Debt & Frugality

As Didi says in the novel (Findependence Day), “There’s no point climbing the Tower of Wealth when you’re still mired in the basement of debt.” If you owe credit-card debt still charging an usurous 20% per annum, forget about building wealth: focus on eliminating that debt. And once done, focus on paying off your mortgage. As Theo says in the novel, “The foundation of financial independence is a paid-for house.”

Steps for saving Money in 2017

Posted By |

By Barney Whistance

Special to the Financial Independence Hub

With a new year come new resolutions and new hopes. You hope to have a better life by maintaining good health, having emotional stability and making yourself stronger financially. All these tasks are achievable, provided that you have proper guidance and will power.

To end up with a lot of savings at the end of the year is no easy feat. Anyone faced with loans, taxes, and insurance payments would want to save some money at the end of the year. There are a few steps that can be taken to maximize your savings and lead you to a better retirement plan than now.

Car Insurance

If you have purchased a new car, it is worth having insurance against theft and accidents. But if your car has been in your possession for more than a 7-year period, it is better that you let go of that insurance. As the price of your car has already declined precipitously, it is no use insuring something that costs so much less. Your insurance will only add to the unwanted expenses since you could have most parts of it repaired for a lot less.

Food

Food is the basic necessity of every human. Studies have found that people in America spend at least an average of $151 on food in a week. Eating at home is far more economical and healthier than eating out. To contain your food budget, allot yourself a fixed amount for every week and see if you can manage within the budget. If you are still left with enough money, indulge yourself in eating out. Moreover, to save on your grocery purchases, you can buy in bulk from a supermarket, which can save you money. Be sure to buy only those items that you use excessively and have a long shelf life. Plan your shopping on the days the store is known to give discounts.

Energy Bills

Continue Reading…

The Canada Child Benefit – 4 key planning points to consider

Posted By |

By Aaron Hector, Doherty & Bryant Financial Strategists Inc.

Special to the Financial Independence Hub

Budget 2016 introduced a new child benefit program called the Canada Child Benefit (CCB). This program replaced the UCCB, and despite their similar acronyms, they are very different from one another.

The U in UCCB stood for universal, and it was just that. Every Canadian resident family with a child under 18 received a benefit. For children aged 0-5, the amount was $160/month and for children aged 6-17 the amount was $60/month. This benefit was taxable as income to the lower income earning spouse (or single caregiving parent).

In contrast, CCB payments are tax-free. Eligibility for CCB payments are based on your family’s combined net income. The word “net” is important as it leads into other tax planning ideas that we will explore a little later on. In general terms, when compared with the UCCB the new program provides a higher benefit for lower and middle-income families at the expense of reduced benefits for high-income families. The specific calculation is as follows:

Step 1 – Calculate the maximum benefit

1. For each child aged 0-5 there is a maximum benefit of $6,400
2. For each child aged 6-17 there is a maximum benefit of $5,400 Continue Reading…

3 tips for raising a family in a Condo

Posted By |

By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

Healthy demand is forecasted for Canada’s condo markets in 2017, and it’s not just young professionals and investors fueling the boom. As low-rise housing prices grow further out of reach, families are increasingly turning to condo life as an affordable housing option.

For many, condos offer the only affordably entry point into the market, especially in Vancouver and Toronto real estate. And while some buyers choose to “drive until they qualify,” suburb life isn’t desirable to everyone, prompting buyers to increasingly sacrifice space to live within city limits.

The Toronto Real Estate Board (TREB) reports demand for high-rise units surged more than any other housing type in 2016, with 20,860 units changing hands – a 19.9% increase. In comparison, detached homes – despite being extremely highly sought – saw a year-over-year change of over 3.10% in the 416 region as sales were limited by tight supply.

Condos still an affordable option

Continue Reading…

4 sensible financial literacy books as gift suggestions

Posted By |

Santa Clause putting a shiny Christmas present into a stocking. Isolated on white.Want to give the gift of financial literacy to a loved one this Christmas?

We have a few stocking stuffer ideas,  following the just-completed Financial Literacy Month in Canada. Throughout November,  there were lots of articles out there on the importance of financial literacy and even more opinions about how to improve it.

Some argue for it to be taught in schools:  aren’t our schools stretched enough for resources as it is?  Some say parents should make it a priority to teach their children about money but many parents struggle with money concepts themselves and “do as I say, not as I do” isn’t always convincing.  Many argue very credibly that the financial services industry in Canada generally works to separate people from their money rather than to educate them about how to best grow their money.

We’re not sure what the answer is but agree it’s an important subject.  If you’ve already read David Chilton’s The Wealthy Barber and are ready to move on to the next step, here are a few investment books that are sensible and concise.

*We first published this list in February 2015 and have received positive feedback!

1) The Investment Answer – Daniel Goldie and Gordon S. Murray – 2011

The Investment Answer – Daniel Goldie and Gordon S. Murray – 2011

Publisher summary:

“What if there were a way to cut through all the financial mumbo-jumbo? Wouldn’t it be great if someone could really explain to us–in plain and simple English–the basics we must know about investing in order to insure our financial freedom? At last, here’s good news. Jargon-free and written for all investors–experienced, beginner, and everyone in between–The Investment Answer distills the process into just five decisions–five straightforward choices that can lead to safe and sound ways to manage your money.”

2) The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns – John C. Bogle – 2007

The Little Book of Common Sense Investing- The Only Way to Guarantee Your Fair Share of Stock Market Returns – John C. Bogle – 2007

Publisher summary:

“Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner’s game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser’s game. Common sense tells us-and history confirms-that the simplest and most efficient investment strategy is to buy and hold all of the nation’s publicly held businesses at very low cost. The classic index fund that owns this market portfolio is the only investment that guarantees you with your fair share of stock market returns. To learn how to make index investing work for you, there’s no better mentor than legendary mutual fund industry veteran John C. Bogle.”

3) The Empowered Investor: A Canadian Guide to Building a Better Investment Experience – Keith Matthews – 2013

The Empowered Investor- A Canadian Guide to Building a Better Investment Experience – Keith Matthews – 2013

Publisher summary:

“With The Empowered Investor: A Canadian Guide to Building a Better Investment Experience, author and advisor Keith Matthews answers the call for a clear, intelligent guide for Canadians looking to invest wisely. Dispensing with jargon and hype, The Empowered Investor is an easy-to-read finance and portfolio management book that offers a down-to-earth treatment of a complex subject with an accessible style that will appeal to novices and experts alike.”

 

4) Exchange Traded Funds for Canadians for Dummies – Russell Wild and Bryan Borzykowski – 2013

Exchange Traded Funds for Canadians for Dummies – Russell Wild and Bryan Borzykowski – 2013

Publisher summary:

“The fast and easy way for Canadians to understand and invest in ETFs – Exchange-traded funds (ETFs) are an increasingly popular part of the investing landscape, being less volatile than individual stocks, cheaper than most mutual funds, and subject to minimal taxation. But how do you use this financial product to diversify your investments in today’s ever-changing market?

Exchange-Traded Funds For Canadians For Dummies shows you in plain English how to weigh your options and pick the ETF that’s right for you. It tells Canadian investors everything you need to know about building a lean, mean portfolio and optimizing your profits. Plus, the book covers all of the newest ETF products, providers, and strategies, as well as Commodity ETFs, Style ETFs, Country ETFs, and Inverse ETFs. The only book on the market catering specifically to Canadian investors.”

5 more suggestions

Editor’s Note: For a list of  5 more financial book suggestions, read this article from Saturday’s Financial Post: Here’s a look back at some of the best personal finance and economics books of 2016.

graham-bodelGraham Bodel is the founder and director of a new fee-only financial planning and portfolio management firm based in Vancouver, BC., Chalten Fee-Only Advisors Ltd. This blog is republished with permission: the original ran November 29th here. 

Mental health & credit-card debt during the holidays

Posted By |

By Eva Wong

Special to the Financial Independence Hub

It’s the most wonderful time of the year and many of us celebrate by making purchases for our loved ones. Sometimes lots of purchases.

We at Borrowell paused to consider how this time of year might make Canadians in debt feel.

Earlier this year, a survey we commissioned found that 58% of Canadians have carried or are currently carrying a balance on their credit card. That doesn’t include other forms of debt, like student loans, lines of credit, car loans or mortgages. When you factor in that the average consumer owes just over $22,000 in debt in 2015, not including mortgages, we wondered why no one was addressing how Canadians juggle the expectations of holiday shopping with the realities of their debt.

Dr. Oren Amitay, a noted Toronto psychologist, told us the holiday shopping season is a time of year that can cause emotional and psychological distress for people who are in the red.

Financial pressure takes its toll

“A lot of people try to ignore their debt by doing things like not opening their bills,” explains Dr. Amitay. “But you can’t run from it at holiday time. Continue Reading…