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.”

How to maximize Credit Card loyalty rewards programs

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Frank Psoras

By Frank Psoras, TD Canada Trust

Special to the Financial Independence Hub

Credit cards can offer many benefits to achieve your financial goals. And with most credit cards today, the more you swipe, insert or tap, the more opportunities you have to earn and redeem loyalty rewards.

According to a recent TD survey, nearly three-quarters (72 per cent) of Canadian adults carry at least one card that offers a rewards program, with most cardholders (82 per cent) saying it’s one of the top factors when choosing a credit card.

North Americans are among the most rewards-savvy consumers in the world; they’re always looking for better ways to get the most from their rewards programs to reach their goals faster. That is why it’s no surprise our survey also shows that almost half (49 per cent) of Canadians are willing to change where they shop to earn and redeem points faster. But remember to pay your balance on time and in full to avoid incurring interest charges on purchases. Continue Reading…

How to use a credit card strategically for emergency expenses

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Emergency FundBy Alyssa Furtado, RateHub.ca

Special to the Financial Independence Hub

You can’t plan for something you don’t know is coming.

Accidents and emergencies are inevitable and a financial cost is often attached to these surprise incidents. So what do you do when you find yourself with an unexpected emergency expense? One option is to use balance transfer credit cards.

Balance transfer credit cards are great tools to help you pay off your debts sooner. They offer a low interest rate (sometimes 0%) for any debts you transfer to the card for a limited period of time. By minimizing interest costs, the money you put towards your debt will directly pay off the amount owing and not go towards fees. While there can be costs associated to balance transfers — like a fee of 1% to 5% for transferring a balance or an annual fee — the interest savings can outweigh the cost of the fees.

So how can you strategically use a balance transfer credit card for emergency expenses? Charge whatever emergency expense you make to a card you already have, immediately apply for a balance transfer card, and quickly transfer over the balance to the new credit card.

There are considerations you need to know before applying for a balance transfer credit card, such as: Continue Reading…

Is RV Traveling a sound Retirement Strategy?

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Living the RV dream. Photo courtesy Pixabay.com

By Barney Whistance

Special to the Financial Independence Hub

At some point we’ve all daydreamed about what our retirement might look like. For some, a cabin in the woods might be their dream life. Others may want a condo near the beach or high-rise apartment in the city. Many daydreams also include travel, both in and outside the U.S.

Ample Hollywood movies about the joys and headaches of the retirement life have given nods to the recreational vehicle (RV) retirement lifestyle as well. From ex-CIA man Jack Byrnes’ sleek black Fleetwood RV in Meet the Fockers, to David and Linda Howard’s homier Winnebago in the movie Lost in America, RV living may represent a luxury life of leisure for many Americans.

One former co-worker of mine, shortly after his retirement, sold his home to buy a fancy new RV. While I was able to meet him at his retirement party and do a short quiz on his reasoning, the decision never quite added up for me. I decided to do some additional research to determine if RV-living was a sound and viable financial decision for my own retirement.

Full-time RVers, also known as full-timers, are people who live, work, and play in their RVs. Often they plan their lives and moves well in advance, but they’re also known to pick up and go on a whim, or to follow the weather on a seasonal basis.

However, there are a few considerations when contemplating the full-time RV life. Here’s a breakdown of points to ponder while deciding whether it’s the best lifestyle for your needs.

Finances

RVs can be purchased in a wide price range – anywhere from $3,000 to $3 million – which makes them perfect for any budget. Continue Reading…

What is Mortgage Insurance?

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mortgage-insurance-cartoon
Cartoon courtesy of LSM Insurance

By Chantal Marr, LSM Insurance

Special to the Financial Independence Hub

Sounds great just lying there on paper, doesn’t it?

Really solid.

The underlying concept of mortgage insurance is that if you die or are incapacitated mortgage insurance will pay off the rest of your mortgage. But be careful: Mortgage Insurance is the most dangerous financial product out there.

Mortgage insurance is the one financial product that declines in value as you continue to pay. Therefore each year you are getting less and less value for your premium.

Why Math is Important

Renting vs. Owning

Let’s start with your house. When you take a mortgage out on your house, it’s a very bad deal to start with. You are just paying interest on the value of the house and in most cases the interest far exceeds the cost of renting the same property.

Here’s an example based on a $500,000 20-year mortgage at 6% on a $600,000 house. We’ll assume rent inflation of 4%/year:

Year 2010: Mortgage payment $3,560/month. Rent: $2,500.

You are leaving over $1,000 in your pocket per month in ready money. That’s a lot of restaurants and vacations twelve months a year.

But let’s take it ten years later: Continue Reading…

The critical role of planning for Cash Flow

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Ennio Longo

By  Ennio Longo

Special to the Financial Independence Hub

Are you like so many Canadians? You have a good paying job, are in a two-income household, own a home and yet you run out money before you run out of month?

The majority of Canadians are spending more than they make.   If this sounds like you, you’re not alone.  We are trying to put some money aside for the future as we have been told we should, but we also want to enjoy today; take that trip, get a new car, renovate the kitchen. We cannot just live for tomorrow.  WE WANT TO ENJOY TODAY.

The reason we have this shared experience is that we never went to school to learn how to “handle” our finances or how to manage our CASH FLOW. With so many different companies from financial institutions to consumer goods vying for our money, managing our cash flow on a monthly basis can be very difficult for many people; myself included.

Certified Cash Flow Specialist

With a four-year business degree and a CFP (Certified Financial Planner) and CLU (Chartered Life Underwriter), one would think that I would have received a formal education in cash flow planning as well, but I didn’t; at least not until I received an actual formal education in cash flow planning and became a CCS (Certified Cash Flow Specialist). Continue Reading…