Dig Debt?

Has the “word” debt lost it’s negative connotations in Canada? For a country that was once known for being very conservative financially, we’ve dug ourselves into a fairly big debt load. Click on the picture below to check out this great video post on The Globe and Mail to see what changed for Canadians and debt.

Source: http://www.theglobeandmail.com/globe-investor/investment-ideas/lets-talk-investing/video-how-did-we-dig-ourselves-into-so-much-debt/article2230607/

Helpful Tips for Tax Refund Planning

A good way to think about the tax money that you may get back, is that it is not ‘free money’ or a ‘gift’ – rather it is your money that you put away in a forced savings plan throughout the course of the year. Framing it like this can sometimes help one to more rationally plan what to do with the cash once it reaches your bank account. Will you spend every last penny on a new wardrobe, invest it, or save it?

I came across an article by Alan Schram, an author with The Canadian Finance Blog, about this very topic! Alan’s article outlines 6 areas you can consider applying your saved funds to:

• Firstly, it may be wise to consider allotting a small amount to some ‘wants’. Putting 5-10% of your refund into an account for splurge shopping may mitigate the urge to blow larger amounts later on if you’re feeling down or having an ‘off’ day or week.
• Emergency Fund: either start one, or add to your existing fund. You never know what life will throw your way, so keeping some money in line will help you face unexpected financial hardships.
• Debt Repayment: putting your tax refund money towards a debt you have (a car loan, student loan, line of credit, etc), will substantially decrease the amount of interest you will pay on that debt in the long term.
• Savings: reach your savings goals faster with a little boost from your tax refund.
• Retirement: don’t just care for your present, care for your future by putting money aside for retirement.
• Vacation: this option is the last on the list. If you’ve taken care of all other aspects covered above, consider investing in a vacation!

You can read Alan’s full article here: What to do With Your Tax Refund

Disclaimer: This blog should be used for informational purposes only and should not replace the advice of a licensed financial professional.

Stop Living Paycheque to Paycheque

Do you find yourself running low on funds just as your next paycheque is on its way? Do you want to find a way to get out of this habit and start saving?

Leo Babauta, author of the Zen Habits blog, has a fabulous article that can get you on your way to a successful financial future, without living paycheque to paycheque. From cutting up your credit cards, to starting a debt snowball, to automating your bills, to using the envelope system, these strategies are sure to help you on your journey.

Read Babauta’s full article, “How to Stop Living Paycheck to Paycheck”.

Disclaimer: This blog should be used for informational purposes only and should not replace the advice of a licensed financial professional.

Young Adults and Credit Cards – To mix or not to mix?

I was recently reading a great blog post by Gail Vaz-Oxlade that discusses an extremely popular topic for parents and their children: Credit Cards for Young’uns.

Many people, especially parents and young adults wonder if it’s a good idea for young people to get credit cards. On one hand, it’s a great way to build up a credit rating and earn reward points for purchases, but on the other hand it can be a disaster waiting to happen if not carefully managed.

Gail Vaz-Oxlade suggests that getting a credit card as a young person can be beneficial, so long as they follow an important set of guidelines, including:

• Pay your full balance every month – which means not spending what you don’t have.
• Choose a card with some reward options – maybe it’s dollars off groceries or travel points.
• Keep track of your spending – it’s easy to process plastic without even thinking about it, so make sure you keep an eye on what you’re spending.

Check out more of Gail’s guidelines here, in “Credit Cards for Young’uns”.

Disclaimer: This blog should be used for informational purposes only and should not replace the advice of a licensed financial professional.

Stop Juggling, and Get Organized!

When you’re working hard to get yourself out of debt and on the track towards financial freedom, there is nothing more frustrating that trying to sort through a huge pile of receipts or figuring out how much money is in which of your 5 accounts. It’s time to get organized and reduce your financial frustration!

Craig Ford from the WiseBread blog gives readers a set of 6 tips to quickly get your finances organized, including:

• Reduce your number of accounts
• Amalgamate accounts into one institution
• Use an effective tracking and filing system
• Keep a regular schedule for paying your bills and filing papers

Read more of Ford’s article by clicking here.

What strategies do you use to keep yourself and your finances organized?

Disclaimer: This blog should be used for informational purposes only and should not replace the advice of a licensed financial professional.

Zen Habits Tips for Financial Success

When you think of the phrase “financial success”, what comes to mind? Is it becoming debt free, having a specific amount of retirement savings, or being able to work and travel according to your own schedule? Whatever your definition of financial success is, there are lots of great strategies to help you reach your goals.

Zen Habits author, Leo Babauta, has a great post on his blog called “10 Habits to Develop for Financial Stability and Success”. I particularly like the fact that he defined both stability and success, as many people don’t realize that financial stability is a huge accomplishment in itself!

These are a few of my favourite tips from Babauta’s list:

• Make your savings automatic
• Control your impulse spending – this may include Taming the Take-Out Beast
• Keep your family secure with an emergency fund
• Read about personal finances – this one is huge! I encourage everyone to read as much as they can about finances

Check out the rest of Babauta’s tips here on the Zen Habits Blog.

What strategies do you use to be successful financially? Please feel free to share your comments.

Disclaimer: This blog should be used for informational purposes only and should not replace the advice of a licensed financial professional.

Make your assets work for you, to go beyond debt-free!

When you think about your financial goals, is being debt-free one of them? Is the reason you work hard and watch your spending to support the goal of paying off your debts?

When we look at the economy and the recent recession, we realize that  maybe debt-free living just isn’t enough. Even if we’re free of debt, we can quickly spiral into a pretty big mess if we haven’t got savings set aside for  those “unexpected” things that always seem to pop up right when we need it the least. Or maybe our employers have to cut back our hours a little due to lower sales. In times like these, it’s important to go above and beyond being debt-free, and create a cushion of savings and income producers.

Are there other ways to create more income without sacrificing too much time or energy, such as renting out a room in our houses or basement suites? Saving could also be as creative as working together with our neighbours and members of your community to exchange labour skills (ie. gardening for bookkeeping) or buy larger quantities of groceries in bulk.

Kentin Waits Wise Bread article, “Beyond Debt-Free: Getting By in the New Economy”, gives readers some wonderful points to consider in an economy that is still recovering. While the article speaks to Americans, Canadians can truly benefit from these suggestions and points too, as our Canadian economy can be so affected by our southern neighbours.

To read more about going beyond debt-free, click here to read Wait’s article.

Disclaimer: This blog should be used for informational purposes only and should not replace the advice of a licensed financial professional.



Saving Money for Students on a Budget

Even if you’re not a college or university student yourself, you probably know of some. Whether it’s a child, sibling, or another relative, we all know that being a student can be very challenging financially. Tuition fees, textbooks, rent, groceries, and all sorts of other costs combined with a typically small yearly income means that many students are finding themselves strapped for cash or in a pile of debt. This great article from the Canadian Finance Blog highlights several tips for students attending college or university on a small budget. From setting up fee-free bank accounts, to making coffee at home, to renting videos at the library, these tips can all be helpful for making the most of your education funds. Even if you’re not a student, many of these tips are great for anybody living on a smaller budget. Check out the article: Money Saving Tips for College Students on a Budget”.

Handbook for Life

These days we seem to have handbooks for everything, be it having children, managing your finances, or growing a vegetable garden. But it’s not often you hear about a handbook for life. This fabulous article offers 52 tips to increase happiness and productivity in your life. It begins with a disclaimer, suggesting that these tips are meant to be used as an experiment, in any order, and using any number of the tips. And while many of these tips are great and will work for a variety of people, none are guaranteed. Read through the list, however, and I’m sure you will see several suggestions that catch your eye and that can inspire you to lead a more positive and productive life. Some of my favourites include #17 – Set long-term goals, #25 – Eliminate debt, #28 – Build an emergency fund, and #14 – Simplify your life. What ideas do you currently use and find helpful in maintaining a happy and productive lifestyle?

Click here to read Chris Voss’s article, “Handbook for Life: 52 Tips for Happiness and Productivity”

Zen Habits Great Debate Against Christmas Shopping

I recently read this wonderful Zen habits article about Christmas shopping and some of its effects on our lives and the world around us.  I thought this was a perfect article to share, especially with the holiday season upon us.  Not only does the author, Leo Babauta, share his reasons for not buying Christmas presents, but he also supplies some fabulous questions and solutions to think about during the holidays. Enjoy, and feel free to share your thoughts or alternatives to Christmas shopping!

The Case Against Buying Christmas Presents

-Post written by Leo Babauta.

I love Christmas. I love the snow-themed everything, even when I was living on tropical Guam, and Santa and elves and reindeer and snowmen and candy canes. Yes, I even love the non-stop playing of Christmas music for two months.

Most of all, I love getting together with my family — eating Christmas cookies, singing Christmas carols together, gossiping and laughing at each other. It’s tremendous fun.

I don’t love Christmas shopping, or the overconsumption, frenzied malls, consumer debt, environmental waste, wasted time wrapping, and over-accumulation of needless stuff that goes with it.

Bah humbug! I love Christmas, but the shopping has got to go. Here’s why. Warning: This will be a rant of near-epic proportions.

1. The focus is on buying, not on sharing. I love the idea of giving to people you love, but that idea has been twisted. Now people go out in a mad rush to shop, like ravenous vampires feasting on new blood. We shop for a month, rip apart the packaging one morning, and then forget about it the next day. Is this about giving, or buying?

2. Giving is great, but buying is not the solution. Again, I’m in love with giving … but do we need to buy to give? We seem to think that buying is the solution to any problem, but that has lead to a society that is deeply in debt and piled high with needless stuff. We can find other ways to give: bake cookies, wash someone’s car, babysit so they can go on a date night, create a photo album, be there when they need help moving.

3. The waste, oh the waste. Let’s start with packaging: the packaging for every toy is double the volume of the toy itself. From cardboard to plastic to metal twist-ties, it’s ridiculous. Then every item we buy must be brought home in bags. We often put everything in boxes. Then we buy wrapping paper and wrap it all up. All of this gets thrown away on Christmas day. Finally, there’s the gift itself — people get so much stuff they can’t possibly treasure everything. So it goes into the closet to be forgotten.

4. The sorrowful debt. Most people spend hundreds if not thousands of dollars on gifts and wrapping. Not to mention all the money spent on gas, driving to different shopping places, and the money spent on fattening food at mall food courts. This goes on credit cards (and around our waistlines), and we then must pay for this — with high interest — during the year. Even if you don’t get into debt, you’re spending money earned from long hours of hard work — is this really how you want to spend your life, paying for needless stuff so corporations can get rich?

5. The horrendous, insipid, seizure-inducing advertising. I can’t stand advertising, and it only gets worse on Christmas. The ads pound on you relentlessly until you give in — and it works. That’s been proven — those ads are getting you to buy more, to want more, to lay down the credit card. I don’t watch TV, read newspapers or magazines, or allow ads in my browser (AdBlock) so that I don’t have to be subjected to this.

6. The fuel. If you drive all over the place to shop, you’re using lots of fuel. Even if you just order online, think of the fuel it takes to deliver these products (overnight!) to your home. And the fuel used to create the products, to get the raw materials to the factories, to cut down the raw materials, to ship the finished product to the stores or warehouses from around the world (most likely from China), not to mention all the fuel used to create and ship the packaging. It’s a few million metric craploads of fuel, wasted for giving some presents that will be forgotten.

7. There are still hungry people in the world. In the frenzy that is Christmas shopping, we spend ridiculous amounts of money that is pure waste. In other countries, people are struggling just to eat, or get medicine, or find shelter, or get clean drinking water. We spend so much in a show of consumerist greed, when that money could go to feed a few dozen families. If you have money to waste, consider donating it to an organization that is helping these types of families. I know this sounds preachy, but really, this kind of reminder is necessary in times like these.

8. The neverending clutter. What happens to all the gifts? They go on our shelves, in our closets, on the floor. We already have so much clutter — do we need more? We already have problems figuring out what to do with everything we own. Why do we want to clutter our homes even more? Why do we want to force clutter on our loved ones, oblige them to find a spot in their already cluttered homes for this gift we’ve given them, so they won’t offend us when we come to visit? Is this obligation really a gift?

Questions

Q: But what about the kids?
A: Kids love getting presents (I have six kids — I should know!). I sure did when I was a kid. Are we to rob them of this? It’s a difficult question, but another side of the equation to consider is what we are teaching the kids. They don’t just participate in the opening of presents — they see all the shopping too. They are being taught to shop, and to value material goods over anything else. Imagine their lives when they’re grown — a life of shopping and debt and waste, because that’s what’s important, right? So for the joy of opening a few presents for a couple hours on Christmas day, we’re imparting on them consumerist values that will last them a lifetime.

I think, instead, this can be a great opportunity to have an open discussion with kids about buying and spending and debt. Did you receive this kind of education when you were a kid? Would you have been better off if you had? This is also a great opportunity to teach kids about giving to others, about volunteering and helping the less fortunate, about finding other ways to spend time with loved ones that don’t require shopping. My kids do want presents — but I don’t want them to think that’s what Christmas is all about. We’ve been having this discussion and we will continue to this month.

Q: But what about family?
A: Family, believe it or not, will survive without a few presents from us. They can continue to shop and give presents, but you can simply tell them that you don’t want to participate this year. Send them a link to this article to explain why.

This is also a great opportunity (you see how I love turning problems into opportunities?) to create new traditions with your family — go caroling, string popcorn for the tree, make Christmas cookies, bake pies, play football outside, create Christmas scrapbooks, volunteer.

Q: But I love giving presents!
A: Sure, who doesn’t? And you might also love shopping. Shopping, for many people, is a pleasure like no other. This can be a problem, in my mind: you might be using shopping to give you temporary happiness, to fill a hole in your life, to make you happy when you’re depressed or stressed or lonely. I’m not saying you are, but many people do, and it’s good to take a look at these things. Richer happiness can be found in simpler things that don’t involve spending: being with loved ones, creating, reading, getting outside and doing something active.

Even if you aren’t addicted to shopping, you might just love giving presents. And that’s OK — but you might consider giving more meaningful presents that don’t require lots of shopping. Creating a photo album or scrapbook for someone takes time and thought, while laying down a credit card at Macy’s doesn’t.

Q: How do you convince a spouse who equates lavish gifts with love & appreciation?
A: This definitely isn’t easy. It’s an important discussion to have, however. You’ll need to do it without accusations, without resentment, without making the other person feel he’s under attack. Bring it up as an ongoing discussion about things you’re thinking about — maybe even point to this post as a starting point.

This is such an important discussion because so many couples get badly into debt for this reason — one partner has different values about material goods, shopping, debt, gifts, and so on, and the other partner hates to fight about it so doesn’t talk about it. Financial issues are also a big reason couples split up. So finding a healthy way to talk about values, about financial goals, about how you want to live your lives, is so crucial. Do it gently, with compassion, as a way to live together as a team rather than two people struggling against each other.

A good way to get started is to write a blog post or a letter to your spouse about your feelings — again, without being attacking. You might explain why you’re not into giving presents, that you still love your spouse but want to show it in non-consumerist ways, that there are other traditions the two of you could start together to share your love.

Alternatives to buying

There are so many good ideas, but a few:

• Do other things with family, such as caroling, baking, watching It’s a Wonderful Life, playing football outside.
• Volunteer as a family at a homeless shelter.
• Ask people to donate to your favorite charity in lieu of gifts.
• Make meaningful gifts.
• Do a gift swap where you put a valued possession (that you already own) into the swap.
• Bake gifts.
• Have an experience instead of giving material goods: do something fun together, go to the beach or a lake.
• Find hope. Christmas has so much potential to be about so much more than buying — it can be a season of hope, renewal, loved ones, inspiration, contemplation. Talk to your family about this — how can we find ways to be hopeful, thankful, cooperative? How can we be more present instead of worried about getting presents?
• Get stuff at Goodwill. It’s recycled, and the money helps a good cause.

To read this or many other great Zen Habits articles, check out the Zen habits website.