Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

4 ways to avoid a financial crisis before it happens

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By Lidia Staron

Special to the Financial Independence Hub

Do you want to avoid a financial crisis before it happens? Everyone does, but few are willing to take the essential steps. You might have heard rumors of a significant economic crisis just looming around the corner. Whether it happens at a personal or national level, it feels good to know that you have done something to avoid it or at least soften its impact in your life.

In this post, let us take a look at some of the most effective ways to avoid a financial crisis before it happens:

1.) Save before you spend

Benjamin Franklin said “a penny saved is a penny earned.” Nothing can be truer than that! Every time you spend on something, you take out cash from your pocket. It decreases your wealth. Spending on unnecessary things may mean that you could have used precious resources for other things.

Now, it doesn’t mean that enjoying the fruits of your labor and buying things that you love are bad things. The point is that sometimes you just have to make small sacrifices today to enjoy great rewards in the future. And that’s precisely what saving can do for you.

The best way to avoid a financial crisis is as simple as saving a penny a day. You can then gradually increase your savings each month. It may sound small at first, but great things start from little things. The key here is consistency. Just keep on saving, and you will soon see how it can help you become financially secure.

2.) Make a Budget

It’s helpful to be reminded of this adage, “If you failed to plan, you planned to fail.” Budgeting is a form of planning for the future. Some people mistakenly thought that they could go on with their lives without a budget. Almost always, without fail, those who don’t have a budget are the same people who are in a financial strait.

Making a budget does not have to be complicated. It only takes a few minutes. Decide where your money goes and ensure that you track every penny from your wallet. If you made a personal loan online, then make it a point to pay off debt first as much as possible before spending on things that are just optional. Continue Reading…

Motley Fool: How to top up your TFSA even if you have no “new” money

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How to top up your TFSA is the subject of my first blog of the new year for Motley Fool Canada, which has just been published.

Click on the highlighted text to retrieve the full piece: January is TFSA top-up time — How to contribute the maximum $5,500 even if you don’t have “new” money.

So what’s the “old” money you can use instead? Well, while younger investors probably have most of their money in RRSPs and TFSAs, old-timers who were saving for decades before the 2009 introduction of the Tax-free Savings Account tend to have significant chunks of their net worth in taxable non-registered (aka “Open”) investment accounts. This is particularly the case for those with generous corporate pension plans, which means RRSP room was limited by the so-called “Pension Adjustment” or PA that’s shown on your T-4 slips. (Yes, brace yourself for the annual onslaught!)

Of course, by definition, taxable accounts generate annual tax liability on all the dividends, interest and capital gains you may have enjoyed in the calendar year. In the next few weeks and months you can expect your mailbox to be full of T-3 and T-5 slips that tell you and also the Canada Revenue Agency just how much money you received and will have to pay tax on when you file your taxes late in April for the 2017 calendar year just completed.

Key concept: Transfers-in-Kind

The Motley Fool article goes into the mechanics of “transfers-in-kind,” which means identifying stocks or ETFs (or other securities) in your taxable account that can be transferred into your TFSA. Continue Reading…

Why you might get more for your home in January

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

When it comes to nuggets of real estate wisdom, a persistent adage is that one should avoid selling in the winter at all costs:  after all, bad weather, limited sunlight and poor driving conditions don’t inspire shoppers to peruse open houses.

But while it’s a fact that the winter housing market is a slower one — there were 25 per cent fewer sales in the Toronto real estate market in January 2017 compared to the previous May —  having to list your home in the new year doesn’t necessarily mean compromising on your profits.

In fact, due to a few seasonal phenomena, listing your home for sale in January can translate to a higher sales price; here’s why.

Winter buyers are extra motivated

Just as January sellers are likely listing for a reason, early-winter buyers are also likely driven by a sense of urgency. In fact, a small but persistent bump in activity is typically seen in the weeks following New Year’s Day, as buyers who shelved their holiday home purchases jump back into the market.

January also tends to be a busy season for mortgage pre-approvals, especially for organized buyers seeking every advantage in preparation of the spring market. However, once these buyers have confirmed their maximum buying power, they may be tempted to take a preliminary look at what’s available now, including your listing.

“The fact is, if you’ve waited until spring to get a mortgage pre-approval, you’re already late, and there are a few real estate market factors that will work in your favour if you act now,” says Mike Bricknell, a mortgage broker at CanWise Financial.

“It is very beneficial to get your mortgage pre-approval when the housing market is quieter, especially as there have been many recent industry changes that may have affected what you can afford.”

Low supply means higher prices

Continue Reading…

2 powerful New Year’s resolutions for a wealthy and healthy 2018

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This will be a VERY short blog; nonetheless if you take the two resolutions seriously, you might well transform both your Wealth and Health. As Sandy Cardy wrote in a Hub blog, last week, Health IS true Wealth.

Resolution 1: Health

If I haven’t done it already, I will embark on a lifelong program to improve my nutrition and exercise daily, along the lines of the last Hub blog of 2017: Younger Next Year.

Resolution 2: Wealth

As of January 1st (if I have an online discount brokerage account, otherwise January 2nd or later this week), I will top up my Tax-free Savings Account (TFSA) by a further $5,500: the “new” TFSA contribution room that all adult Canadians qualify for as of the new year. This resolution applies to everyone from age 18 to seniors: especially to seniors and those in semi-retirement or approaching full retirement. The Hub’s second last blog of the year explains why: Retired Money — How TFSAs can give seniors more tax-free retirement funds.

That’s it: one short blog, two simple resolutions; yet with the potential to transform almost all aspects of your existence. So to all who read or contribute to the Hub, a very happy, healthy and wealthy new year. See you in 2018!

P.S. New Younger This New Year 2018 Facebook Group

I’d like to spread the word that this weekend’s Younger Next Year blog triggered via Twitter the creation of a new Facebook group called Younger Next Year – 2018. I believe I am member #5: thanks to Vicki Peuckert Cook for taking the initiative to create this. As with the Hub, the group consists (at least initially) of both American and Canadians. Hope to see you there!

 

Younger Next Year (& creation of Younger Next Year – 2018 Facebook group)

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Younger Next Year. How’s that for a New Year’s Resolution?

Seriously, as we head into 2018, who wouldn’t want to be younger in 2018 than they were in 2017?

Impossible, you scoff? Clearly, you haven’t read the New York Times bestselling book, Younger Next Year, or its spinoff titles, including Younger Next Year for Women.

The authors are a vibrant 70-year old (at the time of writing) and ex New York litigator Chris Crowley and his personal physician (25 years his junior), named Henry Lodge (Harry in most of the text; I should clarify that this is the late Henry Lodge, since he passed await at age 58  early in 2017 of prostate cancer. Ironic.)

The subtitle says it all: Live Strong, Fit and Sexy — Until You’re 80 and Beyond. I’m grateful to one of my sources — Hub contributor Doug Dahmer of Emeritus Retirement Strategies — both for twigging me to the book’s existence and to supplying me a copy. (He appears to have laid in a good stash of the book).

Take control of your Longevity

And for good reason. The book is all about taking control of your personal longevity, chiefly  through proper nutrition but first and foremost by engaging in daily exercise: aerobic activity at least four days a week and weight training for another two days a week. Week in and week out, for the rest of your life. And the payoff is what is promised in the subtitle.

Apart from daily exercise and “Quit eating crap” (to use the authors’ phrase, one of Harry’s 7 Rules reproduced below) the authors urge readers to “Connect and Commit,” which means staying engaged even after formal retirement. In fact, as we argue in our own book Victory Lap Retirement, there’s a case to be made for never entirely retiring. Leaving the corporate workplace, probably, but semi-retirement and self-employment from home are certainly viable alternatives.

While Younger Next Year only touches on retirement finances, it certainly reinforces the main theme of this web site (FindependenceHub.com). It’s encapsulated in Harry’s 4th Rule: Spend Less Than You Make.

Harry’s Rules

I can see at this point that it’s best to simply list Harry’s 7 Rules, which formally appear in the book’s appendix (page 305 of my copy): Continue Reading…