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.”

Where is the most affordable housing for Singles?

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

It’s no secret that Canadian real estate is expensive, with home ownership financially out of reach for many in the nation’s largest urban centres. Detached Toronto houses, for instance, fetched an average of $1,282,240 in February: and that follows an 18.6 per cent decline from the year prior.

Affordability in Vancouver remains at an all-time low; according to a recent report from RBC, the lender’s Senior Vice President and Chief Economist Craig Wright stated Vancouver home buyers “are being challenged by the worst affordability levels ever recorded in Canada.”

Well beyond expert advice

Financial experts commonly recommend that for homeownership to be financially sustainable, shelter costs should not exceed a third of a household’s take-home pay. This is easier said than done in the majority of Canada’s markets: and not at all possible in some regions for those purchasing a home on a single income, according to data compiled by Zoocasa.

To determine the level of affordability in each market, the study determined the median home price-to-income ratio, based on regional home prices reported by the Canadian Real Estate Association, and median household incomes from Statistics Canada.

This ratio determines how many years it would take to pay off a home using 100 per cent of a household’s annual income:  the higher the ratio, the longer the timeline. And, while dual-income households have their fair share of affordability challenges in hot markets, the numbers paint an impossible picture for solo buyers.

For example, in Vancouver, where a single-income household brings in a median annual salary of $38,164, and the average home cost $1,071,800, homeownership outweighs incomes by multiple of 28. A home in the City of Toronto would set said buyer back 19 years for their home purchase.

Even most affordable markets too pricey for Singles

However, in a market as varied as Canada’s, affordability can change drastically by market, yet single-income households are still theoretically paying too much on homeownership in even the most affordable regions. Houses for sale in Hamilton, a popular secondary market to Toronto, still cost single buyers 15 times their income while in Saint John — the most affordable Canadian market — the average home price of $171,596 still outstrips the regional median income of $39,163 by four times.

Continue Reading…

5 financial tips that save money in the long run

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By Sia Hasan

Special to the Financial Independence Hub

The financial steps you take now can have a major impact on your life. Believe it or not, there are changes you can make right now if you would like to save yourself a lot of money.

Below are five tips you can follow if you would like to handle your finances in the best way possible.

1.) Save for Retirement

First, it’s never too early to start saving for retirement. For example, if you don’t already have one, you can open up a self directed IRA (or its Canadian equivalent, the RRSP.) Contributing money to your retirement account now can help you ensure that you save up enough money for when you are no longer able to work. If you start now, you can help ensure that you earn more in interest as well.

2.) Focus on Maintenance

Maintenance of your home, car and other things you own can be expensive. However, not maintaining your home or vehicle can actually be a lot more expensive in the long run. Therefore, even though it can be tough, it’s important to make maintenance a top priority. This can help you ensure that things last longer and can help you avoid more expensive repairs later on down the road.

3.) Take care of your Health

Along with focusing on taking good care of your car, your house and your other belongings, it is also important to take good care of yourself. Not only can taking care of your health help with your overall happiness and well-being, but it can save you a lot of money as well. Therefore, it’s important to avoid smoking or drinking too much alcohol, and it’s also critical to see your doctor and your dentist on a regular basis. Continue Reading…

Use your Tax Refund to jumpstart your Savings

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By Jordan Lavin, RateHub.ca

Special to the Financial Independence Hub 

It’s tax season, and if you’re like the majority of Canadians you’ll be getting money back from the government.

That’s right. Out of everyone who files a tax return for the 2017 tax year, 58% are getting a refund and the average amount is $1,765.

That’s not a small amount of money. $1,765 is enough for a nice new TV, a beach getaway, or maybe even a deposit on a new car. If you have a big tax refund coming your way, you might already be dreaming of all the ways you can spend it.

But I want you to think of it another way. Your tax refund is a refund. You’ve paid too much money to the government in taxes over the year, and now they’re returning it to you, without interest. If your tax refund is $1,765, that means you paid more than $147 a month too much in taxes over the year.

It’s your money, not free money!

It’s not free money. It’s your money, that you already earned and were forced to save.

You could take your tax refund and splurge on something fun. But since you’ve already saved that money, why not keep it going and use it to earn money that actually is free?

In fact, you can use a tax refund of $1,765 to generate $724 in interest by depositing it in a high interest savings account, TFSA, or RRSP, and allowing it to grow. That’s more “free money” in your pocket.

Need proof?

Today’s best high interest savings account rate is 2.3%. At that rate, a deposit of $1,765 will earn $41.03 in interest in the first year. After 20 years, it will have earned $1,030 in interest. Once tax is taken out, that means the total earnings on your savings would be $2,489 and change.

Wait, taxes?

Yes, money earned in an ordinary high-interest savings account is taxed at your marginal rate. For example, if you make $50,000 per year and live in Ontario, your marginal tax rate is 29.65%. For every $100 in interest your savings account earns, you will owe $29.65 in income tax.

The advantages of TFSAs

Fortunately, there are some ways to reduce the amount the government takes out of your earnings.

Continue Reading…

Tools and platforms for would-be Webpreneurs

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By Linda Binklage

Special to the Financial Independence Hub

So you need your own website? Whether you’re a small business, a budding webpreneur or just someone with a message to share, a website is a great way to reach your audience.

Nevertheless, many people are put off starting a website for fear of the costs and expertise involved. What they don’t know is that there are loads of amazing tools and platforms out there that can help them to design an effective website at an affordable price.

Here are some of the best tools and platforms for making a website:

Duda

Duda is a responsive website builder. Choose from a range of ready-made templates then use the drag and drop editor to create the look and the layout you want. You can integrate your site with the likes of PayPal, OpenTable and Disqus. And there are some great website personalisation features, allowing you to adapt your site for different customers.

WordPress

WordPress is a favourite amongst rookie and professional web designers for a reason. It’s great for everything from a basic blog to a fully-fledged e-commerce site. It’s really easy to use. And this is one platform where the cost of a website needn’t be a worry. Free packages cover all of the basics. And if you’re looking for more templates, greater customisation or full control over how your website looks and behaves, there are very reasonably priced upgrades you can sign up for. Continue Reading…

5 rare types of Credit Card Travel Insurance coverage

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By Maria Weyman, creditcardGenius

Special to the Financial Independence Hub

Having a form of insurance coverage while travelling gives tremendous peace of mind. And when that important coverage comes from the credit card you already have and you use to book your travels, even better.

Why? Because insurance coverage built in with your credit card has no additional cost, not to mention it’s convenient.

Despite the convenience and potential to save money, it pays to read the details.

Reading your insurance certificate

Your credit card insurance certificate should have the details of what coverage comes with your credit card as well as information on exclusions and limitations.

For example, here’s a list of coverage one credit card offers:

However, even after reviewing this list, it’s always best to still review the certificate to read all the fine details so you know exactly:

  • what is covered,
  • what’s excluded,
  • the maximum amount you can claim per coverage, and
  • any additional terms and conditions.

5 rare types of travel insurance coverage

There are 16 types of insurance coverage we track; however here’s an overview of the five rare types of travel insurance coverage your card might include:

1.) Trip Cancellation

Opting for lower-cost non-cancellable flights and hotels saves money up front. But what happens if you need to cancel? Trip Cancellation coverage takes care of that for you if you’re cancelling for a list of emergency reasons.

Keep in mind there will be a cap to how much you can claim, typically around $1,500. However $1.5K is still better than $0 without this coverage. Continue Reading…