Line of Credit

Posted on May 2, 2012 by admin

We should use our line of credit responsibly and with care to take advantage of the benefits it offers.  It is not readily available for us to take vacations, dining at the finest restaurants in town, or buying cars and expensive appliances. Debts will be on the rise among Canadian households if we do not act wisely and work towards global economic recovery. A line of credit is the most flexible cash management tool that can also be used for home renovations, to pay off or transfer high interest rate credit card balances and to manage cash flow.

There are two types of line of credit; a Secured Line of Credit and an Unsecured Line of Credit. A Secured Line of Credit allows your real estate holdings, or guaranteed investments to secure a higher credit limit. Your credit limit is from $5,000 to as much as 80% of the equity in your home, less than any prior mortgages.  An unsecured line of credit is quick and has an easy approval process with an interest given based on your financial standings.  A secured line of credit means you must pledge some collateral or security for the loan.  If you miss your payment the lender can lay a claim to your collateral. A secured line of credit lets you receive a larger credit limit, lower interest rate and more favorable terms in general than you would from an unsecured line.  Lenders are taking less of a risk and based on your credit rating, they let you have more money and charge you less interest.  Over the terms of the account, you will save a substantial amount of money in finance charges.

Make sure that you keep a good record of payments and religiously pay your balance when it is due to get your credit rating at a higher score. This is a critical point to understand and the only way to stay on top of your line of credit is to make sure to submit repayments every month.  Once your credit line has been established you can have the peace of mind knowing that you have funds for emergencies or unplanned expenses.

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Saving for Retirement is Important

Posted on April 18, 2012 by admin

When we retire we dream of beaches and vacations and not having to work another day in our lives. This dream can become reality by investing in your retirement through an RRSP.

An RRSP is a Registered Retirement Savings Plan, which is not to be confused with an RSP.  With an RSP you are not eligible for tax exemptions from the Government; with the RRSP you are eligible. Essentially, an RRSP is an investment account that you set up for savings toward your retirement. You can set this up with any bank or credit union as long as you are considered to have an “earned income” taxable in Canada.  These incomes include salary and self-employment; there are other incomes that may be acceptable, you can check with Revenue Canada to see about other acceptable incomes. Some employers also have programs for employees to set up RRSP’s. The amount you are contributing will be deducted automatically from your paycheck.  They may also match a certain amount or percentage of your contribution for signing up as an added incentive.

Saving for your retirement is very important.  The government does offer programs such as CPP (Canada Pension Plan) and OAS (Old Age Security) to those who are ages 65+.  CPP depends on how much you have contributed to the plan throughout your working years. If you have gone through financial hardships and/or have not worked, your contribution those years would have been less, in turn making the amount of CPP you are entitled to less.  This is a government supplemented income therefore, it may not be enough to live the life you are accustomed to and could be significantly less than what you were making during your working years.  Having an RRSP can be a safety net and provide you piece of mind, knowing that you have a secured amount of money that you can take advantage of when you retire.  Having an RRSP, you can maintain the life you are used to and may even be able to take the trip you have promised yourself you would take when you retire. You worked for the last 40 plus years, you deserve it!

Contributing to you RRSP is as simple as saving money; the sooner you start the more you will save.  For Example: if you put a minimum payment of $20.00 a pay into your RRSP and are paid bi-weekly, you could save up to $19,200 in 40 years.  This figure does not include interest that will accumulate on the amount saved. More is of course, always better, but you should only contribute what you can afford.

RRSP is the best planed financial security that you can have for your retirement and it is never too soon to start.  Think of it as an investment in your future.  Saving for your future is important, why not start now?

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Ontario’s 2012 Budget

Posted on April 11, 2012 by admin

“…Protecting and building on Ontario′s achievements, while returning to balance in 2017–18, are the cornerstones of the 2012 Budget.”

This was a statement delivered by the Ontario Liberal Finance Minister Dwight Duncan during the opening speech of the 2012 Ontario Budget on March 27th.

Although Ontario is still enduring a 15.3 billion dollar deficit, very little ripples are felt in the low to mid income families.    MPPs are expected to have their wage freeze extended for the next two years, along with executives at hospitals, post-secondary schools, school boards and agencies.  The Liberal budget also calls to end more executive perks for the public sector.

Duncan is also planning on increasing the Ontario Child Benefit, unfortunately not as soon as originally anticipated, but it is scheduled to be increased.  With the new budget, the increase will be by $100.00 in July 2013 and by another $100.00 the following year, thus making the OCB $300.00 a month by July 2014.

Another benefit in Minister Duncan’s budget was to continue with the Ontario Clean Energy benefit.  This benefit assists homeowners with a 10% rebate on the total cost of electricity charges.  As of right now, it is not scheduled to be in place until December 31, 2015.

A major change in the budget is how company pensions are going to be handled.  According to Duncan, “One way to help make our jointly sponsored pension plans more sustainable is to change the way they address pension shortfalls.   When a public-sector pension plan has suffered a pension shortfall … Taxpayers have been called upon to make higher contributions.”  The Liberal government believes that it is not fair to expect a low income single family with no pension plan to have to pay into the pension fund of others.  By working closely together with the public sector, the budget wants to eliminate the effect on tax payers’ pockets when a pension fund is in a deficit by reducing some of the pension benefits offered.  The change in the pension benefit would have no affect on people that are already retired and on company pension.  Before making any changes, the Liberal government plans to consult with the opposing parties and begin talking with residents of Ontario- with and without public pensions- to “strengthen” the pension plans.  Currently, most employees with public-sector pension plans contribute less into their plan than their employers do.  With the proposed changes, these same employees would be equally sharing the costs of the pension plans with their employers.

In hopes of collecting more taxes, the Liberal government plans to open at least 25 large LCBO stores.

However, according to an article on the Daily Commercial News website, the Liberal budget is not favored by the opposition parties.  The Ontario PC leader, Tim Hudak called the budget “surprisingly weak”.  He claims that his party will not support a budget that has no clear plan for job creation, out of control spending and no plan for everyday cost reduction.

While the PC focus is placed on creating at least 200,000 jobs in the skilled trades, NDP leader Andrea Horwath prefers to speak to Ontarians about the proper course of action, questioning if the Liberal government was keeping the public in mind while creating their budget.  Horwath was quoted “…when the priority of people is jobs, a budget that doesn’t set out a plan for job creation really falls short of the mark.”

Premier Dalton McGuinty has since opened up the floor at Queen’s Park for discussion on the budget.  Although it may be a while before a decision is reached, McGuinty is adamant the deficit is wiped out in the next five years.

http://www.fin.gov.on.ca/en/budget/ontariobudgets/2012/statement.html

http://dcnonl.com/article/id49511/–2012-ontario-budget-not-a-winner-for-opposition

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Home Renovations

Posted on April 11, 2012 by admin

Home renovations are costly and time consuming. If you are planning a home renovation in the near future I can only say plan, plan and plan.  You need to see the end project on paper and price materials. Are you going to hire someone to do the project or are you going to do it yourself. If you are going to hire someone get at least 3 estimates. Get references, talk to the references, and ask questions

  1. Was the job completed on time?
  2. Did the project stay on budget?
  3. Were they tidy?
  4. Were they kept informed?

Now you need to finance this. There are many ways to do this, but again plan. You can save the money, take out a personal loan, use a credit card , personal line of credit , secured line of credit and home equity loans. Also sometimes the government will give you a grant or incentive.  Across Canada federal, provincial government and local utilities grants are being offered. If you qualify that may help with some of the costs.

Also you need to plan for the unexpected such as a pipe needs to be replaced, you decide you need a new window or the furniture does not quite fit. You need to plan that a percentage of your renovation costs will be just for the unexpected. Having set this up at the beginning of your project allows you make decisions without more stress, without having to re-apply for a loan or renegotiate.

You should speak to a financial advisor to find out what would be best for you. They can help you in understanding your options. They can advise you on how much you will qualify for if you decided to get a loan. Then you can plan your project realistically. You will know what you can spend, how long it will take to pay it back. Keep in mind that interest rates are low, home improvement is a good way to invest in your home.

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Tax Deductions

Posted on April 11, 2012 by admin

Don’t Miss Out On These Tax Deductions

A lot of Canadians tend to overlook some potential deductions and tax credits that may help with their tax return as it reduces their income.

If you find enough deductions you will lower your current tax bracket and could end up with a higher refund.

Remember to keep a receipt of all expenses you have acquired over the year and keep them organized to make your tax claims easy.

Charitable donations:

If you had made a charitable donation either by money or other gifts you may be entitled to claim all or part of your donation, up to 75% of your net income. You can find a list of registered charities on the CRA’s website.

Physical fitness and arts activities for children

By taking advantage of this deduction you can claim a maximum of 500.00 per child relating to you or your spouse’s child‘s registration. This is eligible for children under 16 or under 18 if they are eligible for the disability amount.

Children must be in the program for at least eight consecutive weeks or five consecutive days.

Carrying charges:

This is a cost that you have incurred to earn an income on your investments or if you have paid for the management of your investment.

Moving expenses:

You are able to deduct moving expenses if you have had to move locations to become employed, start a business or if you have become a full time student at a post secondary level college or university. In order to qualify you must move at least 40 km to your new home.

Child care expenses:

Any child care expenses must be claimed by the parent with the lower net income and includes nanny and day care services. These expenses are only eligible for children 6 and under.

However in some cases a nanny or daycare services my not claim your income on their taxes so your claim may not be eligible.

Public Transit

You are able to claim public transit passes that are annual passes this includes busses, subways, trains and ferries only passes that allow you to gain unlimited travel are eligible.

Equivalent to Spouse credit.

This Deduction is used when you do not have a partner but you do have a dependant under the age of 18.

Home Buyers Amount

If you have purchased a home made in 2011 you may be able to claim an amount of 5000.00 providing you or your spouse purchased this home and if you or your spouse did not live in another home owned by you or your spouse in the year of acquisition or in the next four years this is considered the ‘first time home buyer’.

This is just a small list of tax deductions you can take advantage of for a full list visit the CRA website.

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Personal Finance

Posted on April 11, 2012 by admin

There are different reasons to save, and different approaches depending on what you are trying to achieve. Putting at least 3 months salary away for a rainy day, for repairs to a house or car, health related problems or even loss of a job is the smart way to live because by doing this you can avoid debt. The easiest way to put long term savings away is to set up an automatic withdrawal of funds you may feel the difference in not having that extra money initially, but before long, you will adjust and will get used to it. Your budget will make sure that if it’s not there you don’t miss it. In fact, many companies allow flexible ways of having savings deducted directly from an employee’s pay, making it easier to keep sticking to the plan.

Saving money in an RRSP (Registered Retirement Saving Plan) is an account, registered with the federal government that you use to save for retirement. There are a number of benefits to saving in an RRSP. You won’t pay any tax on investment earnings as long as they stay in your RRSP. This tax-free compounding allows your savings to grow faster. You can borrow from your RRSP to buy your first home or pay for your education. You can take out up to $25,000 for a down payment for your first home under the home buyers plan. You can also take out up to $20,000 to pay education costs for you or your spouse under the Lifelong Learning Plan. You won’t pay any tax on these withdrawals as long as you pay the money back within the specified time period. While saving for retirement it’s also important to save for your children’s future, opening an RESP account (Registered Education Savings Plan) when you have children is an education savings account that can help you and your family save for your child’s education after high school. The RESP is registered by the government of Canada it is tax-free and could also gain government money through the Canada Education Savings Grant and the Canada Learning Bond if you qualify. To be on the right path and save for your future and for your children’s future you need to track your income and track your spending once you know what money you have and what income you can expect to get, it’s time to find out where your money goes, record everything, record the cash you spend, record every bill payment, check, debit, and credit card usage. Include the amount you paid, who you paid (or where you shopped), and the date you made the purchase. Knowing what you have and what you can afford and how much you can put away in savings keeps your finances organized. By managing your finances you avoid going over your budget, you avoid using a credit to make ends meet and you avoid using your savings because you know where all your money is going and where you are spending it.

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Tax Preparation Tips

Posted on February 16, 2012 by admin

Monday, April 30, 2012.  The date slowly creeps closer for Canadians to file their individual income tax returns for 2011.

As the end of February draws nearer, your T4 slips that have been sent out by any of your employers from 2011 are making their way through the postal system to your house.  By law, your employer is required to have them mailed to your house by the last day of February in order for you to prepare and file your 2011 income taxes on time.

Personal income tax packages can be obtained online by downloading and printing a package or if you don’t have a printer you can order a printed package online.  You can also order a package by phoning 1-800-959-2221 (only in Canada during the government office business hours) or you can find the packages at most post offices, service Canada offices or income tax offices.   These tax packages are always free of charge and will only cost you the price of a stamp to send.  However, sending your completed income tax forms back through the mail is very time consuming.  You have to make sure that the information is correct, complete and everything is included.  Once received, the government will process it and send you a cheque in the mail.

You’ll also notice that throughout the beginning months of the calendar year, new tax preparation stores tend to pop up locally to assist in filing your taxes for you.  The charge for their tax preparation services range in price depending on how much work they need to do with your taxes and they will take care of sending your taxes to the government for you.  The appeal that these stores have is that most of them will offer you a rebate cheque right on the spot.  However, they can be time consuming and are found to be personally invasive.  It is entirely up to you if you chose to send your completed taxes in the mail or use a store to file for you.  Another option that you have is to file electronically.

Filing electronically is the fastest, most efficient way to get your taxes done.  Not to mention, the easiest way as well.  For under $100, you can buy a tax preparation program to prepare your taxes.   Along with your e-file access code and the internet, from the comfort of your own home, your taxes are sent directly to the government through NETFILE.

NETFILE is the Government of Canada’s electronic filing system.  Filing this way, submits your taxes directly to the government tax centres for processing.  A huge benefit of using this service is that if you’re owed a refund, and you have your banking information on government file, your refund can be deposited directly into your bank account in as little as 8 business days!

Any way that you do choose to file, just make sure that your 2011 individual tax returns are filed by the April 30th, 2012 deadline to avoid any penalties.

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