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.”

Vanguard reduces fees on three passive Canadian Bond ETFs

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With interest rates falling ever closer to zero, the mantra that costs matter in investment funds is truer than ever.

So it’s good news that on Tuesday Vanguard Canada cut fees on three passively managed Canadian bond ETFs, the sixth fee reduction in its Canadian operation in the last seven years. With the latest fee cuts, Vanguard says its average Management Expense Ratios on its ETFs are 57% lower than the industry average.

As the graphic to the left shows, the management fee will now be 0.15% on the Vanguard Canadian Long-Term Bond Index ETF (VLB/TSX), the Vanguard Canadian Government Bond Index ETF (VGV) and the Vanguard Canadian Corporate Bond Index ETF (VCB). Previously the fee on VLB was 0.17%, VGV’s was 0.25% and VCB’s was 0.23%.

Vanguard Canadian Long-Term Bond Index ETF seeks to track the Bloomberg Barclays Global Aggregate Canadian 10+ Year Float Adjusted Bond Index, investing primarily in public, investment-grade fixed income securities issued in Canada. Vanguard Canadian Government Bond Index ETF seeks to track seeks to track the Bloomberg Barclays Global Aggregate Canadian Government Float Adjusted Bond Index, and invests primarily in public, investment-grade government fixed income securities issued in Canada. Vanguard Canadian Corporate Bond Index ETF  seeks to track the Bloomberg Barclays Global Aggregate Canadian Credit Float Adjusted Bond Index  and invests primarily in public, investment-grade non-government fixed income securities issued in Canada.

Kathy Bock, Managing Director and Head of Vanguard Investments Canada Inc.

“For us, low costs are not a pricing strategy. We are built to pass on the benefits of our size and scale to investors in helping them achieve investment success,” said Kathy Bock, Managing Director and Head of Vanguard Investments Canada Inc. in a press release, “This is even more important in the current market climate, where low returns mean that costs erode an even larger share of returns than they would normally.”

The extreme volatility of the last few months has challenged both individual investors and financial advisors and in such an environment “high-quality bond ETFs can play a key role as a stabilizing force in a portfolio,” said Scott Johnston, Vanguard Canada’s Head of Product, “We are pleased to support investors with these fee reductions to help them keep more of their returns.”

Low fees and the “Vanguard Effect” in Canada

Including fee reductions from 2013 to 2015, and in 2018 and 2019, Vanguard estimates the cumulative reductions have saved Canadians more than $10 million.

As competitors adjust fees down in response, industry investment fees have come down significantly over the last several years, typically after Vanguard enters a particular geographic market. This “Vanguard Effect” phenomenon has occurred in the United States, the United Kingdom and Australia as well as Canada.

For more information on Vanguard’s broad pricing impact on the ETF market, see this infographic.

 

 

   

Want to save money on Energy Bills? Go Solar

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By Gary Bordeaux

Special to the Financial Independence Hub

Most people are well aware that solar power is better for the environment, but did you know it can have a positive impact on your wallet, too? Start saving today by converting your home to solar.

Affordability

Year after year the cost of installing a solar panel system has been decreasing dramatically. In the last decade alone costs have dropped nearly 70 per cent, putting solar energy well within the financial reach of most homeowners. More options for ownership have also become available, and you can now finance or lease a system. That means you can see immediate savings on your energy bill with lower upfront costs. Contact the most trusted Colorado solar provider to learn how you can affordably convert to solar today.

Reduced utility bills

It’s almost a given that when you rely on a traditional energy source your bill will increase each year. What if instead of paying more and more you could watch that payment decrease instead? With a well-designed solar installation, your utility bills will shrink: potentially even down to zero if your system generates all of the energy your home requires.

No dynamic pricing

What is dynamic pricing? It’s when a service provider raises rates at peak times, and it’s becoming the norm in the energy industry. Instead of one flat rate for energy usage throughout the day, utility companies increase pricing when the demand is highest. Most home energy consumption occurs from 4 p.m. to 9 p.m. on weekdays, so utility companies raise the cost of electricity during that time period. It’s meant to discourage use during high-demand hours, but what it really does is drive up the total you see on your bill.

When you’re off the grid, you aren’t subject to paying more during peak periods. You’ve generated your own abundant supply of solar energy that is 100 per cent free to use, regardless of when you choose to use it.

Usage rebates

Savings are provided to solar owners through a process called net metering, which makes it possible for you to profit from the energy made by your panels. Continue Reading…

11 ways Millennials can eliminate Credit-card debt

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Many people find themselves struggling with credit card debt. If you happen to be one of them, replace your stress with an action plan. Becoming debt-free is a liberating experience, but it takes discipline to get there. 

Below, 11 business executives share their take on the best way to rid yourself of credit card debt. Plus, they reveal their own practices when it comes to credit cards.

Treat Credit Cards like Debit Cards

I have no credit card debt at 27! I haven’t used a debit card in over 8 years. I currently have 5 credit cards – Discover IT, Alaska, Delta, Costco, and Target. Each card provides a different benefit and allows me to maximize the rewards and discounts I receive. I have always treated credit cards like a debit account, ensuring I don’t spend more than I have. I don’t make large purchases on credit cards that cannot be paid off at each billing cycle. — Megan Chiamos, Cannabis ERP Software 

Pay off the smallest balance first

Intentionally paying it off with the smallest balance first.  Now with the current situation things are a little different as I need to be mindful to keep some of that money I would have used to double up payments. — Leeanne Gardner, Unbridle It

Understand where every Dollar is going

We have lines of credit that have credit cards attached to them. The balances vary depending on the situation. Cash flow is one of the most challenging aspects of being a small business and I believe it is wise to leverage good credit to cover those gaps. It is extremely important to be aggressive about paying down that debt and knowing where every dollar is going. — Lukas Ruebbelke, BrieBug

It doesn’t matter how broke you are

Before we were married, my wife worked for Sears credit central. Her job was to turn down people with bad credit. As a result of her experience, we have never carried credit card debt during our entire marriage, no matter how broke we were. Makes for both great finances and a happy marriage! — Rick DeBruhl, RickDeBruhl.com

Think of the benefits of being Debt-Free

I don’t have any credit card debt, and to the best of my ability I never will. The interest rates on credit cards are fairly high, so I do my best to pay down my balance every month. If you do this, you’ll rack up all kinds of free points and have a great credit score on top of it. Win-win. — Michael Norris, Youtech

Try Debt Consolidation products

debt consolidation products have been helpful to me in reducing that debt. You have to be very careful though & diligent. That is a solution that only works if you change your habits too. — Emily Beattie, Recruiting Manager Continue Reading…

As Coronavirus doubles unemployment, more Americans worry about Retirement

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By Mike Brown

Special to the Financial Independence Hub

At the time of this writing, the latest numbers from the Johns Hopkins University of Medicine attribute more than 2.5 million cases and 171,810 deaths worldwide to the Coronavirus pandemic. 

In the United States, those figures are 788,920 and 42,946, respectively. In Canada, they are 36,831 and 1,690. 

The devastating loss of life due to the COVID-19 virus will continue to get worse in the coming weeks and months. Another consequence of this global pandemic that is also continuing to worsen is the financial damage faced by so many everyday consumers. 

As markets plunge at an unprecedented pace and social distancing measures close down countless businesses that have been forced to lay workers off, nearly every person’s personal finance situation is taking on water and managing those finances can be tough. 

LendEDU, a personal finance company, tracked how the Coronavirus pandemic is impacting the financial lives of everyday people. The company conducted two surveys, each of 1,000 adult respondents, over the course of two weeks, and the survey-to-survey results painted an increasingly gloomy financial picture for most consumers. 

In two weeks, Unemployment due to Coronavirus doubles

LendEDU’s first Coronavirus survey was conducted on March 18, and it found that 6% of poll participants had lost their jobs due to the Coronavirus, while 35% had seen no changes to their jobs, 13% had their hours partially cut, and 11% had been furloughed. 

Two weeks later, LendEDU’s second Coronavirus survey that was conducted on April 1 revealed much different results to the same question. (See graph at the top of this blog). The percentage of people that had been laid off due to the Coronavirus pandemic doubled from survey-to-survey from 6% to 12%. Continue Reading…

How to manage your Finances in your 20s

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By Cloe Matheson

Special to the Financial Independence Hub

Your twenties are often touted as the best years of your life. They’re full of fun, frivolity, and finding out who you are. But it’s easy, as a twenty-something, to surrender any thought of saving for your future.

Now, we aren’t saying that every millennial will squander their chance of buying a house because they spend too much money on smashed avocado toast. There are, however, a few key things that we could all do better in our twenties to manage our finances. Want to know how to save your pennies for the future? Here are some top tips.

1.) Don’t get into (more) debt

Most of us will already have large loans to pay back for college. Avoid saddling yourself with even more debt by buying things you can’t afford. This habit will only lead to a world of pain in the next decade of your life.

So how do you avoid getting yourself into financial trouble by spending carelessly? Firstly, evaluate and reflect whenever you look to purchase items over a hundred or so dollars. It’s not only big-ticket purchases you need to watch out for, either. All those discretionary purchases – a top here, a coffee there – really do add up. 

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2.) Build your credit history

You also need to build up your credit history carefully and surely. For many banks and mortgage brokers, a total lack of debt signals financial immaturity. Start building a solid credit history by making a small purchase on credit (say, a washing machine), and promptly paying the moneylender back.

3.) Learn to live with less

It might take some philosophising, but it’s time to re-evaluate your attitude toward material things. Young people tend to compare their circumstances with their friends’ more than most. There’s also a tendency to covet the gadgets and homes that we see plastered on social media. But you don’t need to live this way to be happy. Continue Reading…