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.”
An insight into the modern methods of real estate that is much more accessible and inclusive!
We have now shifted from steel locks to smart locks in our homes, but for a long time, the conventional real estate systems continued functioning with similar patterns. One of which is real estate investments.
Real estate investment involves the purchasing and sale of a real estate asset for rental profits or market returns. Historically, this investment has yielded better and continuous returns for investors. However, a major roadblock to this remained its accessibility and high barriers in terms of capital and liquidity. For a long time, this segment was exclusive to a specific niche.
However, with modern instruments and advanced innovations at hand, real estate investment has the potential to widen its range. Through these new models, the potential of real estate investment has entirely been transformed.
Let’s take a look at the future of real estate investment with such modern innovative tools.
Investing With REITs
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Real Estate Investment Trusts (REITs) are one of the techniques that has made property investments accessible to a certain extent. With REITs, individuals invest in companies that further deal with real estate investments. In return, shareholders receive dividends in proportion to their investment share in the company.
With REITs, instead of directly investing in real estate an individual would invest in a company that has invested, in part, in real estate. The company then offers dividends through its rental income to its stakeholders. Any investor can hold shares and indirectly become an investor in a real estate asset. This eliminates the need for high capital needed in a traditional system. Continue Reading…
Canadians often consider tax-saving strategies on an individual basis but don’t consider how their families can also contribute to lowering the tax bill. While often overlooked, family tax-saving strategies are effective and legitimate ways for households to save big on tax dollars each year.
The Canadian government recently announced the reduction of its prescribed interest rate from 2% to 1% starting on July 1, 2020 – the first time the prescribed interest rate has been this low since April 2018. For Canadian families, this represents a significant opportunity to make a loan directly to family members or where minors are involved, to a family trust, and use this income-splitting strategy to their advantage.
How does it work?
If you loan your spouse money for the purpose of income-splitting, the prescribed rate (the rate of interest you charge your spouse) remains fixed for the term of the loan. Through this tax-saving strategy, that many may not be aware of, transferring income from a high-income earner to a family member in a lower tax bracket allows Canadian families to pay less taxes overall, potentially saving hundreds or even thousands of dollars per year.
Although the Canada Revenue Agency (CRA) restricts most forms of income-splitting, there are legitimate ways to split taxable income with a spouse or minor child such as this strategy. Provided the loan is properly structured, the loan proceeds can be invested by the spouse receiving the loan, with the income taxed at their lower marginal rate.
Of course, one of the keys to a successful income-splitting strategy is to ensure that investment returns are higher than the interest rate charged on the loan: so keep that in mind when choosing your investment.
A real-life example
Let’s suppose spouses Jack and Jill are looking for ways to lower their family tax bill. They are in different tax brackets, Jack at 48% and Jill at 20%. Jack loans Jill $100,000 at a prescribed rate of 1%. Jill invests the money and earns 4% – or a total of $4,000. She then pays Jack the $1,000 loan interest and deducts the same amount as “loan interest expense.” Jill pays $600 in tax on the remaining $3,000, and Jack pays $480 on his interest income. Continue Reading…
Not all people are fortunate to have enough cash to cover emergency expenses. Sooner or later, you’ll probably deal with unexpected fees, such as for repairs and other situations that require immediate use of money.
Although there are many options that can help you obtain money, some might just place you in further financial distress because you can’t afford to pay off the entire loan in one lump sum. To remedy this situation, an online installment loan can come to the rescue.
Below are a few top advantages of taking out online installment loans from the get-go:
What is an Online Installment Loan?
Primarily, an online installment loan refers to an amount of money borrowed for a specific purpose, and which must be paid back within the specified timeframe, usually through installments or monthly payments. However, it’s important to note that the amount of money you borrow and the terms of your repayments might vary depending on your personal qualifications, such as the type of loan you choose, your monthly income, and many more.
Unlike other types of loans, it has a salient feature, which is the fixed interest rate. This means that the interest rate added to your loan is already set and will not change throughout your loan contract.
Thus, if you consider getting an installment loan online, do your research first to make sure you choose the right loan and lender for your financial needs. Even if you need fast cash, you should find time to assess your options and make the right decision. So, to help you with your research, reliable websites, like Personal Money Network, can be an excellent source of information about installment loans offered online.
Online Installment Loans: Top advantages of taking one out
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Now that you know what online installment loans are, it’s time to explore how acquiring one can benefit your financial needs. So, if you’re searching for the best way to obtain cash without breaking your wallet, below are the advantages of taking an online installment loan you need to know:
Easily Accessible
Typically, an online installment loan is one of the best types of loans of which you can avail. Compared to other loans, it’s easily accessible because anyone is open to apply. As long as you fulfill the basic qualifications for the loan, you can apply and get approved within the fastest time possible.
Also, getting an installment loan online means you can take advantage of unsecured access to loans. This means that you don’t need to provide collateral before your application gets approved. Most lenders offering these loans are more concerned about having a stable source of income as one of the essential qualifications. Therefore, if you want easy access to this type of loan, make sure you meet the requirements set forth by your lender. In doing so, you can obtain a loan that will work best for you.
Quick Application Process
When you take out an installment loan online, you don’t need to fall in line and wait for a few days for the result of your application. Just fill in an application form on their website and submit the requirements. The lender will, then, check your application form and notify you once you get approved for the loan.
Ideally, getting this type of loan online is fast and easy because you don’t have to set an appointment or work around office hours just to get yourself accommodated by the lender. That’s because online loan applications can be made 24/7. All you need is your computer and a good Internet connection to get started with the application process. Continue Reading…
Millions of Americans have lost their jobs, experienced furlough and applied for unemployment during the COVID-19 pandemic. As a result, many are struggling financially, and some must even choose between buying food to feed their families and paying the bills. If you find yourself in the same predicament, you may wonder how you’ll be able to afford your mortgage payments in the coming months.
While rethinking your budget may help you scrounge up a few extra dollars here and there, it likely won’t be enough to pay your mortgage without a steady stream of money coming in. If you’re unable to make payments any longer, mortgage forbearance may be the route you need to take. Here’s what you need to know as you pursue this option.
Pros of Mortgage Forbearance
While mortgage forbearance shouldn’t be your first option when seeking financial assistance, it can be helpful, especially as you cope with short-term financial emergencies. Here are a few advantages of pursuing mortgage forbearance.
1.) Suspends mortgage Payments
If and when you agree to mortgage forbearance with your servicer, they will likely temporarily defer your payments for a specified period or allow you to skip some. This setup will help you avoid foreclosure or damaging your credit score.
Most importantly, a temporary suspension of payments gives you time to find a job, recover from the pandemic and begin saving money and eventually making payments again.
2.) Protection under the CARES Act
Under the CARES Act [in the United States], homeowners can receive certain protection benefits if they have a federally backed mortgage. One such benefit is that your lender or servicer may not foreclose on you until June 30. Another advantage includes having the right to request mortgage forbearance for up to 180 days, plus an additional 180-day extension.
Moreover, lenders don’t require documentation proving you qualify for forbearance. Speak with your servicer and answer a few questions about your financial hardship to qualify.
3.) Better Alternative to Foreclosure
The alternative option to forbearance is foreclosure: which often goes hand in hand with bankruptcy. This combination can easily sink your credit score for years and result in months, and even years, of legalities and paperwork. It’s also incredibly expensive for lenders to foreclose on a home, so allowing borrowers forbearance is a more affordable option.
Cons of Mortgage Forbearance
All of those benefits may make mortgage forbearance sound like a great deal. However, there are consequences to pursuing this option, even if it does solve your financial problems in the short-term.
1.) Possible Credit penalties
Pursuing forbearance during the coronavirus pandemic should not affect your credit score. In fact, the CARES Act states that no negative credit reporting or late charges will occur during your forbearance agreement. However, credit penalties and dips may still happen as your lender reports your account information to credit bureaus. Continue Reading…
Pursuing a post-secondary degree marks a significant chapter in one’s life: and it’s being dramatically rewritten for millions of students across Canada in the wake of COVID-19. Campuses on lockdown, classes gone digital, and increasingly gloomy job prospects are just some of the new realities students face.
But while these times pose new challenges, there’s some silver lining as many schools have made moves to ease grading criteria and the federal government has stepped in a big way to launch new financial aid programs. If you’re a post-secondary student who’s looking to better manage your money during COVID-19 but aren’t sure where to start, you’ve come to the right place.
Below is a list of what I consider to be the key first steps students should take to get a better grip on their finances during COVID-19:
1.) Apply for CESB
Whether you’re a freshman whose paid summer internship was abruptly cancelled or a recent grad struggling to land a position due to the very real impact COVID-19 has had on the job market, you can seek financial support from the federal government by applying for CESB.
CESB – which is short for Canada Emergency Student Benefit – is a form of unemployment insurance and is the single-most impactful form of financial support you can receive as a student during COVID-19.
Here are some things you need to know:
How much support can you get?
If you qualify for CESB, you can receive one of the following amounts for a set four-week period:
$1,250 either because you’re: 1. unable to work due to COVID-19, 2. actively on the job hunt but can’t successfully land a position, or 3. currently employed but only earn a monthly income of under $1,000 before taxes
Up to $2,000 if you tick off any of the three boxes above and you also have a disability or you’re a parent with a child under the age of 12.
Who does (and doesn’t) qualify for CESB?
While CESB is mostly geared towards students currently enrolled in a post-secondary institution, you can also receive support even if you’re not technically in college or university right now. For instance, you can receive CESB if you’re a recent post-secondary grad and completed your education in December 2019 or later. Additionally, if you’re in high school and applied for a post-secondary program set to start by February 2021, you also may qualify.
You must also be a Canadian citizen, permanent resident, registered Indian, or in very rare cases, recognized as a person in need of protection by the Refugee Board of Canada.
Unfortunately, that rules out international students.
The type of program and institution you’re enrolled in matters too. You’ll need to be in (or applying to join) a program that’s at least 12 weeks long, working towards a certificate or degree, and a student in one of the post-secondary institutions recognized by the government (the good news here is the list of designated schools is long and widely encompassing).
Aside from just being an eligible student and ticking all of the boxes above, you must also be actively looking for a job and unable to find employment due to COVID-19. You’re not eligible to get any CESB payments if you aren’t actively looking for work, have a job that earns over $1,000 per month before taxes, or already receiving support from the Canada Emergency Relief Benefit.
How to apply
CESB is available for up to a maximum of 16 weeks; however, you’re not guaranteed to get payments for that entire length of time and must apply for CESB every 4 weeks. The idea being you can keep reapplying and receiving support until you no longer need it.
The 4-week application periods aren’t arbitrary and follow a strict schedule based on the following dates:
May 10 to June 6, 2020 (no longer available)
June 7 to July 4, 2020
July 5 to August 1, 2020
August 2 to August 29, 2020
As long as your SIN is registered on the CRA website and you’ve filed your 2018 tax return, you should be able to apply online straight from CRA’s My Account. If you don’t, you can call 1-800-959-2019 or 1-800-959-2041. Phone lines are open seven days a week between 6 am to 3 am. You’ll also want to set up direct deposit on your CRA My Account so your CESB payments can be sent straight to your bank account digitally.
Remember, CESB isn’t intended as a free subsidy for all students but is temporary financial support for those who are actively looking for a job and can’t get one. The Government of Canada may even require you to submit proof you’ve been searching for a job, so be sure to keep records of your emails and other communications with potential employers.
2.) Set a budget and cut discretionary spending
A well-maintained budget can help you save hundreds of dollars every month – and in an unprecedented time like this – every dollar counts.
The first step of creating a budget is to start tracking how much you spend in the first place.
List out every purchase you make by amount and by type. And yes, I’m talking about every purchase. Spent $10 on
Lunch? Track it. Bought $50 worth of groceries? Track it. Use your smartphone or scribble down in a small notebook, it’s up to you, just track it.
While you can use apps to automate the process, I recommend noting down every purchase manually since it’s the best way to put your spending habits under the microscope, spot your biggest money wasters, and discover how even small nondescript purchases can add up. Nothing can get you more motivated to start meal prepping at home than seeing exactly how much you spend on takeout.
Once you have a grasp of your spending habits, start separating needs from wants and cutting out any discretionary purchases. Next, set strict spending caps for every category (i.e. no more than $100 on groceries per week) to ensure your monthly income can cover those essentials.
If you’ve got any money left over at the end of the month, don’t splurge and instead set aside the money in a high-interest savings account to gradually build up some cash reserves.
3.) Check if you can receive relief from your biggest bills
If you own a car, reach out to your insurance provider. In the wake of COVID-19, many are offering either rebates, discounts, or deferrals that can help cut down your monthly insurance payments. The same goes for utility bills. For instance, both Toronto Hydro and BC Hydro are offering support to customers who may be under financial pressure with options like payment deferrals or flexible payment plans with no penalties.
Banks are also stepping up in their own way. If you currently owe credit card debt, reach out to your bank and ask to receive payment deferrals and a temporary drop in your card’s interest rates. That can help postpone your minimum payments and ensure more of your money can go towards covering your more immediate essential expenses. Ratehub has provided a breakdown of how credit card minimum payment deferrals work and how terms differ by bank. Continue Reading…
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