Now Is Still Not The Time For Major Borrowing

Government credit bad, Consumer credit good?

First Published Date: June 26, 2009

As the danger of a third election in four years hangs over a nation considered by the rest of the world to be so stable it is “boring”, it would be entirely understandable if the alarm bells in the brain of every Canadian started to ring right about now. After all, the prospects of the nation trading at a deficit any time soon are at present not amazingly good. This, however, has not stopped the press from suggesting that now is the time, if ever the time existed, to get out there, dust off your credit card and prepare to hit the shops with a vengeance. This advice comes via the newspapers from the Finance Minister Jim Flaherty.

If it sounds a little bit reckless for something a Finance Minister might say, this is with very good reason. The minister’s words were somewhat more considered, but by the time the press had had their way with them, it did sound a little bit more like incitement to spend the inheritance. What he actually said was “positive signs in financial markets give us cause for cautious optimism that a global recovery may not be far behind”. He added that Canada would lead this recovery and be at the front of the queue to boost business. There is, perhaps, some amount of mockery in the words as set out in the press, with some journalists not quite sharing the Minister’s optimism for the future.

Much of the implication behind the press reaction to what Minister Flaherty has said seems to be that the minister is saying everything he can think of in order to stimulate consumer spending in a time when the nation’s financial sector could do with a helpful push or two. This is not exactly an untried initiative, of course, but the average family may well be heartened by what they hear from the government. The theory of consumer spending stimulating the economy is a self-perpetuating one. Sure, it’ll boost the flow of cash through businesses. It will, however, only operate that way if it is allowed to, and this means that banks need to be as willing to lend as customers are to spend.

The next year to eighteen months will be interesting for those who like to read the global response to financial situations. Many countries in the developed world, including the United Kingdom, are due to hold general elections to decide on the makeup of their next government. Good governmental marshalling of the global economies in the next year and a half will see more incumbent governments re-elected, but to drop the ball now would be to almost guarantee and end to a government’s hold on power. Indeed, with one country’s economy affecting those of its neighbours, it could be that decisions taken in one country affect the election in another. Should you go out and spend, spend, spend in order to keep a few governments in their seats? Well, only if you can afford it. Now is still not the time for major borrowing.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on June 16, 2009.

More Money Saving Tips

How To Save Money

First Published Date: March 21, 2009

We could all do with a little more cash in our lives. Be it due to rising energy costs, a desire for a big purchase or saving toward a holiday, there is always room for a few extra dollars. There are a few tips and tricks you can try to save yourself a little cash and invest it toward a better future.

To begin with, evaluate your outgoings. Look closely at the price plans you are on for energy and heating, as there might be a better deal available. Check comparison websites and if there is a saving to be made, switch immediately. Some people have reported up to $160 a year saving on energy bills purely because of this.

Next up, look at your home and cell phone bills. Again, there might be a cheaper tariff available. A neat trick is to telephone your current provider and inform them that you’re planning to leave and would like to cancel your contract. At this stage, you will be put through to a department – often going by the name of “Cancellations”, though they are anything but – who will try and woo you and persuade you to stay. They’ll offer deals on your plan that could save you hundreds of dollars a year, just to keep your custom.

Continuing along the same theme, check the interest rate you’re paying on any credit cards you may have. Many people remain with the same provider for years out of habit, never bothering to see if there is a better deal available. Nine times out of ten, there will be – apply for a new card with a better rating, transfer the balance and cut up your old card. Your monthly payments will reduce and you’ll be paying less interest.

With these things in check, you can move on to trying to cut your expenditure. One of the biggest, and often unavoidable, expenses is the price of gasoline. To begin, consult a website such as Gas Buddy, to find the cheapest gas station closest to you. These done, then try to fill up your tank on a Monday. Gas prices traditionally rise over the weekend and dip again at the start of the new week, with Monday being the cheapest. It might only be a small amount, but every little helps.

On more frivolous pursuits such as shopping, savings can also be made. One priceless tip to remember is that eBay is not just for used goods. Many big companies – such as IBM – run eBay stores as a way of clearing old stock. Many brand new items are available on eBay for huge discounts off their original retail price. While online and buying a new purchase, try the many comparison websites – like the aforementioned for credit cards and energy companies – to get the best price.

When it comes to health and beauty, you can also make savings. Most salons charge high prices, but will offer discount rates if a junior treats you or trainee stylist. This may sound risky, and no one wants to end up with bad hair, but a senior stylist will usually oversee the junior and if something does go wrong, they’ll fix it for free. You can also try making your own skin care products – a bottle of branded exfoliating lotion will cost anything up to $25, where a warm bowl filled with sugar and rubbed in firmly with a sponge will have the same effect.

Essentially, there are ways to save money on everything. Utilize the Internet, as it genuinely does offer some spectacular deals if you have the patience to look for them. In the same vein, learn to haggle when in store – many retailers price their items with mark ups that allow for negotiation. 99 times out of 100, you can find a discount on something – all you need is a little clear thinking and a large amount of patience.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on Mar 21, 2009.

New 4 Percent Retirement Withdrawal Idea & Free Financial Planning Software

How Much You Can Spend in Retirement?

First Published Date: June 6, 2015

A retired financial planner in California, Bill Bengen, researched and came up with his 4 percent retirement rule. The New York Times recently published a detailed article on this, as his retirement 4 percent concept has attracted criticism both accepting and rejecting it.

Based on the assumption of that the retirees’ portfolio is made of stocks and bonds half half, Mr. Bengen’s 4 percent withdrawal concept survived every thirty year period from 1926.

However, there are other complex methods created by retirement analysts that call to withdraw from 2.85 percent to 4.95 percent, as the article points out.

Critics argues that Mr. Bengen’s method does not take account into various factors such as investment fees, tax rates, locations, etc. and should not apply to all retirees.

If you search online for various methods of retirement withdrawals, you will be astonished to see how many are there. The best course of action is not to go by any single idea you stumble into. As everyone’s situation is unique, it’s best to seek help and sit down with a qualified financial professional who can assess your own situation and create a plan that will suit your needs and lifestyle.

Free Financial Planning Software

Developed by Boston University economist Laurence Kotlikoff, ESPlannerBASIC Canada is free financial software that can calculate how much you can spend and save to sustain your living standard in retirement life. The planning tool takes consideration into other factors such as changing jobs, moving, having kids, pensions, etc. can affect your financial future. You can access this free tool here:

One Investment Market That Is Currently Doing Fine

Investment Opportunities Exist Even In A Terrible Market

First Published Date: Feb 22, 2009

As global markets continue to pop like antique light bulbs, the value of some assets is beginning to slide south; even in a country, that has managed its economy as well as Canada. For people with money to spare who are worried that despite the security of Canadian banks their cash will begin to lose its value, it is therefore a tricky situation in which to invest wisely with any measure of confidence. Of course, investment is indispensable for an economy to thrive and grow, and if you’re not satisfied to see interest safely accrue on what you have in the bank then you’ll still be looking around to see where you can invest without having instantly to drop to your knees and pray. You’re not alone.

One investment market that is currently doing just fine is the buy-to-let market. This makes sense if you stop to think about it. With financial uncertainty clouding matters at the moment, renting a home has never been more popular. Fewer people are taking the considerable risk of buying a home, concerned that they might lose their job – particularly if exports begin to tail off as the global economy struggles. This makes it a potentially very profitable time to be a landlord. Real estate prices are falling, so if you have the spending power and the borrowing capability to buy up properties, now is a good time to do so, before doing the necessary work and turning them out on the rental market.

It is at least partly true that where one man is facing a crisis, another spots an opportunity. This may be cruel in some people’s eyes, but someone is always going to be getting rich when other people are having concerns, and when it comes down to it why shouldn’t you be that someone? Another thing to take into account is that property prices will by their very nature increase again at some point, and with senior analysts voicing the belief that the real estate market has bottomed out (or is at least about to) this might just be a fine time to get on the “property ladder”. Intelligent development could pay off in a big way a couple of years down the line.

One word of warning, however. To repeat the final words of the first paragraph, you’re not alone. There are a great many other people looking for an investment opportunity, and where there is a demand for something there will always be someone ready to profit from that demand. That someone will not always be as altruistic as might be hoped.

A competitive market is the ideal breeding ground for scammers and hustlers, and it is important to vet any investment opportunity more than once over before committing. A once in a lifetime, too good to be true opportunity might just be exactly that. Scammers will not always e-mail you pretending to be a retired Nigerian general with millions of dollars to invest – sometimes they’ll look you in the eye and smile at you. If you have doubts, contact the Investment Dealers Association of Canada. They police investment professionals, and there are few scams they haven’t seen.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on Feb 22, 2009.

Two Tax Scams to Watch Out for This Tax Season

Tax Season Tax Scams

First Published Date: March 8, 2015

Hard-working Canadians are busy getting ready to file their taxes. And so are the scammers are busy getting ready to utilize this seasonal opportunity to make some money. Tax scams can come in various ways. Today, I will talk about two methods that are popular among con artists, as these methods are easier for con artists to use to get your money.

Tax Software Scam: If you are filing taxes via tax software, scammers can reach out to you via various methods like emails or phone calls. What usually happens is that they will tell you that you filed your taxes with the wrong information, password, or made terrible mistakes while filing and they need to fix the mistakes with the tax authority. So they will require your personal information to access your files. The emails they send can have malicious links to install a virus on your computer or would ask to enter a fake site that looks like your tax software site to obtain your password or other information. Sometimes they will make phone calls instead to obtain your information.

Tax Authority Phone Call: Scammers can manipulate phone lines to show they are calling from tax bodies like the CRA or IRS and will ask you for money to settle your issues, otherwise a warrant will be issued or a lawsuit will be filed. They can even provide you an 800 # to call back, which will look like a legit number. When such calls happen, scammers will have your previous tax information, your home address, and personal information – so you will think they are calling you from the tax authority for real. Then they ask for money right away to settle your case. Usually they ask to wire transfer money, but there are reported cases where scammers agreed to meet in person to receive the money.

Government agencies do not call or send email notifying you that a lawsuit or warrant is on its way and will never ask you to wire money or receive money in person. Any tax correspondences will arrive in the mail. Your best defence is your own common sense and vigilance. Look for suspicious behaviour and other elements from anyone contacting you for money in a sense of emergency and hurry.