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.”

Blue Monday: Here’s what gives us the financial blues on this saddest day of the year

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Feeling the financial blues a bit today? Little wonder because today, Monday, Jan. 15th, is Blue Monday, dubbed the saddest (most depressing?) day of the year.
 Call me a masochist but I also decided this was the day to download the 2017 online version of TurboTax and at least confront the looming reality of preparing another year’s tax returns. The program said it can be used to print and file your 2017 tax return by mid-January, and that NetFile will be available as of 6 am on February  26th. How depressing is that a mere two weeks after the holidays?

But if the thought of filing your taxes doesn’t make you blue, or even the snow that’s falling as I write this, maybe the thought of credit-card bills from the holidays will do the trick. Credit Canada and the Financial Planning Standards Council today released the results of  a Blue Monday themed Financial Blues survey that revealed that 53% of Canadians are “already feeling financially blue, with the younger generations struggling.”

The Financial Blues Survey was based on a Leger poll that asked Canadians “when it comes to your finances, what makes you blue this time of year?”

Well, bowl me over with a feather: the start of another tax season didn’t make the cut in the poll, or at least the top five “standout” findings. Here’s the top candidates for feeling blue in January:

  • 20% of us have a credit-card balance larger than our savings accounts
  • Younger adults aged 18 to 44 are especially blue about finances right now: 68% of them versus just 41% for adults aged 45 or older
  • 25% of us lack the funds to take a winter vacation in the sun
  • 6% have already broken their financial new year’s resolutions
  • 21% over-spent during the Holidays

Credit Canada CEO Laurie Campbell  says that while “we are seeing a good deal of Canadians stressed out about their financial situation … the takeaway message is that there is hope. Develop a plan, tackle debt, and realize your financial potential. There are professional resources available to you, so don’t feel you need to go it alone.” Continue Reading…

January is a great time for these 4 financial planning action items

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January rings in the New Year, a sign of optimism, and the annual promise of something new: adopting resolutions, setting goals and looking ahead. It’s also a time to reflect on the previous year. Making resolutions is common for many, but less than 40% will actually achieve what they set out to do.

Nevertheless, for those looking for improvement in their financial health, here are some good habits to follow at the beginning of each year.

January is a good month to…

Save

1. ) Calculate your net worth

You know how to do this. Total up all your wealth building assets – home, investments – subtract your debts – mortgage, credit cards, car loan, and voila – the resulting total is your net worth, or in other words, the current picture of your financial standing.

There are lots of online calculators that help you do this, but don’t stop there. Redo the calculation at least once a year. Create your own spreadsheet so you can compare several years. It will help you see if you’re moving in the right direction. Otherwise, how can you know if you’re getting ahead?

Also read: Your financial plan is a compass

Focus on what you can do to improve your finances, and if you find yourself getting off track, do some course corrections and carry on.

2.) Revisit your goals

January is also a good time to review your goals. If you have a spouse or partner, set aside some quiet time this month to have the money talk. Have an honest discussion about your short-term and long-term goals and check to see whether you are still on track to meet them.

Or, maybe your situation or priorities have changed, and you need to reassess. If something is not working, go back and modify. Since you can’t know what the future holds for you, a period of five years is a manageable target.

Also read: Create your own financial plan with these eight steps

Map out a few steps for the current year that will see you heading towards a better financial situation. Continue Reading…

Rekindling our inner creativity and frugality this Holiday season 

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By Maria Weyman, creditcardGenius

Special to the Financial Independence Hub

Gifts, parties, drinks, and yes … food! Is there a more expensive time of year than … now?

Staying on the straight and narrow road of financial responsibility means we can’t go about our lives like a zombie (oh wait, wrong holiday )…

But how do we stay frugal (yes, I’m using the F word), and keep fun within arm’s reach?

It’s all about creativity

… not sacrifice.

So, don’t worry, I’m not going to ask you to create two separate lists for needs and wants. Instead, let’s stick with one master list: where you list your full holiday needs and wants.

Now, here’s the thing. At the bottom of your list, write the max dollar amount you plan on spending for everything. But before you write that single number down … a little research would help, like:

How much disposable money –- after your fixed expenses and savings goals –- do you have in the bank?

(No, your credit card limit doesn’t count.)

Working with that single number –- your maximum budget –- it’s time to break it down into chunks depending on what’s in your list. Now we’re cooking.

You’ll feel a little bit of tension. An internal struggle when you’re deciding how and where to allocate your holiday spend. Completely normal. That just means our brain is getting warm and prime to let our creative juices flow. Because here’s a not-so-obvious secret:

Constraints and limitations drive creativity.

Make it a game

Because games are fun. And at its core, aren’t games all about solving problems and overcoming specific challenges?

Even more fun when you get to save, indulge yourself, and spoil the people you love in the process. And here’s the best part:

You get to create the rules.

Here are some questions and suggestions:

Review your list

When you review your list…

  • Is there anything that you can get pre-loved (say hello to Kijiji, Craigslist, and even Facebook)?
  • Is there anything that you can create yourself (using a little help from Pinterest and YouTube)?
  • Is there anything that you can borrow from friends and family?
  • Is there something that you can replace with something that is just as good or better?
    • Example: if you’re thinking of getting your bff that beautiful warm $50 scarf, how about a) inviting her over for home-cooked dinner?, or b) volunteer to watch over the kid(s) for an afternoon so she can have a “me time”?

Anytime you can DIY [Do it Yourself], borrow, replace or get something pre-loved…write down how much you’re saving. Obviously, the bigger the number, the bigger the genius you are.

What’s at stake? Well, that’s for you to decide.

Free is fun

Let’s stop and think about all the free things we’re getting online; amazing isn’t it?

So, back to your list. Is there anything you’ve listed that is available for free? Some ideas …

  • Free local events: Check Eventbrite for current and upcoming local events, some have tickets for sale and some are free.
  • Free stuff. Browse Kijiji and Cragslist free stuff and see if there’s a match on what’s on your list.
  • Other freebies: like games, baby stuff, etc.

7 DIY gift ideas

Ideas from easy to advanced …

  1. Personalized christmas tree ornament: grab a box of blank-canvas ornaments from the dollar store, markers, and stickers … and have fun!
  2. Vanilla infused vodka for baking, etc.: Better alternative than that boring store-bought “vanilla extract” (cheap vodka is welcome).
  3. Chocolate spoon mixer like this one is delish.
  4. Ready-to-go hot cocoa and marshmallow in a jar: drool-worthy ideas here.
  5. Homemade chocolate and caramel dips: you can find glass bottles at the dollar store and recipes for chocolate and caramel dips are abundant.
  6. Decorated candle holder. You can go from simple elegance to elaborate, some ideas here.
  7. Festive painted glassware: Grab a (wine) glass (you guessed it, from the dollar store), enamel paint (specific for glasses), paint brushes, and … some inspiration! The best news? Sky’s the limit to your pattern and design.

These ideas are by no means exhaustive, but I hope it’s a good starting point to get you thinking of the possibilities.

The bottom line

Gifts, parties, drinks, and yes … food.

We’re entering a time where abundance and indulgence are celebrated. And while, no doubt, there are worse things in the world, over-indulgence only feels good for a moment.

So let’s make sure the reality we come back to after this holiday is a happy one for you and your wallet.

Maria Weyman is Co-Founder of creditcardGenius, the only tool that compares 50+ features of more than 150 Canadian credit cards using math-based ratings and rankings that respond to your needs, instantly. Follow on Twitter and Facebook.

 

How to graduate debt-free from College

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By Steve Barker

(Sponsored Content)

Many high school students are faced with the prospect of going into tens of thousands of dollars in debt or foregoing higher education. Today’s young people are having to look at a college education as an investment and to weigh the value of that investment against potential returns.

There are ways to stay out of debt and still earn a college degree: it just requires a little planning and patience.

Advantages of Going to College

The cost of tuition is steadily rising without the accompanying rise in income. Although there are many paths to success, a college degree does greatly increase job options, teach valuable skills, and create lifelong networks of friends and colleagues. Here are some reasons why college is still worth the cost.

  •       Increased pay: Even though incomes aren’t rising with tuition costs, college graduates still tend to make more than their non-schooled friends. College grads earn an average of 56 per cent more than high school graduates.
  •       Higher rate of employment: The job market is extremely competitive. Anything that gives you an edge should be considered. Some studies show that only 3.8 per cent of college grads are unemployed compared to 12.2 per cent of individuals with only a high school diploma.
  •       Networking opportunities: You are likely to make a lot of valuable connections while attending school. You are introduced to people with new ideas who have the potential to inspire, encourage, and challenge you. Your professors and peers may become vital connections as you enter the workforce.

Staying Out of Debt

There is more than one way to earn a diploma. Taking out student loan debt is not the only way to finance your education. Continue Reading…

10 financial lessons to share with friends

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The personal finance community can be a bit of an echo chamber, reinforcing and repeating the same ideas on how to save, invest, and spend our money. This sort of tribalism can be intimidating for outsiders who are eager to learn but afraid to ask questions or know where to start, especially when it comes to more complicated topics.

The truth is not all Canadians are financially savvy. In fact, a Tangerine survey last year found that only half of Canadians consider themselves knowledgeable when it comes to personal finances.

As personal finance enthusiasts it’s our duty to move beyond this little corner of the Internet and start talking to our friends and family about money.

It’s not easy to talk in real-life about what we do with money, how much we save, how much we spend, and the foolish mistakes we make. But these are crucial conversations to help each other deal with money and the complex decisions about it that we all face.

We can start by sharing the kinds of tips and tricks that helped us build lifelong financial habits and skills. It’s what financial literacy is all about, right?

That’s why I was excited to partner with Tangerine for Financial Literacy Month and list my top 10 financial lessons to share with friends:

1.) Avoid credit card debt like the plague

It’s impossible to go through life without incurring at least some debt. I’ve had student loans, credit card debt, a car loan, line of credit, and finally a mortgage.

Carrying a balance on my credit card was by far the most harmful to my finances. Making the minimum monthly payment hardly puts a dent into the balance, and 19 percent interest ensures that balance will continue to grow.

Tackle it with the debt avalanche or debt snowball method, and once it’s gone commit to never again paying one cent of credit card interest.

2.) Track your spending

To free up that additional cash flow you need to understand how much money comes in and how much goes out every month. There’s no other way around it – how else will you know what you can afford to save?

Whether you use a mobile app, budgeting tool, or good old-fashioned Excel spreadsheet, the point is to track every transaction until you can glean some insight into how you spend your money. Use this information to make informed decisions on which areas of your budget you can cut, and where you’d like to direct any additional savings.

Related: Track your habits, save money

3.) Automate your savings

The key to building a life-long habit of saving is to make your contributions automatic and as painless as possible. Pick a day that coincides with your paycheque and set up an automatic transfer into your RRSP, TFSA, savings account, or RESP.

It’s called paying yourself first. Start with as little as $25 and increase it annually, or as your budget allows. This powerful strategy works because it treats your savings goals as ‘mortgage-like’ fixed expenses that come out of your account on a specific day.

4.) Save a percentage of your income

One rule of thumb suggests saving 10 percent of your take home pay for retirement. I say save a percentage – any percentage – of your income as long as you start with something and make it automatic.

One cool trick I learned was to bump up that percentage in tandem with a salary increase each year. So, for example, let’s say you earn $50,000 and saved 5 percent of that amount ($2,500). Then you get a 4 percent raise in the New Year, so now you make $52,000. Well, don’t just continue saving $2,500 – bump that up to $2,600 to stay in-line with your 5 percent savings rate. Continue Reading…