Tag Archives: saving

5 surefire ways to stay out of Debt

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By Gary Bordeaux

Special to the Financial Independence Hub

In the modern world, there are two types of debt: good bad and bad debt. Good debt would be considered financing something that has the potential to go up in value, like a home or a small business. Bad debt would be considered consumer debt like jewelry, designer clothes, and luxury cars. These things tend to depreciate. People typically get into trouble financially when they start going into debt with consumer goods or things they really don’t need.

1.) Create a budget

Unless you are already financially well-off, you are going to need to create a budget for you and your family. This is the single biggest way not to go into debt. Why? Because you are tracking every dollar you spend. Start out by listing your monthly income after taxes at the top of the budget, then list your expenses below that. If you don’t have a surplus of money after all your expenses are accounted for, you are either spending too much money or you are not making enough money. Whatever the case may be, adjust your budget accordingly.

2.) Quickbooks

The Quickbooks online platform by Intuit is probably one of the best online financial tools you can use for your business. In general, it is an online accounting software that helps manage your finances for you. With an easy Quickbooks online payment, you can pay people and you can receive money too. In the end, business finances can get pretty confusing. Quickbooks allows you to track your finances more easily. Also, Intuit has a budgeting app called Mint. I use Mint quite often and it tracks all my transactions and spending activity. It also tracks your budgets, monthly cash flow, and your credit score along with many other investments and other accounts.

3.) Emergency fund

Let’s face the fact that bad things happen to good people. When these setbacks occur, people need money set aside to protect themselves from debt. This is what an emergency fund can do. First, start by putting away a simple $1,000 just in case an emergency happens. Continue Reading…

How to Retire debt-free

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By Laurie Campbell

Special to the Financial Independence Hub

These days, don’t be surprised to find a senior citizen standing behind the counter of your favourite fast food spot taking your order instead of a braces-wearing teen. What retirement looks like today has changed quite significantly from what it was even just ten years ago, and there’s no stopping this trend. More and more seniors are staying in the workforce, and for many of them, they have no choice.

Last June for Seniors Month, our agency, Credit Canada co-sponsored a seniors and money study that looked at the financial difficulties Canadian seniors are facing; the results, while shocking, were no surprise.

As a non-profit credit counselling agency, our counsellors are on the forefront of what’s happening when it comes to people and their financial hardships, and we are seeing a large number of people who should be starting to settle into their “golden years” still working, maybe even taking on an additional side job, just to pay off their debt, let alone get a time-share in Florida.

When we conducted our study in June 2018, it revealed that one-in-five Canadians are still working past age 60, including six per cent of those 80 and older. And while one third do so simply because they want to — which is fantastic, kudos to you — 60 per cent are still working because of some form of financial hardship, whether it’s too much debt, not enough savings, or other financial responsibilities, like supporting adult children.

The truth is the golden years have been tarnished, and I don’t know if we’ll ever get them back.

Half of 60-plus carrying some form of debt

Many of today’s retirees are living on fixed incomes, making them vulnerable to unpaid debt. In fact, our study revealed more than half of Canadians age 60 and older are carrying at least one form of debt, with a quarter carrying two or more types of debt. What’s even more alarming is that 35 per cent of seniors age 80 and older have debt, including credit-card debt and even car loans.

Staring at the problem isn’t going to help, nor is hiding from it. The best thing we can all do is to face the facts head-on and devise a plan of action that we know will work, whether it’s getting rid of any debt while building up savings, taking on a side job, delaying retirement by a few years, or all of the above.

Sizing up Government support

Before delving into the numbers it’s important to understand what income you can expect to have during your retirement. A few numbers have been compiled here as an example, but if you wanted to get more detailed information you can visit the Government of Canada website and click on the Canada Pension Plan (CPP) or Old Age Security (OAS) pages.

So, let’s get started by taking a look at 2017. Continue Reading…

Dear Generation X: Here’s how to fix your Finances

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The number of financial responsibilities facing Generation X – those ages 37 to 52 today – seems overwhelming. Getting married, having kids, and raising a family can be expensive enough. Now factor in building an emergency fund, paying down the mortgage, setting aside money for retirement, saving for your child’s education, and everything else that comes along with improving your finances. It’s a tall order – I’ve been there! In fact, I’m living it.

But let’s skip the scaremongering and over-generalizations and get to some common sense advice.

How do you balance paying off debt, saving, and investing with the everyday costs of supporting a family? Let’s start by setting up a simple plan for each of these categories to ensure that you are on the right financial path. Here’s how to fix Generation X finances:

Treat consumer debt like a financial sin

You can’t move the needle forward financially if you’re constantly spending more than you earn. But when your mortgage payment, car payment(s), daycare costs, groceries, and gas take up your entire available budget then you have no wiggle room to plan for unexpected costs.

Not only that, when the “I deserve this” moments come up and you want to treat yourself or your family to dinner, a movie night, or a vacation you end up going into debt (just this one time) to make ends meet.

Start with a list of everything you currently spend over a period of three months. Where does all your money go? Find a way to slash expenses so that you’re no longer going into debt just to get through the month.

Make it a rule: No new debt this year

Now it’s time to tackle your current debt, whether that’s in the form of a lingering line of credit or (gasp!) a high-interest credit card. If it’s the latter, put all savings and extra spending on hold and throw every extra dollar at that debt until it’s paid off.
Continue Reading…

How to develop a Financial Independence mindset if your parents were reckless spenders

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By Alex Lawson

Special to the Financial Independence Hub

Our parents are our first teachers. We learn our values, our habits, life skills, relationship skills, and many other things from our parents, long before we venture out on our own.

One of the things that people pick up on is financial habits, good or bad. If your parents were reckless spenders, chances are you’re already headed down the same path. The good news is that it’s possible to change your mindset and learn to manage your finances so that you don’t make the same mistakes they did.

Separate yourself from them

The first thing you need to do is realize that you are your own person capable of making your own choices. Don’t tell yourself you’re irresponsible with money just because that’s how you grew up. Make the decision to be different and start telling yourself the opposite. Reinforce the idea that you can be financially responsible and independent regardless of how you grew up, and you’ll be able to start making better choices.

Decide on your goals

Many people that had financially irresponsible parents have never been taught to think about the future. Planning for retirement should begin as soon as you leave college. Do you think you’ll want to retire with enough money to live comfortably as you have been, or are you planning on securing complete financial independence by the time you’re 30? The process for saving and investing will be completely different based on your goals. Begin saving aggressively when you’re young so that your money will have more time to grow.

Make saving a priority

If your parents were reckless spenders, they probably didn’t teach you anything about saving. One of the biggest keys to financial independence is learning how to save properly, so that you can be prepared for both unexpected problems and for your future. Build savings into your budget before you even look at what type of housing you can afford. A good rule is to start saving 10% of every paycheck and live off what is left over until you reach the goal of three times your monthly income. Then, when your car breaks down or if you lose your job, you will have an emergency fund to rely on without having to go into debt. Continue Reading…

Retirement Planning for Late Starters

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We’re always hearing dire warnings about how woefully unprepared boomers are for retirement. An Ipsos-Reid survey done for CGA-Canada reports that 25% of their respondents have never made a savings contribution and 29% said they had no money left over to save after paying expenses.

So, what if you’re now in your 50s, still have a mortgage, and have a measly retirement fund? You held off with your savings for whatever reason and chances are you’re now thinking more about retirement and how you want to spend your time.

Related: A simple way to boost your retirement savings

What do you do now?

If you’ve arrived late to the retirement savings game then you have your work cut out for you. This is a critical time for retirement planning.

For many Canadians, their 50s are the peak earning years and they could still have 10 – 15 years left in the workplace.

Typically there is a decline in spending as many larger financial commitments are hopefully behind you, or are winding down. There should be a big push to optimize this and work to accumulate your nest egg. You’ll have to set aside more of your earnings and consider some cost-cutting options.

For most people, learning to spend less is about breaking bad habits. This may be the last shot you have to impose some meaningful discipline on your finances. Stop throwing away money on stuff you don’t really want or need.

Pay down high interest credit-card debt as soon as possible. Pay off your mortgage. Take the money spent on mortgage payments and providing for your children and whisk it away into your savings. You probably have loads of unused RRSP contribution room, which can generate huge tax returns.

Make the most of new money. Consider putting any bonuses, tax refunds or other lump sum payments directly into savings.

You may have to reduce your style of living. Consider downsizing to a less expensive-to-operate home. Tell grown children still living at home to start fending for themselves.

Basically – spend less.

If you and your spouse can do that for 10 – 15 years while earning average salaries or better, it should provide enough for a typical middle-class retirement.

Where do I start?

Figure out where you stand financially.

Assume you don’t sell your house and you receive $25,000 to $30,000 a year per couple from CPP/OAS and you have no employer pension.