Manage Your Debt With A Simple Budget

The Budget And Debt Management

First Published Date : March 2, 2011

When you are putting together a plan to manage your debt, one of the most important pieces of making debt management successful is the budget. A budget is so important in debt management that without it, there is little chance of success.

A budget is a simple tool that goes a long way because it shows you how much you are spending, how much you need to save, how far you are to your goal, and most importantly, how much you are allowed to spend.

To make a budget, it is actually a very easy process. First, you should look at how much you are spending so you can create a realistic budget. This is important because if you do not know how much you spend, how will you know how much to allocate. If you assume you spend $150 on food in a month, when you actually spend $500, then budgeting only $100 will doom you to failure. So, it is important you spend an entire month collecting receipts that you can then use to check how much you are spending.

You may not think that spending three dollars a day on a latte is much, but when you spend $90 a month, and $960 a year, well that can add up to a lot of wasted cash.

The next thing you need to do is determine what you can eliminate from your expenses. Find anything that is not essential and cut it out. Once you do that, you can then put together your budget.

When writing up your budget limits, make sure you do not set them too low, or too high. Find out how much you spend on average on bills and food, and go with that. Cut out anything you don’t need and cut back on anything you can.

Now, once you have done that you will be able to see how much you are saving each month. If you are managing your debt, depending on the size, you will want to ensure that you get as much of the debt paid off as possible. Shoot for saving $500 or more per month on your expenses by sticking to your budget and you should be well on your way to paying off your debt. Of course, even paying minimum payments until you can pay more will ensure your debt does not grow at all.

Now, the most important thing to remember with your budget is you need to keep it flexible. Things change over time and you may need to adjust the budget to reflect higher expenses (heat in winter, etc), higher pay, new income and more. If your budget is rigid and never changes, it will become obsolete with your needs. Every six months or so, look at your budget and rework it.

By just having a budget, you are well on your way to fixing your debt and practicing proper debt management. That way you get out of the dreaded debt spiral.

An Interview With The CEO Of ING Direct Canada – Peter Aceto

A Dawn Journal Interviews ING Direct Canada CEO, Peter Aceto

First Published Date : September 22, 2010

ING Direct Canada recently added a free chequing account, called a THRiVE Chequing, to their inventory. This online no-fee chequing account created a huge buzz as Canadians were waiting long for a free chequing account from ING Direct Canada, who pioneered online banking across the globe and made high-interest savings account popular in Canada. Today, I am going to present an interview with the CEO of ING Direct Canada, Peter Aceto. Peter provides his valuable insight on ING Direct, THRiVE Chequing, economy in general, and much more in this interview.

1 – Please tell us about yourself and your experience in the banking industry

I am a passionate leader and savings advocate, a volunteer, a mentor, an athlete, a Canadian, a dad and a husband.

I began my career with ING DIRECT nearly 14 years ago as a founding member of the senior leadership team. Before becoming President & CEO of ING DIRECT Canada, I held many roles in the organization in both Canada and the USA – everything from sales and marketing to lending, risk management and legal.

I am involved in our community in my current role on the Business Development Committee for Mt. Sinai Hospital and as a champion for Habitat for Humanity. I am also passionate about improving the communities where we live and work which led to an initiative at ING DIRECT that we call “Orange in the Community”. This past year we have contributed funding and volunteer hours from over 700 of our staff to build natural playgrounds in two parks in areas needing help in Ottawa and Toronto.

I keep active playing in a hockey league, running and working out regularly at the gym.

I love social media and the dialogue it allows me to have with our clients and employees.

Outside of work, I’m fortunate to have three great kids and a smart, beautiful wife who likes me (I think).

2- Could you please tell us a little bit about THRiVE and how it is different from chequing accounts offered by other Canadian banks

THRiVE Chequing is a game changer in the Canadian banking industry and redefines what Canadians should expect from a chequing account. It’s the first chequing account made by Savers for Savers, and that’s why we choose to launch it as a preview for our clients first so that we can continue to gather feedback about the product before we launch it to all Canadians in early 2011. Our first 10,000 clients have the chance to open an account starting this week. Very exciting for us!

The most distinct thing about THRiVE Chequing is that it is an online, no-fee daily chequing account that actually pays interest. This means that regardless of the balance in their THRiVE Chequing accounts, clients will get free ABM access at any of the 2,400 EXCHANGE Network ABMs across the country (and more than 265,000 in the USA), free email alerts (so you can stay close to your money), free money transfers, free monthly online account statements, a free chequebook and we’re protecting or clients from NSF charges through the industry first Whoops! Protection. I know it sounds fun, but Whoops! Protection is also very practical. It allows you to pay a bill for up to $250 even when you don’t have the money. We won’t charge you interest or a fee as long as you pay it back within 30 days.

We believe THRiVE Chequing will make Canadians question why they are paying fees for daily banking and what value they are getting for their hard earned money.

3 – THRiVE Chequing customers will be using THE EXCHANGE® Network for ABM access. This network is not widespread and it is difficult to locate an ABM unless you are in a big city.  Does this mean that ING DIRECT is currently targeting consumers only in big cities? Do you have any plans to offer a broader network affiliated with a major Canadian bank to reach every corner across Canada in the future?

THE EXCHANGE Network does reach every corner of the country. With 2,400 ABMs in Canada and over 265,000 in the USA, an EXCHANGE Network ABM is never far away. By comparison, BMO, Scotia and TD’s ABM networks fall somewhere within the 2,000-3,000 range.

Most all Credit Unions, which are popular in Canada and particularly in smaller cities, belong to THE EXCHANGE Network.

I encourage you to visit our web site where we have an ABM locator as well as a list of all THE EXCHANGE Network ABMs by province ING Direct ABM Locator. If you are on the go, our mobile apps available for the iPhone, iPad, BlackBerry and Android devices include an ABM locator, highlighting THE EXCHANGE Network ABMs in your area.

4 – What are your thoughts on Canada’s ongoing economic recovery from the financial crisis?

Overall Canada seems to be on a solid footing for a gradual economic recovery but we should expect some bumps along the way. During the crisis both the Department of Finance and the Bank of Canada did a very good job of introducing a number of measures to ensure the stability of the Canadian financial system. Since then they have been involved in a number of initiatives to further improve the integrity of the financial system which will only serve to increase the resiliency of the Canadian economy.

From a housing perspective, which is important to us because of the size of our mortgage business, unlike the USA we don’t feel that there is large over supply of housing in Canada and therefore expect housing prices to remain relatively stable over the next couple of years. Continued low interest rates should also serve to provide affordable opportunities for home buyers.

5 – ING pioneered online banking across the globe and made the high-interest savings account popular across Canada through its clever marketing strategies.  However, other banks have started providing higher interest rates on their savings accounts.  How does ING plan to remain competitive?

Our value proposition is all about offering value for money. This doesn’t mean that we will always have the highest rates on savings or the lowest rates on mortgages but our products will always be fair and do three things: save you money, save you time and make your life simpler. These attributes combined with our award winning customer service make us the number one recommended brand to family and friends. Canadians should keep in mind that many rates they see advertised are promotional and intended to get their business, but those rates often won’t remain that high for long. Our objective is to offer value over a longer period of time.

6 – Do you see more companies emulating the ING banking model and if so, how will ING stay ahead of the game?

We do see some companies also now offering elements of our products but I don’t believe anyone can replicate what our brand stands for in the minds of Canadians. ING DIRECT is a place where consumers are guaranteed to get a fair deal regardless of what product(s) they have with us.

7 – ING’s marketing always emphasizes saving money. We are coming out of a global recession and saving money is more important now than ever before. Do you have any tips for our readers on saving money – especially with regards to day to day banking?

In a nutshell: Don’t let fees eat away at your hard earned money.

On average Canadians pays $185 per year to use their chequing accounts and many require you keep a minimum balance while they pay little to no interest. Most actively managed mutual funds charge over 2% in fees. My advice to Canadians is to find a no fee, high interest savings account, invest in low cost, index-based mutual funds, get a no fee daily chequing account and pay attention to the fees you are charged by banks for “special services” like drafts and money transfers.

On the mortgage side of things, don’t let your bank dictate your mortgage rate and terms. A mortgage is one of the biggest investments many of us will take on in our lives yet we often spend less time researching our mortgage than we do planning a weekend getaway. Take advantage of extra payments on your mortgage where possible.

Finally, pay yourself first. An easy way to do this is by using an automatic savings plan like we offer with most of our savings products at ING DIRECT.

8 – ING is known for introducing innovative financial products to the marketplace. Are you working on anything new for Canadians right now? If not, do you see anything coming up in the near future?

We are always looking for new ways to help Canadians save their money. Our goal is to design products that make Canadians’ financial life simpler. For years, many of our clients have been asking for a chequing account. It took us 14 years to launch THRiVE Chequing and that’s because if it was going to be an ING DIRECT chequing account, it had to be different. It had to save you money, save you time and make your life simpler. Like all of our products do.

We continue to listen to Canadians’ concerns and will bring new products to the market when they make business sense for us and benefit Canadians in a big way. Currently, we have a number of great products to offer from our popular investment savings account , GICs, Streetwise Funds, Children’s Savings Account and the unmortgage, as well as many RRSP and Tax-Free Savings Accounts options.

9 – ING has been operating as an online bank for quite some time.  Are there any plans for physical locations?

We pride ourselves on being a highly successful and efficient DIRECT Bank. We have no branches and because we can service our clients’ needs over the phone and online, we can pass more savings onto our clients. Canadians are welcome to visit us at one of our Save Your Money Cafés located in Vancouver, Calgary, Toronto or Montreal to learn more about any of our products. We have a new location opening in downtown Toronto early next year that will include a community meeting space and free WIFI.

10 – ING DIRECT has been named one of the Greater Toronto Area’s top 90 employers of 2010.  Can you tell us what makes ING a desirable employer?

There are so many things that make ING DIRECT a great place work. Some of things that I hear employees value the most include:

· Orientation Program hosted by HR that welcomes employees on their 1st, 30th and 90th days.

· Our Leadership Blueprint program which captures the competencies that are unique to being a leader at ING DIRECT, and then providing coaching, mentorship, and even curriculum to help people strengthen these pillars. We are actually going to be building these into performance appraisals and systems for how our people get feedback about their performance, particularly with regard to a leadership role.

· Our recognition program which allows employees to purchase vacations, iPods, iPads, etc. online.

· Orange Spark – a unique, online portal that promotes new ideas, knowledge sharing and continue improvements. Everyone is encouraged to participate by adding a new idea or voting on those submitted by others.

· Orange Grove is our intranet site that enables employees to know what’s happening in the business at all times.  Postings occur on a daily basis. A feature on the site is “Peter’s Corner” which enables employees to connect directly with me.

· Our diverse workforce. We recently received an award from the federal Minister of Labour for our industry best practices on this front. Diversity is engrained in our culture and we have a series of events that promote this including our own diversity day where people come to work in their national dress, international potluck and stations to explain their different cultures.

· Social events throughout the year – bowling, gala, children’s party, etc.

· I host informal “lunch and learns” with employees across the organization where we bring our lunches and talk casually about the business.

· Our Orange in the Community events, which allow our employees to engage and help improve the communities where we live and work. Last year, close to 500 of our employees in Toronto volunteered time away from work and built the city’s first natural playground in McLeary Park. And just last month in Ottawa, 200 of our employees worked on a similar initiative at Fairlea Park.

11 – The internet has transformed the way we do banking.  Do you see any further changes on the horizon for the traditional brick and mortar model?

Mobile banking is big and all banks are adopting it in a big way. We need and want to be wherever our clients want to bank and save their money. Over the past year we’ve been a leader on the mobile banking front. We were the first bank in Canada to simultaneously launch mobile banking on our mobile website, BlackBerry App, iPhone App, and just recently launched an iPad App and Android app making saving easier and more accessible for our clients.

THRiVE Chequing will be supported with all of our mobile applications. Our mobile software has a handy ABM locator so clients will always be able to locate the nearest ABM. Meanwhile, email alerts linked to THRiVE Chequing will come in handy for those with handheld devices, allowing clients to stay close to their money, literally. It’s like having a branch in your pocket.

How To Protect Your Personal Privacy

Protecting Your Personal Privacy

First Published Date : September 30, 2010 ADawnJournal.com

In today’s world, it can be very difficult to protect your privacy. Companies and scam artists are all trying to get your personal information for their own purposes. With companies, it is to market to you and sell you things you may or may not need. With scam artists, it is to gain your money without you even realizing you are losing it. For this reason, you want to ensure that you protect your personal privacy both in the online and offline world. I am not just talking about identity theft here, but your personal details that can be bought, sold and given away without you even knowing about it.

In Canada, two federal privacy laws are in place to protect you and your personal information. These laws give you the right to find out who is using your personal information, how it is being collected, how it is being used and where the information is being stored. In addition, you can know who is handling your personal information.

If you want to protect your personal information in the offline world, do the following:

·   When you get a sales agreement, it is very important that you read the fine print. Sales agreement often feature fine print that states you agree to add your name to a marketing list. If you see this, make sure you either check the box that says “NO”, or that you write a note on the document saying you do not agree to this clause. In addition, you can just refuse to sign the contract until that point is removed.

·   When you buy something at a store, the store staff may ask for your name, address, phone number, and email for their records. Ask what is happening to your personal information and if you do not get a satisfactory answer, do not give your personal information.

·   Charities will often share donor lists between each other, so ask that you do not want your personal information shared.

·   Do not sign up for free draws, raffles, or contests if you do not want your personal information being used by someone else. The personal information you put on entry forms is often used to then send you sales offers, or given away to other companies.

·   Remove y our name from any mailing lists that it may be on. If you are in Canada, you can do this by writing a letter to Canadian Marketing Association, 1 Concorde Gate, Suite 607, Don Mills, ON, M3C 3N6.

·   When you call a company, dial *67 before you dial the number because this will protect your phone number from being used by the company or filed into your account as a way to contact you.

·   When you are subscribing to magazines, see if the magazine mentions that they will be using your information and giving it to other companies so they can use your information for some reason you may not know about. You typically will have the option to opt out of this and you just need to contact the magazine to do so.

Now, offline it is usually pretty easy to protect your personal information but online it can be very difficult and you have to think about where your information may be used or taken with every website you visit.

·   This means do not allow your contact information and personal information to be left at websites after you visit them. You should go into your browser’s menu and setup under your privacy options a fake name and do not enter in your e-mail address.

·   Tracking cookies are a good way for a company or scam artist to know where you are going and information about you. Cookies can contain your User IDs and passwords. Cookies can also be used to mine your data by tracking your motions through a website, the time you spend in the website and more. Make sure you turn off cookies in your browser.

·   Have an e-mail address that you never enter to websites and only give to people you know. When you are posting to newsgroups, websites, mailing lists and more, use an e-mail address that will serve as a buffer between the spam and your clean e-mail.

·   Before you add someone on Facebook, make sure you block your personal information. Don’t just give personal details about yourself and your family to strangers and people you just met online. It may seem safe but the person you are talking to on the other end of the net may not be who you think they are. Even companies will hire people to interact with future customers to get their personal information, so be very aggressive in not allowing anyone to get your information.

·   Your internet use and e-mail may be monitored at your work and that information may be used by the company to actually market to you, even though you are already working for the company. In addition, you may also lose your job if the things you surf or your personal information does not fit well with the company policies.

·   If you get spam, do not reply to it and say that you know it is spam. When you reply to spam, it just shows spammers that the e-mail they sent their spam to is a real e-mail. If you reply to them, you will just get much more spam in the coming days.

·   Some websites will offer prizes and rewards in exchange for your personal information or other personal details. Do not give your personal information on these sites because often if the prize seems too good to be true, then it most likely is.

·   Always enable encryption on your browser so that you can ensure you do not have anyone trying to access your information. Usually you just have to click the box for encryption in your browser to make sure your surfing is encrypted.

How The One Child Policy Helped Chinese Economy

China’s One Child Policy

First Published Date : October 6, 2010 ADawnJournal.com

China is the most populous country on Earth, with 1.3 billion people, or 20 per cent of the world’s population. As amazing as it is to think, that population would have been even higher if not for the one-child policy, which was implemented in 1978 by the Chinese government. This policy, while some criticize it, helped China become the world power that many recognize it as now.

The one-child policy restricts the number of children that can be born to married urban couples to just one, while there are exceptions for parents without siblings, official minorities and rural couples.

The policy was created by China as a way of alleviating the social, economic and environmental problems that were beginning to affect China. While the policy has been controversial around the world, roughly 75 percent of Chinese people agree with the policy. The policy helped the fertility rate in China fall from five births per woman in 1970 to just 1.8 births per woman in 2008. It is estimated that about 300 to 400 million births have been prevented through the one-child policy, helping to keep the resources of China from being depleted even more. Overwhelmed social services, slums and overpopulation have all been reduced thanks to the policy.

The one-child policy has helped to fuel the economic change seen in China over the past few decades in large part because there is not as much competition among citizens, allowing for more wealth to be spread around to everyone. Most of the Chinese population is now 60 years of age and over, meaning a big drop in the population will come as those people begin to die.

One benefit from this policy is that individual savings rates have increased in the past 30 years. This is due to the fact that a Chinese household has more resources because they are not being spent on multiple children in terms of time and money. As well, with only one child parents are no longer just relying on children to support them so the parents are saving more for their old age.

As well, the one-child policy has reduced the demand on natural resources, while maintained a steady labour rate, reduced unemployment, and reduced exploitation of workers.

While many look at the economic policies of China as a reason for the change in the country, one cannot dismiss the impact the one-child policy has had in helping to make the country an economic power. The decision in 1978 to limit the population has had far reaching impacts in China and across the planet. With 400 million less people being born in the past 30 years, there has been less drain on resources and an easier time for the world to adapt to environmental changes. Not to mention the fact that the economy of China has become supercharged in part because of the policy, making China one of the leading nations on the planet in the 21st century.

What Is Debt?

Debt 101

First Published Date : October 9, 2010 ADawnJournal.com

Something that seems to dominate our lives is debt. Debt routinely influences the lives of individuals, allowing them to buy things, or preventing them from buying things they want or need. As the years have gone by, the debt load of people in the Western World has increased greatly. While most people had little debt in the 1950s and 60s, but the 1990s and 2000s, people owed more money than they made, which is a very bad situation to be in. So, what is debt and how does it influence our lives so much?

Debt is something that is owed to someone else. It can mean money that is owed, or a moral obligation that is owed. Either way, it is something that must be repaid. Like a favour, you are agreeing to pay or do something for someone else at a future date because you are in his or her debt. A debt is created when a creditor agrees to give a lump sum of assets to a debtor. The debtor agrees to repay the debt with interest in most cases.

The word debt itself comes from the French word dette, which itself comes from the Latin word debere, which means to owe. In the 17th century, the letter b was put into the word debt in Samuel Johnson’s dictionary.

When a debt is made, the debtor and creditor must agree on the manner in which the debt is going to be repaid, this is a deferred payment. The payment is typically a certain amount of money that will help pay off the debt, or it could be the entire debt at once. Payment of increments of a debt over time is one of the most common forms of repayment, but repayment in full at the end of the loan agreement is also very common these days as well.

There are several types of debt that you should be aware of when dealing with debt:

1.   Secured Debt – This is debt that is made against some sort of collateral. For example, you agree to put up your house as collateral when you get a loan for your business. If you do not repay your business loan, you lose your house. Secured debt typically has lower interest rates because the risk is less.

2.   Unsecured Debt – This debt is not against any sort of collateral and therefore has a greater risk for the creditor. As a result, interest rates are higher for this and one’s credit score must be good to obtain this credit.

3.   Private Debt: This is a bank-loan obligation.

4.   Public Debt: This is a general definition that covers freely tradable debt on a public exchange with few restrictions.

5.   Basic Debt: This is the simplest form of debt and is just an agreement to lend someone a sum of money over a certain period of time, which must be repaid at a certain date.

6.   Syndicated Loan: This is a loan granted to companies who want to borrow more money than a single lender is prepared to risk. Therefore, the loan comes from several lenders at once and typically runs into the millions of dollars.

7.   Bond Debt: A bond is a debt security that is issued by certain institutions such as companies and governments. This bond entitles the person who holds it to repay the principle sum, plus interest.

There are other forms of debt that many people and companies use to help them manage day-to-day.

1.   Cash credit: This is the primary method in which a bank will get money for the security of debt. It is like a current account except the money that can be withdrawn is done so without restriction to the amount that is deposited.

2.   Working capital: Firms need money to pay for day-to-day activities like paying wages, buying supplies and more. This is the working capital of the company and the main source of working capital is the current assets the company can use to generate money.

3.   Bank overdraft: When you withdraw more money than you have in your bank account, you will often go into your overdraft, which is money lent to you by the bank. You will have a negative balance on your account, which must be repaid at some point.

Debt has a lot to do with credit worthiness. The better your credit, the more of a debt you can take on. Typically, if you have a FICO score above 600, you will be able to accumulate more and more debt, and anything between 350 and 599 will mean you will have difficulty getting debt until you manage your credit better. Companies also have the same type of system for when they borrow money. The best credit rating for a company is AAA, while the worst is C.

When debt becomes too much, one of the most common things for people to do is file for bankruptcy, which is one of the only ways that a debt can be removed without repayment. A debtor cancelling the debt is very rare, but becoming more common especially during the economic crisis. In fact, many economists feel that the only way for developing nations to reach equity with developed nations is for their immense debt load to be erased. As for individuals, many will try debt consolidation or debt counselling, which will allow them to repay their debts without having to declare bankruptcy. The problem with declaring bankruptcy is that it will destroy a credit rating for several years, often as long as seven years in total.

Debt is a big fixture of our lives these days and not something that is going to disappear any time soon. The only way to manage debt properly is to be smart with debt and make sure that it does not become something that causes you to fall behind. Be smart with debt and it will not overload you and make your life less than what you want it to be.