of all the free money you can get!

As mentioned, what is working for me may not work for you. A good first step is to meet with a Credit Counsellor. A Credit Counsellor will be able to review your financial situation and provide you with additional options to help you get out of debt faster. This may include a consolidation loan, refinancing your mortgage or a debt repayment plan, amongst others. At the end of the day what is important is that you feel in control of your debt and you have a plan for getting it paid down as quickly as possible.

 

 

 

 

Coping Financially During Long Term Illness

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money-illness-225x300By: Adam Buller

Illness is something which can occur unexpectedly and out of the blue. Sometimes though the effects of an illness can stay with you for a long time affecting many aspects of your daily life. It can be extremely frustrating not being able to do what you once could but it can be even more frustrating when the illness begins to hit your finances, especially if you have a family you are trying to provide for. Hopefully you will have some savings put away in an emergency fund but these will likely soon become exhausted if your illness really does prove to be long term. So what else can you do to cope financially during a long term illness?

Admit your problem and put pride to one side-
One of the hardest things for many of those who are suffering is actually admitting that they can’t do what they once did. We all like to stay financially independent for as long as possible in the hope that we will be able to recover from our illness and get on with life as normal again. This pride can often cause your financial situation to become even more dire as the unpaid bills start to stack up and charges start being added. So the first step is to recognise and admit that you may need to make some changes or seek some short or long term financial assistance before your finances spiral out of control. So what changes can be made and what assistance can you seek? Let’s consider a few things that can be done.

Check your existing policies-
If you currently have any insurance policies in place related to life or income then it can be a good idea to get out the document box and sift through the details of all policies to see if there are any unexpected benefits in that policy that may be relevant to your situation. If your illness is particularly serious for example then you may find that your life insurance policy has a critical illness element to it which will pay out on diagnosis. You may find that you still have some sort of income protection policy in place that you set up years ago but never got around to cancelling. We’re looking for the expected and the unexpected here so even if you don’t think that any of your policies contain these benefits it is still worth an hour of your time finding out on the off chance that they do.

Another thing that you should check is whether you have any insurance policies on your mortgage, loans or finance deals. If you do then there is a good chance that you may be covered for medium term illness and you may be able to make a claim to help pay these commitments in part or in full whilst you recover from your illness.

Are you eligible for benefits?
If you have found that your income has significantly decreased due to your illness then you might now be eligible for benefits such as increased tax credits or even housing benefit. Pride can again play a part here as most of us don’t like to admit that we can’t support our loved ones on our own steam anymore. The problem with pride is that it won’t change the situation you are in. These benefits can also take a long time to sort out and you often cannot backdate them without a valid reason. So if your financial situation has changed because of your illness then it’s wise to find out what you are eligible for and make any claim as soon as possible. You can always cancel a claim later on if your health improves but it’s better to plan for the worst case scenario and claim what you are entitled to early on.

Can you work from home?
If your employer offers the option of working from home while you get over your illness then perhaps this could be something you could cope with? If this option isn’t available then maybe you could use your skills to top up your income with an online business or by freelancing as and when you feel able. It’s obviously wise to check whether any work you are doing would negatively affect your sick pay or benefits but if you are able to add a few extra pounds to your weekly budget then this could really help during this tough time in your life.

Making lifestyle changes
The timing of this decision can also be tough, when to make those lifestyle changes? If you expect your illness to end quite soon then it can be tempting to delay making changes to how you live. The problem here is that life doesn’t always go as you expect it to. The wise thing to do would be to make cutbacks and start saving money right away just in case your illness lasts for a lot longer than you were expecting. These changes could include slashing your food budget, reducing cable packages; mobile phone tariffs etc., anything that can be changed without incurring a penalty. Perhaps you could even cancel some contracts.

Again it can be difficult to admit that you can’t now afford the things you once could but if this is the case then it is best to deal with the problem yourself before someone else – the debt collectors – deal with it for you. Creating a workable budget, even if it is just for a temporary time, can reduce the stress in the long run which could then help drastically with your ability to overcome your illness.

It can happen to anyone-
As we’ve discussed, one of the biggest things that can prevent us from improving or protecting our financial position during illness can be our own pride. You may be reluctant to make lifestyle changes, claim benefits or seek advice. What is it they say though, ‘pride comes before a fall’? If you’re feeling down on yourself then just remember that you are not alone in what you are facing. There are many people out there dealing with long term illness or even critical illness. It truly can happen to anyone so you should not be afraid to make changes and seek advice, it could mean the difference between keeping your finances afloat during this hard time of life, or not.

Sourced from: http://moneybulldog.co.uk/coping-financially-during-long-term-illness/

Important Dates and Information for Filing 2012 Tax Returns

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  • Personal tax returns (except you or your spouse or common-law partner is self-employed) are due April 30th 2013 and any balance due has to be paid that day and otherwise interest will be assessed. Tax returns for self–employed and their spouse or common-law partner is due June 15th 2013 but balance due must be paid April 30th 2013.
  • You can file hard copy return or NETFILE or EFILE (EFILE can be done by tax preparer).
  • TELEFILE option is not available.
  • If you need a tax package (hard copy) you can order one from CRA and it will be delivered after February 4th 2013. The packages will also available to postal outlets and Service Canada offices from February 4th 2013.
  • The NETFILE transmission service will be open from February 11, 2013, until November 30, 2013, for the electronic filing of your 2012 personal income tax and benefit return. Tax returns filed via NETFILE must first be prepared using one of the 2012 commercial tax preparation software packages or Web applications certified for NETFILE.
  • List of certified software for NETFILE can be found here.
  • You employer has to provide your T4 slips by Feb 28th 2013.
  • Your investment provider or banks have to mail your T5 slips by Feb 28th 2012 and T3 slips by March 31st 2012.
  • You can log in to My Account at CRA to find your RRSP contribution limit. RRSP contributions made in the first 60 days of 2013 (i.e. contributions made till March 1st 2013) can be used in 2012 tax returns)

Sourced from http://canadianaccountanttips.blogspot.ca/2013/01/important-dates-and-other-information.html

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.

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.