Canada New Mortgage Rules

Changes to Canada’s Mortgage Rules

First Published Date: July 22, 2012 ADawnJournal.com

To tame the Canadian housing market, new mortgage rules kicked in starting June 9, 2012 for government insured mortgages. Here is what you need to know briefly:

– The maximum amortization period is now 25 years (down from 30 years).

– Borrowers now can refinance mortgages using 80 percent of the home value (down from 85 percent).

– Homes costing less than 1 million are eligible for mortgage.

– GDS (gross debt service ratio) ratio and TDS (total debt service ratio) are limited to 39 percent and 44 percent. GDS tells you the percentage of gross annual income you need to cover mortgage and housing related payments such as mortgage payments, property tax, 50% condo fees, etc. TDS tells you percentage of gross annual income you need to cover housing related payments and other debts such as credit cards, car loans, etc. So, TDS = GDS + other debts.

A point worth mentioning is that until these new changes, the acceptable GDS and TDS ratios for mortgages usually have been 32 percent and 40 percent. Also, lenders would relax GDS ratio for borrowers with higher credit scores.

Should You Pay to Read The Globe and Mail?

TheGlobeandMail.com and GlobeInvestor.com Are No Longer Free

First Published Date: November 7, 2012 ADawnJournal.com

Blaming its declining ad revenues, Globe and Mail recently started charging online readers accessing more than 10 articles per month for $19.99 monthly. I have been a religious Globe and Mail reader for a long time and have been contemplating whether to pay for online access or not – and I am sure the majority of online readers are in the same boat as me. Today, I will discuss whether to pay or not to pay to read Globe and Mail online.

Free access to information or knowledge is a basic human right. Free access to information serves as the basic foundation to develop and build a better society – a society better in every aspect: economically, culturally, and technologically. The Internet opens up endless possibilities to access free information across the globe. However, in the name of declining revenues, free access to information has severely been compromised by publishers around the globe. And the recent Canadian version is the Globe and Mail’s restriction.

Now let’s come to the question of whether you should pay or not to read the Globe and Mail online? Unfortunately, there is no straightforward answer. The answer lies in how you value the Globe and Mail content. If you feel it is worth it to pay $20 a month to have full access, you can pay to read. If you think there are still so many other sites available for free and there is no point paying $20 per month, you know what to do.

$20 per month may not seem like a lot of money. However, if you consider the gross amount you need to earn to spend $20 per month annually (considering you are in a 40 percent tax bracket), it comes to $400 gross amount per year. Are you willing to spend $400 gross yearly to read one site? I am not. When I first heard the news that the Globe and Mail will be a paid site and the figures were not published yet, I thought to myself that if it’s $10 a month, I am willing to pay. If not, I won’t.  

There are many other sites you can still read for free. I am mentioning a few of them here. Search online for more and I am sure you will come up with at least one or two that you would like to read instead of the paid Globe and Mail.

Five Simple Steps Toward Financial Literacy

Financial Literacy Does Not Have To Be Difficult

First Published Date: November 15, 2012 ADawnJournal.com

November is Financial Literacy Month. This is a special post to participate in Blog for Financial Literacy campaign. 

Financial literacy does not mean you need to have an MBA, CFA, CGA, and so on or you spend hours endlessly deciphering the Wall Street Journal everyday. Financial literacy begins with taking some simple steps and today I will discuss such basic steps you can take right now to build a solid financial future.

Step One – Spend Less Than You Earn – This is the most basic, yet most difficult, step to take to become financially independent. If you can’t do it, any other financial plans will become meaningless.

Step Two – Pay Yourself First – If you have money in your hand, for sure you will spend it and it will be gone. Depending on your affordability, set aside 5 to 20 percent of your income every month and invest it in a low MER, income-generating and less volatile mutual fund or ETF. Do the whole Step 2 automatically so you don’t see this money and it gets deducted and invested automatically each month, year after year.

Step Three – Avoid Accumulation Debts – Avoid the accumulation of credit card or any debt. Use a credit card only when you can pay it off in full each month. Avoid buying a car or furniture on loan. However, good loans to build asset and generate income are okay, such as mortgage, investment loan, etc.

Step Four – Build An Emergency Fund – Have six months to one year living expenses set aside separately in a high interest paying savings account, mutual fund, or ETF.

Step Five – Set Goals and Review – Know what your goals are (such as buying a home, paying off a mortgage, retirement, etc.) and start saving realistically to pursue your goals. At least once a year review your progress and adjust your spending habits to reach your goals.

These five steps are not the end of financial literacy journey; they are only the beginning. Once you kick off your journey with these basic steps, start educating yourself more on financial literacy and flourish to become financially literate and independent.

How to Take Charge of Your Debt

4 Things You Can Do Right Now to Manage Your Debt

First Published Date: December 22, 2011

If you have difficulty handling your debt, the very first thing you need do is to admit that you have a debt problem. It is our nature to not see the real picture and keep adding up debt – unrealistically thinking that our debt is still manageable. Today, let me describe these simple steps you can take right now to get rid of this vicious cycle of debt.

Admit and Stop – Admit that your debt situation is beyond control and you need to take steps right now to get rid of your debt. Stop charging more to your credit card or adding more debt into your existing balance. The most important thing you can do is to start your journey towards a debt-free world and you do it starting this moment.

Add Extra Money – Whether it is $10 per month or $50 per month, adding extra towards paying your debt can have a enormous effect on the life of your debt. By adding additional amounts, you are shaving off years from your debt-paying timeline and saving lots of money. So, if possible, pay extra money every month. For those months when you cant pay extra, stick to the minimum.

Stick To Reducing Your Debt – Yes, you can do it. You can have a debt-free life. Start visualizing how life will be and how much freedom you will have when you won’t have debt anymore. To make it happen, you need to stick to reducing your debt and continue paying off all your loans until they turn into zero.

Educate Yourself and Seek Professional Help – Learn about managing money to build your financial future. There are many independent personal finance websites, Canadian government websites, and U.S. government websites out there for free where you can learn about money and finances. Use these free resources to educate yourself. However, there will be times when these resources are not enough to handle your situation – in a situation like this, seek the help of financial professionals to walk you out of your debt situation.

6 Things You Can Do Right Now to Manage Your Credit Card Debt

How to Take Charge of Your Credit Card Debt

First Published Date: January 5, 2012 ADawnJournal.com

Credit cards are a modern-day necessity, and it’s unrealistic trying to survive without them. However, if you are unable to manage them, credit cards can take over your life. Let’s look at 6 simple things you can do right now to take charge of your credit card debt.

Stop Charging – If you have credit card debt that you can’t pay in full every month, do not charge anything on the credit card unless you have the money to pay it. This is your first step towards managing your credit card debt.

Avoid Making Late Payments – Always pay on time and never make a late payment. Late payments can affect your credit score. Pay at least the minimum if you are unable to pay the full for any given month. I have seen people not paying a 70-cents bill thinking it would not make sense to pay this small amount. They ended up paying a penalty for late payment and affecting their credit score. A small amount can drag you down a lot if it’s not taken care of in a timely manner.

Call and Ask – Call and ask your credit card companies for a lower interest rate and waive any penalty fees you may have occurred. Optimizebalance transfer offers to lower your interest on credit card.

Pay Extra Amount – Pay whatever extra amount, whether it’s a small or a big amount, you can possibly arrange to pay towards your credit card balances every month. If you look at paying addition amounts in terms of longer time frame, it will accelerate your debt-free endeavour a lot faster.

Be Aware of Credit Repair – The Consumer Reporting Act has rules regarding how long accurate information can appear in a report and no credit/fix companies have the authority to remove, erase, or change this in a consumers’ file. Beware of these companies claiming to fix your file.

Take Charge of Your Finances – Learn about managing money, investing, and building wealth for your financial future. There are many independent personal finance websites like A Dawn Journal, Canadian government websites, and U . S. government websites to help you build your financial roadmap.