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 Canadians are impacted by rising home prices: National Survey

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

Election season may have come and gone, but the need for affordable housing remains a top-of-mind issue for Canadians, regardless of governing political party. According to a recent national survey conducted by Zoocasa, a whopping 84% say they feel the ability to afford a home is a major issue that’s negatively impacted the population: and 78% feel the government needs to make it a priority focus.

As well, the survey findings reveal that anxiety around affordability extends beyond those who wish to get onto the property ladder; while renters express particularly strong feelings of uncertainty (93%), current homeowners are also feeling the squeeze from spiralling home values, with 80% in agreement.

Let’s take a look at the top concerns indicated by Canadians.

Incomes can’t keep pace with Real Estate prices 

It’s no secret that prices for houses for sale in markets across Canada have seen enormous growth over the last five years. According to the Canadian Real Estate Association, the national average home price now exceeds half a million dollars, at $515,500 (though it should be noted that removing Vancouver and Toronto houses and condos from the equation would trim that total to $397,000).

This has left the majority of Canadians – 91% – feeling as though home prices have outstripped wages in their city or town, while another 92% say they feel rising home prices have reduced the ability of middle-class Canadians’ abilities to purchase a home.

As a result, in order to seek out greater affordability, more than half of first-time buyers said they’d leave their current location and move to a market with lower home prices, contributing to what’s referred to in real estate circles as “driving until you qualify.”

Other homeownership hurdles

But rising home prices only tell a portion of the story: while 70% of respondents agree they’re the largest obstacle to getting on the property ladder, the inability to save enough for a down payment also ranks highly on the list of challenges. Continue Reading…

Give the powerful gift of Decluttering to your Loved Ones

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By Akaisha Kaderli, RetireEarlyLifestyle.com

Special to the Financial Independence Hub

Stuff, stuff, and more stuff!

My sisters and I were fortunate.

My Mother was a very forward-thinking individual. Years before she (and my Father) died, Mom started going through her closets, her paperwork, her jewelry, the items in her safe, her garden area and the storage shed next to it.

She tossed items that were outdated, expired, and the things that were no longer useful to her household. She gave away cherished items, met with a lawyer, updated her will, and made funeral arrangements.

Neighbors and friends thought it was odd but comforted themselves by saying “that’s just Betty.”

Mom, on the other hand, knew exactly what she was doing.

The years were passing by, and she didn’t want her daughters to be burdened with having to clear out piles of stuff from her home after she and her husband died. She had the foresight to put her affairs in order before the events of their deaths.

These days, the courtesy and care of what my Mom was doing now has a name. It’s called dostadning, a hybrid of the Swedish words for death and cleaning.

Not everyone is on board

My Father was much more of a patterned man. He liked his routines and his schedule. Mom? She was a tornado.

I truly think it made him nervous to have familiar (but no longer useful) items be given away or tossed out. He learned long ago not to quibble, and he picked his battles. He didn’t help Mom prepare for the inevitable, but he didn’t stand in her way, either.

Differing styles of dealing with life and death

Over the years since my parents’ passing I have watched friends and other family members deal with the demise of loved ones: in-laws, close friends, siblings or their own Mother or Father. In every case, the chaos left after a death was totally overwhelming.

In the situations where the loved one downsized after retirement, it was easier. Few people would carry pay stubs from the 1940’s into a newer, smaller home. But that was not always the case.

Many people get comfortable – not being able to let go of the past – with children’s bedrooms not touched since they left the house and married. Or countless boxes in the attic of holiday items that are no longer used, or grandchildren’s drawings and painted rocks jealously kept for their loving memories.

All well and good … except that when one passes on, these mementos are left for family members to sort out.

When the adult children go through all this — stuff — full-blown emotional meltdowns or something close to it can happen during the process. Sorting through a loved one’s home after a death is the last thing anyone feels like doing.

Morbid or renewing?

I get it.

No one wants to be chased by the idea of the Grim Reaper at their door. But keeping what you love – and getting rid of what you don’t – isn’t morbid. It’s more like a relief, like a renewal.

There is something very empowering and healthy about taking care of your own space and making it more organized. Clutter is really just a bunch of decisions that you’ve put off making. Most of the junk we have is simply stuff screaming out for a place to be or a decision to be made. Keep it (not countless duplicates) in its place or get rid of it.

Approaches to clearing your clutter

There are lots of ways to get started. There’s the brutal approach, the simple approach, and everything in between.

Brutal begins like this: If your home burned down, what would you replace? Continue Reading…

These are the credit cards Canadians favour the most, according to J.D. Power

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By Barry Choi

Special to the Financial Independence Hub

J.D. Power has just released its 2019 Canada Credit Card Satisfaction Study and Canadians have spoken: they prefer non-traditional card issuers over what the big banks are offering. This shouldn’t be a huge surprise as consumers had a similar outlook in the 2018 study, but there have been some minor changes to the ranking of cards with Tangerine Bank now having the highest overall customer satisfaction rating.

Using a 1,000-point scale, the average overall ranking was 754, but the top four credit card issuers had an average score of 799. Ratings were based on six factors: Benefits and Services; Communication; Credit Card Terms; Customer Interaction; Key Moments; and Rewards.

With more than 6,600 cardholders taking part in the survey, it’s impossible to determine what everyone was thinking, but we can make some logical assumptions based on the data available.

Canadians are favouring non-traditional card issuers

The biggest takeaway from the survey is that Canadians are favouring non-traditional card issuers with Tangerine, American Express, Canadian Tire and PC Financial taking the top 4 slots. This might be shocking to some people but when you look at the features of the credit cards offered by these companies, it may not surprise you at all.

The Tangerine credit card has become a popular card ever since it came onto the scene a few years ago. What makes this card appealing is that you get to choose up to three categories where you’ll earn up to 2% cash back. Every other credit card out there offers cash back has pre-defined categories so Tangerine is giving their customers the ability to choose what works best for them.

With American Express, they offer both cash back and travel cards, but one feature that’s unique to all of their cards is American Express Invites. With American Express Invites, you get exclusive access to some of the best entertainment, dining, and shopping experiences out there.

When it comes to Canadian Tire, it’s a brand that every Canadian knows. Canadian Tire Money is one of the most popular loyalty programs in the country and it has recently become better since the Canadian Tire credit card lineup was updated and rebranded to Triangle Mastercards.

Then there’s PC Financial Mastercard, which took the top slot last year but has fallen to fourth. Their PC Optimum program is still incredibly popular since you can earn up to 45 points per dollar spent at Shoppers Drug Mart and 30 points per dollar spent where President’s Choice products are sold. In other words, you can earn free groceries and merchandise fast with PC Optimum.

Cash rewards are more popular

According to the survey, 30% of those who responded said they preferred cash rewards. Airline rewards followed with 23%. Overall, customers who understood the value of their rewards program and what they earned were more likely to recommend their card over people who weren’t exactly clear how their rewards worked.

Favouritism towards cash back is nothing new as many Canadians now prefer the simplicity of cash rewards. With cash back credit cards, you get a set % back for every dollar you spend and you can cash out when you have a certain amount banked. When you compare that to travel rewards which may have blackout dates or it may take a ton of points before you can redeem any rewards, it’s easy to see why people prefer cash back these days.

That said, airline rewards are still popular. Within Canada, Air Canada controls much of the airspace so their loyalty program Aeroplan is still incredibly popular. Earlier this year, Air Canada formally acquired Aeroplan and have started to slowly implement some changes. Many Canadians are excited to see what else Air Canada has planned for Aeroplan which is likely why airline rewards are still ranked second overall.

Canadians prefer fewer communications

Unlike customers in the United States, Canadians were more satisfied when their credit card provider only contacted them once or twice a year. Overall, people much preferred email as their preferred way of communication. Continue Reading…

Why Robb Engen is striving not for FIRE but to be a FIE (Financially Independent Entrepreneur)

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I’ve written before about my modified pursuit of FIRE (Financial Independence, Retire Early). The twist is that I’m striving for FIE: to be a Financially Independent Entrepreneur. It’s an idea that I haven’t been able to get out of my head lately. Here’s why:

For as long as I’ve been writing this blog I’ve had a goal to achieve financial freedom by age 45. I’ve also declared a goal of reaching $1M in net worth by the end of 2021, the year I turn 41.

I’m on pace to achieve that, perhaps slightly ahead of schedule. More importantly, though, is a realization that my so-called side hustle – the online income earned from blogging, freelance writing, and financial planning – has far surpassed my full-time salary. Simply put, I could leave my day job tomorrow and still pull in enough income to meet our spending and savings goals.

So what’s holding me back? A few things. The security of a full-time job with benefits. A wife and two children who depend on my income. A $200,000 mortgage. The angst of where my next freelance contract will come from (and when it will be paid). Navigating the constantly changing online world while trying to earn a living. Having enough of a cushion in the bank in case things go sideways.

Never been busier

I think about all of those things. But the reality is my business has grown by nearly 50 per cent this year. I’ve never been busier, and I know there’s plenty of opportunities I’m leaving on the table because I can only do so much on evenings and weekends. Continue Reading…

How has the Home Buyers’ plan Changed?

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

Of the tax breaks and incentives offered to first-time home buyers in Canada, the Home Buyers’ Plan is likely the most utilized; the program, which allows qualifying buyers to pull, tax-free, funds earmarked for retirement from their RRSPs for a home purchase, has steadily grown in popularity since it was first introduced back in 1992.

Eligibility for the program is fairly straightforward; first, the prospective buyer must have some funds saved in an RRSP. They must also be classified as a first-time home buyer, meaning they do not own, or have owned, a principal residence in Canada within the last four years.

The funds must be sheltered within the RRSP account for a minimum of 90 days before they can be withdrawn for the HBP, and the money must be paid back within a 15-year timeline, to kick in the calendar year after the withdrawal is made, in installments of one-fifteenth of the total amount.

While the program is structured to allow home buyers to tap into their retirement funds, it also ensures they pay themselves back; should one of the 15 installments be missed, that portion of the withdrawal funds loses its tax-free status, which the buyer will see reflected in their income tax bill.

However, there are some new changes afoot for the HBP, as announced as part of the federal budget in March, including the program’s first maximum expansion in a decade, and a tweak of the rules to improve eligibility for more home buyers. Let’s take a look at what’s new.

New maximum withdrawal now $35,000

As of March 19, the maximum withdrawal amount for the HBP has been expanded to $35,000, up from $25,000, where it had remained since 2009. This also means that, if a couple is purchasing a home together and both qualify as first-time home buyers, each could theoretically withdraw $35,000, to a combined total of $70,000; an amount that will give buyers greater pull in expensive markets, such as those buying homes for sale in Toronto. Continue Reading…