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.”

Comparing the Cost of Living in Cities and Suburbs

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By Holly Welles

Special to the Financial Independence Hub

Are you torn between the city and the suburbs? While the city may have direct access to public transport and popular restaurants, it’s clear that the suburbs allow you to enjoy more space. Both locations have their perks: but urban life costs more, right? Maybe not. Each area has its own expenses that could affect your decision.

Here’s a quick look at the financial differences between cities and suburbs:

1.) Rent and Mortgages

Whether you want to buy a house or rent an apartment, it’s smart to weigh your options. That said, it’s almost always cheaper to buy or rent farther from an urban area. It typically costs more to live within a city’s 15-minute vicinity. In Seattle, it’s hard to find a house under (US)$600,000 unless you look at places an hour away from downtown.

The same data applies to rental expenses. However, rental costs can vary across the country, so the size and location of the city is crucial. For example, these numbers may differ if you live near a smaller urban hub like Pittsburgh or Omaha.

The last piece of the housing puzzle is size. Urban apartments and homes tend to be smaller with minimal outdoor space, meaning the price per square foot will be higher. Meanwhile, suburban residences will likely be larger and offer yards for renters and homeowners to enjoy. It’s important to consider not just how much you’re willing to pay, but what you’re paying for: a prime city location or more private space.

2.) Entertainment and Groceries

Generally, extra expenses like entertainment and groceries cost more if you live near a city. However, it’s often not as straightforward as that: because cost also depends on availability and choice. Cities with large populations might have a higher variety of grocery stores, but they also might lack access to fresh food. The best way to evaluate cost is not just to look at grocery prices, but also the distance to the nearest store and the number of farmers’ markets.

We can apply the same idea to entertainment. While dining out at bars and restaurants will likely be more expensive in a metro area, there are also more food stands and takeout options for those looking to eat more cheaply. Theatres and venues will charge for tickets, but living in the suburbs means you might have to travel far to attend these events in the first place.

There’s no hard and fast rule when it comes to food and entertainment costs. If you like to see plays and musicals with friends, think about those activities specifically. Does it make sense to drive 30 minutes from the suburbs to see productions throughout the year? Your choice is all about your wants.

3.) Transportation

It costs less to travel throughout cities. Most urban locations have public transport systems that you can access with a monthly pass. You won’t have to own a car unless you need to drive to places a bus or subway doesn’t reach. This perk cuts down on vehicle-related expenses like gas, maintenance and insurance. Most cities are also generally walkable, so you won’t always need to rely on public transport. Continue Reading…

Absurdity in certainty: finding yield during a pandemic

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Franklin Templeton/iStock

By John Beck, Franklin Templeton Fixed Income

(Sponsor Content)

An inverted yield curve, historically a harbinger of a recession, lived up to its reputation this year. The beginning of 2020 saw an inverted curve in both the United States and Canada as equity markets reached record highs. Then came the realization that COVID-19 was not simply a regional issue centralized in Wuhan, China, but a pandemic that would turn the global economy completely on its head.

A precipitous drop in stock valuations followed, reaching a nadir in mid-March, but stocks have rallied strongly since then, recovering many of the losses of that late-February/mid-March period. In the bond markets, unprecedented monetary stimulus and across-the-board rate cuts meant yields remained anemic throughout the crisis. That started to change in early June when better-than-expected job and growth numbers saw bond yields edge up. A steepening yield curve with a wider spread between short and longer duration securities is good news for both fixed income investors and the wider economy.

Across the Atlantic, the European Central Bank (ECB) announced in early June that its bond purchasing program would run to at least this time next year, spurring a rally in European bond markets.

Central bank policy

Any macro forecast must come with the caveat that a prolonged economic recovery is entirely contingent on the pandemic. A second wave of COVID-19 this fall or winter will likely mean further lockdown measures across the globe. The French philosopher Voltaire famously said: “Uncertainty is an uncomfortable position, but certainty is an absurd one.” Apt words for the current environment, but investors can take encouragement from the efforts of governments and central banks throughout this crisis. Continue Reading…

The Evolution of Real Estate Investing

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Image by Pixabay

By Emma Williams

Special to the Financial Independence Hub

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

Image by Pixabay

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…

Spousal Loans: Loan money to your spouse, save on your tax bill

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By John Natale

Special to the Financial Independence Hub

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…

The advantages of taking out Online Installment loans

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By Bobby Orlando

For The Financial Independence Hub

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…