Should You Use a Credit Card or Debit Card?

Credit or Debit?

First Published Date: February 15, 2016

Common question we hear these days is which is a better option to pay for your purchases, a credit or debit card? You will even see ads running on TV warning consumers not to use credit cards and stick to debit cards when you shop.

Strikingly enough, the answer depends on what type of person you are when it comes to managing debts. Debit transactions come out of your own bank account based on your available balances, so you are not piling up debts. On the other hand, credit transactions are a short-term interest free loan or long-term high interest loan from your credit card companies.

If you have difficulty managing finances and are unable to pay off credit card balances in full each month, a debit card is definitely your answer when shopping because you can’t buy more than you can afford. If you are excellent in managing money and always pay off balances in full, definitely stay away from debit cards and always use credit cards.

Credit cards offer unsurpassed security, protection, guarantee, warranty, rewards, and much more that debit cards will not be able to offer. However, at the end of the day, all these features offered by credit cards will not make sense if you keep balances on them and pay skyrocketing interest month after month.

From my own personal experience, I will not put a single dollar purchase on my debit card, as it translates into me losing the opportunity to earn free miles or points towards my next travel. Used diligently, credit cards can be your friends towards earning free or partial travel that debit cards can never offer.

In my next book “Credit Card Hacks: What Credit Card Companies Don’t Want You to Know” I will discuss that and many other tips in detail. I am expecting to get this book out in 2016.

Old Age Security pension or OAS

Understanding Old Age Security Pensions

First Published Date: May 29, 2010

Retirement can be a stressful time for many individuals when they realize that they will no longer have a steady income, and instead will be hoping that the savings they put together will be enough for them to live on. While company pensions are great, they do not always cover everything and that means many retired individuals rely on old age pensions. In Canada, the old age pension is the Old Age Security Pension, which is a taxable-monthly social security payment that is available to Canadians who are 65 years and over. Currently, the basic amount for the old age pension is $502.31 per month. During tax season, if you have an income that is greater than $64,718, you must pay back a portion of your Old Age Security to the tune of 15 percent of your total net income.

It is important to note that not everyone will qualify for the old age pension. Depending on your circumstances, you may or may not qualify. If you want to collect a full pension, then you must meet the following requirements:

1.    For Category 1, you will have had to live in Canada for at least 40 years after you turned 18.

2.    For Category 2, you must have been born on or before July 1, 1952 and you must have lived in Canada for some period of time between that point and July 1, 1977.

If you want to collect only a partial pension, which usually happens if you are not approved for a full pension, then you need to meet the following conditions.

1.    You must be over 64 years of age.

2.    You must be a Canadian Citizen or a Permanent Resident of Canada.

3.    You must have lived in Canada for the last 10 years at least.

Just because you lived in another country though, that does not mean that you cannot collect payments. Canada has agreements with many countries that can allow you to count years spent in another country so that you qualify for your Old Age Security pension. It is important to determine what countries they are but generally the United States, the United Kingdom and much of Europe allow you to qualify.

If you do not have much income, then your Old Age Security can be supplemented by a Guaranteed Income Supplement, which is non-taxable. That means that you are not taxed on that income, which gives you more money to use. The amount of money you receive with this Guaranteed Income Supplement will depend on how much you make your marital status and the age of your spouse if you are married.

Currently, the maximum supplement that you can receive as one individual with no other source of income is $597.23 and $392.01 for each spouse if you are married to someone.

It is also very important that you do not confuse the Old Age Security pension with the Canada Pension Plan, which is something that you contribute to, and which is earnings-related, which is paid in addition to the Old Age Security pension.

Real Estate In Cape Verde

Buying Property In Cape Verde

First Published Date: February 18, 2016

Cape Verde is a unique place to live. Officially called the Republic of Cape Verde, the country is an island nation that covers 10 islands in the central Atlantic Ocean. It is the perfect location for individuals who want to get away from it all because the islands are 570 km away from Western Africa. The islands cover 4,000 sq. km., some of which are volcanic in origin. There is often very little rainfall so the island is not very green, despite the Portuguese word for green being Verde. The population of the country is 500,000, most of which are in the capital city. Roughly 45 percent of the population lives in a rural setting, and 20 percent of the population lives below the poverty line. The literacy rate is a respectable 85 percent and the country does have a stable democracy with good economic grown and living conditions. It is currently a developing nation and that is good news for you if you want to move there. It means that the country is rising to the forefront and the property prices are going to be low.

If you are going to buy property within Cape Verde, then you should look at the following:

1.    First, you should consider that there is an immense amount of opportunity to buy property within the country. The people are friendly, it is always sunny, the sea is beautiful and the scenery is astounding. In addition, the country has a stable political and economic system, meaning you don’t have to worry about your peaceful home being turned into a military dictatorship. The country is aggressively pursing growth and tourism so that is good news if you are thinking of moving there. It means many good places to eat and many resorts to check out.

2.    There is a lot of development within the country building new homes and that is something many foreign investors are looking at. The Canary Islands are 240 km to the north and much more expensive but offer nearly the same type of living environment as you get in Cape Verde. The infrastructure is still catching up with the building but there are many places for you to buy a home within the country.

3.    The islands you should look at are Sal, Bao Vista, Santa Maria and Santiago. These are the islands with the most new developments. They offer low-density and environmentally-friendly buildings, and there are restrictions on how close to the beach buildings can be built here, meaning you will not lose your pristine views. There are also many amenities you can choose form on these islands including spas, tennis courts, gyms and more. The island of Sal has the international airport for the country and is the most developed of the islands. It is 30 km by 12 km and most of it is flat with the best beaches in the country. The island of Santa Maria has over eight km of wonderful beaches, plenty of restaurants and bars and a ferry service to the other islands. The island of Boa Vista is the easternmost island, and a place where a property boom is taking place. There is also a lot of infrastructure improvements being made there. The island is 31 km by 29 km and it has plenty of beaches, places for fiestas, a carnival and more. The island of Santiago is 75 km by 35 km and is it the largest island in the country. There are sandy beaches, mountains and it holds the capital of the country, as well as half the country’s population.

4.    If you are going to buy property on these islands, then understand that all the property in Cape Verde is sold freehold, much in the same way as is done in Portugal. A verbal agreement is done and the purchaser’s lawyer will then begin the legal search. The tax office then provides a fiscal number and a contract is signed. As the purchaser, you need to pay between a 10 and 30 percent down payment.

5.    There will be fees and costs for buying a home within the country. First, there is the transfer tax of three percent on all property purchases. You also have to pay about a 2.5 percent fee of the purchase price for notary and registration fees, plus a stamp duty. The property tax within the country is going to be three percent on 25 percent of the value of the property.

6.    You need to finance your mortgage within the country and that must be obtained on property that is already built. You cannot get a loan on a property not yet built. Often it is better to pay cash than to try and get a loan.

7.    There is no double taxation treaty between Cape Verde and most western countries. However, you will pay a tax on some other things like renter’s insurance.

8.    You need to meet residency requirements within the country to live there as well. A visa will only be good for a stay of 90 days. Foreigners can obtain residency within the country if they work for a local business, have a business that employs a minimum number of Cape Verde citizens, invest a certain amount in a new business, or have sufficient income outside of the country.

Cape Verde is a stunning country that is full of wonderful and friendly people. However, it is important that you remember it is a developing country so it might not have the same amount of amenities you are used to. That being said, it is catching up fast and with the country possibly joining the European Union, there is the chance that it will then gain plenty of benefits that will make it even easier for those within Europe to live in the country. You are not living in the third world when you move to Cape Verde, but you are living in a beautiful place that you will absolutely love.

The Canada Pension Plan (CPP) Faces Depletion?

The Performance of the Canada Pension Plan

First Published Date: June 11, 2010

The Canadian Pension Plan is very important to many people because it serves as a good chunk of their monthly income when they retire. To ensure that the Canada Pension Plan always has money in it, the Canada Pension Plan Investment Board oversees the plan to ensure that it keeps growing to accommodate the growing population of Canada. Under the direction of the Finance Minister at the time, Paul Martin, the CPP Investment Board was created in 1997 as an independent organization that monitors the funds in the CPP and invests them. Every three months it reports on its performance and a professional team oversees the operation of aspects of the CPP fund, while also planning out the direction of the investments.

In order to provide more money to those who will be retiring, especially baby boomers, the Canada Pension Plan Investment Board decided to use 45 percent of its assets to invest in securities located outside of Canada, including in Western Europe and the United States. The Investment Board has also been investing heavily in emerging markets because, as the board states, Canada as one market cannot accommodate the future growth of the pension plan.

According to most estimates, to sustain the population in 2020 that will be using the Canada Pension Plan, the CPP must grow at least 4.1 percent per year. By 2010, the CPP Investment Board had grown to $147 billion. The next 40 years also see some benchmarks for the CPP Reserve Fund that the CPP Investment Board hopes to achieve to accommodate a growing population:

·      2015:  $200 billion

·      2030:  $592 billion

·      2050:  $1.55 trillion

The performance of the CPP has varied in the past few years, as has the CPP Reserve Fund, which grows based on the contributions by Canadians. In the past few years, the CPP Reserve Fund has grown and fallen over the years, seeing a rate of return that was highly fluctuating:

·      March 2003 Total Value: $55.6 billion Rate of Return: -1.1 percent

·      March 2004 Total Value: $70.5 billion Rate of Return: 10.3 percent

·      March 2005 Total Value: $81.3 billion Rate of Return: 8.5 percent

·      March 2006 Total Value: $98.0 billion Rate of Return: 15.5 percent

·      March 2007 Total Value: $116.6 billion Rate of Return: 12.9 percent

·      March 2008 Total Value: $122.7 billion Rate of Return: -.29 percent

·      March 2009 Total Value: $105.5 billion Rate of Return: -18.6 percent

The large fall in 2009 was because of the recession that hit the world due to the credit crisis that began in the United States. However, the increase in 2010 was expected to be roughly seven percent, which would allow the CPP Reserve Fund to increase for the first time since 2008.

The Canadian Pension Plan needs to grow at a continuous rate to ensure that there is enough money available for the growing retiring population in Canada. With millions of Baby Boomers retiring and not enough of subsequent generations to prop up the Pension Plan, the Pension Plan needs to grow to ensure everyone has enough money when they retire using the Pension Plan. As long as there are no more years like 2009, it should continue to grow to meet those needs.

Time is Right For Spanish Real Estate

Property in Spain

First Published Date: Oct 1, 2010

Due to financial troubles in the country, property prices in Spain have fallen to their lowest levels in recent memory. Many North Americans and Europeans are now looking at possibly getting a second home in Spain to take advantage of the nice weather, beautiful landscape and friendly people. Unlike buying property in third-world countries and developing nations, when you buy in Spain you are moving to a country that is a world leader. So, if you are going to buy property in Spain, what do you need to know as a foreigner?

Spain does not have limitations like other countries in foreigners buying homes, so it is actually quote easy to buy a home there. The first thing you need to think of is where you want to live in Spain. Spain has a huge amount of space, and there are many different regions. Do you want to live near the beach, or do you want to live near the mountains? Do you want to live in a city, or a small rural village? Find out where you want to live, before you start looking for property to buy.

When you know where you want to live, contact an independent legal advisor in that region. They will have a clear understanding of the legal system of Spain and they will know the language better than you in most cases. Make sure your advisor is working for you and not tied to any property dealer who you are going through because that could be a conflict of interest that just costs you more money.

Even though prices of homes in Spain are very low, that does not mean you shouldn’t look at what you can afford. Having enough equity to buy a home will help you a lot, but if you need to get a mortgage, most Spanish banks will offer you a mortgage of 60 to 80 percent of the home price. That means you have to come up with 20 to 40 percent of the home price as a down payment. That can be a lot of money for higher end homes but luckily with record low prices, your down payment will be low as well. The more you have, the more you can get and the less of a mortgage you will be saddled with. Just like you would anywhere else, do your research and shop around with Spanish banks for the best rate. You want to pay as little as possible in interest.

Lastly, you need to have proof of income with your last three pay-slips, six months of bank statements, and a credit report will help when getting a mortgage. Your debt load cannot exceed 35 percent of your total monthly income if you are going to get a Spanish mortgage. It is important to not that that debt load includes your possible Spanish mortgage.

Spain is a beautiful country, so why not take advantage of the low prices now and move there where you can enjoy the scenery, friendly people and amazing food and culture.