Foreign students are being wooed to Ontario. An interesting article in the November 6, 2010 Toronto Sun.
The first recipients of Premier Dalton McGuinty’s new scholarship fund for international students will start school about a month before the next provincial election in the fall of 2011.
The bulk of the program’s cost — $30 million for the first four years — will be spent during the term of the next government.
PC Leader Tim Hudak, who’ll be leading the Conservatives against McGuinty’s Liberals into the next campaign, said he’ll keep fighting to have that money spent on Ontario students.
”The PCs have called for this $40,000 per year grant to foreign students to be cancelled and the funds put towards helping Ontario students access post secondary education instead,” Hudak said.
“Certainly this is a government that’s done a lot of backtracking and the PCs will continue to push to get Dalton McGuinty to back down from this latest bad idea.”
McGuinty announced the new Ontario Trillium Scholarship in Hong Kong this week as he wrapped up an official trip to China.
The international students will get $40,000 a year for four years for doctoral studies at a university in Ontario.
The plan is to start with 75 students next year, and then add an additional 75 a year to a maximum of 300 annual recipients.
When fully ramped up, the scholarship program will cost $12 million a year.
The proposal has drawn strong support from universities, but opposition MPPs at Queen’s Park have questioned the decision to go further into debt to help foreign students while many Ontarians continue to struggle through the lingering economic effects of the recession.
Ontario taxpayers will pay $20 million in the first four years, while universities pick up the remaining $10 million.
Hudak said it’s wrong to expect Ontarians to pick up the cost of the program plus interest payments on debt.
The McGuinty spring budget says the province won’t balance its books for eight years.
Training, Colleges and Universities Minister John Milloy said the scholarship program will allow provincial institutions to compete with the best universities in the world for the top minds.
Milloy said the amount put aside for the international scholarships is “small” compared to the government’s investment in financial support for Ontario students.
According to Statistics Canada, Ontario university undergraduates and graduate students face the highest tuition in the country.
Graduate students entering the 2010/11 academic year were walloped with a 10.6% increase in tuition, bringing the average yearly cost to $6,917.
Undergraduates saw their tuition leap by 5.4% to $6,307.
But international students often pay three times as much for the same education as Ontarians.
The Canadian Federation of Students issued a report in the fall of 2009 criticizing the high tuition faced by foreign students.
The federation accused governments of cutting back funding to universities, and then exploiting foreign students to help make up the difference.
According to the U of T website, undergraduate tuition for international students at the institution ranged from $20,000 to $26,000 in 2010-11.
However, a math undergraduate degree at one Australian university costs $29,862 (Canadian) a year and other programs can be considerably more expensive, according to information posted on line by the university.
antonella.artuso@sunmedia.ca
Sunday, November 7, 2010
Saturday, November 6, 2010
Pre-paid credit cards
Dealing as often as I do with credit-challenged clients, I am often asked about pre paid credit cards. They do have their place, but there is absolutely no impact (good or bad) on your credit history. They seem suited to people who simply need a credit card for certain transactions (parking lots, internet purchases etc.) but who cannot qualify for a regular card. They can also be useful for gifts or for beginning the teaching process for young people under the age of 18.
I came across a very good article at Moneyville this week which was entitled " A primer on pre paid cards." With thanks to the original author, Jennifer Stewart, here it is below.
November 04, 2010 by Jennifer Stewart
With the Christmas season nearly upon us, many gift buyers are opting to forego overcrowded shopping malls and long lines, and are purchasing pre-paid credit cards instead.
“If you don’t feel like trying to beat the Christmas rush or giving somebody money, which can often seem impersonal, then pre-paid credit cards can be a great gift option,” said Leanne Di Pucchio, who has given and received a pre-paid credit card during the holidays. “It can also take the cringe out of returning a gift you’re never going to use.”
While a pre-paid credit card may give users endless shopping choice, the unique form of swipe-and-go-plastic comes with its own rules.
Not quite a gift card, debit or credit card, pre-paid credit cards allow consumers to load a pre-determined amount of money onto a card, which is then used at stores. It is impossible to go into debt using a pre-paid credit card because once the money is gone, the card doesn’t work until more is deposited. There are no bills and no interest charges.
“It is essentially the same as a debit card linked to a bank account, without the overdraft option,” said Margot Bourque, a financial security adviser with Maia & Associates.
Touted as an alternative to carrying cash and an effective budgeting tool, pre-paid credit cards have one major difference from regular credit cards: they don’t build credit. All money on the card is pre-paid, and therefore developing credit history is impossible.
“Your credit rating is the most important thing you can ever have. Financially speaking, it’s like gold,” said Bourque, who added that that getting mortgages and best rates is highly dependent on credit history. “If you can get credit, even the slightest amount, pre-paid credit cards are the card of last resort.”
Despite their disadvantages, pre-paid credit cards are heavily advertised during the holiday season to give your loved ones what they really want: the freedom to make their own purchases. During other times of the year, they are touted to parents as a budgeting tool, allowing parents to control how much their child spends and making it impossible to go into overdraft or unwanted debt. The cards also give parents a means of getting money to their child in a pinch.
Mark Shefner, 24, received a pre-paid credit card this year as a promotion from an eye-wear company pre-loaded with $100. The card, said Shefner, was useful — until he got to the last $10.
“Once the bulk of the money on the card was gone, I basically stopped using the card, except for parking now and then,” said Shefner. “It’s not something I would recommend to others. I would always use my credit card, or use cash.”
Contrary to common belief, some pre-paid credit cards come with protection, in the case of a lost or stolen card. All MasterCard prepaid cards carry the same security protection as other MasterCard payment cards including Zero Liability, which protects card holders from unauthorized purchases. Visa pre-paid cards are also protected through Visa’s Zero Liability policy providing users follow set-out rules, such as registering the card. Rules for pre-paid Visa cards vary per issuer.
In the rush of the Christmas season, a pre-paid card can allow users to take advantage of post-holiday shopping sales, and avoid long waits in return lines. But buyer beware, the swipe and go plastic is not what it appears.
“I think as long as people know that pre-paid credit cards are essentially gift cards, than they are fine,” said Di Pucchio. “I think the term pre-paid credit card is misleading, and may confuse some people come Christmas morning.”
I came across a very good article at Moneyville this week which was entitled " A primer on pre paid cards." With thanks to the original author, Jennifer Stewart, here it is below.
A primer on pre-paid credit cards
November 04, 2010 by Jennifer Stewart
With the Christmas season nearly upon us, many gift buyers are opting to forego overcrowded shopping malls and long lines, and are purchasing pre-paid credit cards instead.
“If you don’t feel like trying to beat the Christmas rush or giving somebody money, which can often seem impersonal, then pre-paid credit cards can be a great gift option,” said Leanne Di Pucchio, who has given and received a pre-paid credit card during the holidays. “It can also take the cringe out of returning a gift you’re never going to use.”
While a pre-paid credit card may give users endless shopping choice, the unique form of swipe-and-go-plastic comes with its own rules.
Not quite a gift card, debit or credit card, pre-paid credit cards allow consumers to load a pre-determined amount of money onto a card, which is then used at stores. It is impossible to go into debt using a pre-paid credit card because once the money is gone, the card doesn’t work until more is deposited. There are no bills and no interest charges.
“It is essentially the same as a debit card linked to a bank account, without the overdraft option,” said Margot Bourque, a financial security adviser with Maia & Associates.
Touted as an alternative to carrying cash and an effective budgeting tool, pre-paid credit cards have one major difference from regular credit cards: they don’t build credit. All money on the card is pre-paid, and therefore developing credit history is impossible.
“Your credit rating is the most important thing you can ever have. Financially speaking, it’s like gold,” said Bourque, who added that that getting mortgages and best rates is highly dependent on credit history. “If you can get credit, even the slightest amount, pre-paid credit cards are the card of last resort.”
Despite their disadvantages, pre-paid credit cards are heavily advertised during the holiday season to give your loved ones what they really want: the freedom to make their own purchases. During other times of the year, they are touted to parents as a budgeting tool, allowing parents to control how much their child spends and making it impossible to go into overdraft or unwanted debt. The cards also give parents a means of getting money to their child in a pinch.
Mark Shefner, 24, received a pre-paid credit card this year as a promotion from an eye-wear company pre-loaded with $100. The card, said Shefner, was useful — until he got to the last $10.
“Once the bulk of the money on the card was gone, I basically stopped using the card, except for parking now and then,” said Shefner. “It’s not something I would recommend to others. I would always use my credit card, or use cash.”
Contrary to common belief, some pre-paid credit cards come with protection, in the case of a lost or stolen card. All MasterCard prepaid cards carry the same security protection as other MasterCard payment cards including Zero Liability, which protects card holders from unauthorized purchases. Visa pre-paid cards are also protected through Visa’s Zero Liability policy providing users follow set-out rules, such as registering the card. Rules for pre-paid Visa cards vary per issuer.
In the rush of the Christmas season, a pre-paid card can allow users to take advantage of post-holiday shopping sales, and avoid long waits in return lines. But buyer beware, the swipe and go plastic is not what it appears.
“I think as long as people know that pre-paid credit cards are essentially gift cards, than they are fine,” said Di Pucchio. “I think the term pre-paid credit card is misleading, and may confuse some people come Christmas morning.”
Saturday, October 30, 2010
Are you a gold bug?
I must admit, I have always had a fascination with gold, and gold stocks in particular. Goes back to my early days as a stockbroker when ripples in the price of gold would send shockwaves through the gold stocks - Lac Minerals I recall, was particularly kind to me and my clients.
In the past few years, gold has finally started to deliver on all the promises made by soothsaying goldbugs - and the price of gold is now in the mid thirteen hundreds. (USD)
I do own some gold stocks (I am not about to tout which ones - that's not the point, nor am I licensed to do so), and I am wondering when the stock market is going to wake up to the expected bonanza major gold producers are about to enjoy.
Yesterday was a very interesting article in The Globe and Mail business section - entitled "Gold miners ride new infatuation with metal to higher profits"
I like the article, and consider it recommended reading for all of you. Here it is:
Toronto-based Barrick Gold Corp., ABX-T the world's biggest gold producer, reported a record quarterly profit, while Goldcorp Inc. G-T quadrupled its profit and doubled its dividend. Shares of both companies shot up Thursday as results impressed investors and gold prices resumed their upward climb.
Gold, at about $1,342 (U.S.) an ounce, has risen about 30 per cent in the past year and remains near its all-time high of $1,387 reached earlier this month. The increase comes amid new predictions from mainstream investment banks such as RBC Capital Markets that if gold's rally turned into a full-blown investment bubble, prices could run to nearly $4,000 an ounce, well beyond the precious metal's inflation-adjusted peak of about $2,400 in 1980. Most analysts, however, see more limited gains ahead, and some say gold prices could stage an abrupt turn lower, especially if the U.S. dollar overcomes its recent weakness.
Gold "does have significant room to go," said Chuck Jeannes, chief executive officer of Goldcorp.
Underpinning the gains in gold, Mr. Jeannes and other supporters believe, is a fading faith in fiat currencies, the paper money issued by central banks in ever-greater quantities. The spectre of so-called currency wars has bolstered this view, and gold bulls argue the commodity provides a store of wealth whether the flood of global currency liquidity leads to inflation or fails to revive stalled economies.
In a report this week entitled "Bonfire of the Currencies," longtime gold supporter Sprott Asset Management LP insisted gold producers have more healthy earnings gains ahead. "If you haven't participated in gold's recent rise, don't fret, because the fun has only just begun," the Sprott report said.
"It's all about earnings. ... Investors seek out earnings growth wherever they can find it and we can't think of a single equity sector that exhibits better year-over-year earnings growth potential than the gold producers. ... As countries decide to burn their currencies in the devaluation race, gold has responded, and now it's the producers turn to perform. We'll gladly take the earnings," the report said.
Institutional strategist Myles Zyblock at RBC added: "The real fireworks might still be several quarters away."
Gold's climb to record heights hasn't drawn the widespread interest of investors to the biggest names in the industry. The hot spot for gold equities has been the smaller producers, mid-tier companies and juniors. Big investments in such companies as Osisko Mining have propelled the $1-billion (Canadian) Dynamic Precious Metals fund up 72 per cent in the past year.
Before trading Thursday, Barrick's shares had risen about 20 per cent in the last year- which made it just a median performer in the 234-member S&P/TSX index. Goldcorp badly lagged, with its return of 8 per cent ranking 191 out of 234 names.
But soaring earnings among the biggest producers is rekindling interest.
"People have ignored the big-cap companies to some degree, unfairly," said Robert Cohen, the fund manager for Goodman & Co. "They'll probably be more interested in them now."
On Thursday, Goldcorp's stock jumped 4.6 per cent as Barrick gained 2.4 per cent.
Barrick's profit in the third quarter was a record $839-million (U.S.). On an adjusted basis it was $829-million, up three-quarters from $473-million a year ago. (The adjusted basis was presented for comparison purposes and strips out massive losses Barrick took last year associated with its hedge book.)
Goldcorp, which reported results late Wednesday, made $464-million in the third quarter, more than quadruple the $114-million of a year earlier. The company doubled its dividend, paid monthly, to 36 cents a year- though the yield on the stock is less than 1 per cent.
Skepticism about gold still abounds, with critics wondering how a metal that has little industrial use can keep rising. It isn't a crucial component in any product in high demand. Even if the world entered severe distress, critics wonder whether gold could actually be used as a currency and medium of exchange, since gold quantities are relatively small.
Sheryl Purdy, a vice-president at Leede Financial Markets Inc. in Calgary, is among the skeptics. The stockbroker works at a Vancouver-Calgary firm that is full of gold bulls and has made significant money among mid-tier/junior names. Still, Ms. Purdy pointed to the relative underperformance of the big names Barrick and Goldcorp as an indication that there are more skeptics than believers.
"The share prices of Barrick and Goldcorp should be much higher and they're not," said Ms. Purdy. On the seeming inexorable rise in the price of gold, Ms. Purdy said: "I'm sitting on one side, saying, 'I don't get it, it's too far overdone.'"
______
GOLDEN NUMBERS
$839-million (U.S.)
Barrick's third-quarter profit, a record
$464-million
Goldcorp's third-quarter profit, more than quadruple a year ago
$1,342
The price of an ounce of gold on Thursday
In the past few years, gold has finally started to deliver on all the promises made by soothsaying goldbugs - and the price of gold is now in the mid thirteen hundreds. (USD)
I do own some gold stocks (I am not about to tout which ones - that's not the point, nor am I licensed to do so), and I am wondering when the stock market is going to wake up to the expected bonanza major gold producers are about to enjoy.
Yesterday was a very interesting article in The Globe and Mail business section - entitled "Gold miners ride new infatuation with metal to higher profits"
I like the article, and consider it recommended reading for all of you. Here it is:
October 28, 2010
Gold miners ride new infatuation to higher profits
By David Ebner
From Friday's Globe and Mail
From Friday's Globe and Mail
Barrick, Goldcorp make big gains as investor faith in fiat currencies fades
Gold's price GC-FT surge is beginning to shine on the world's top producers as they report massive profits, while experts predict the cash torrent is just getting going.
Toronto-based Barrick Gold Corp., ABX-T the world's biggest gold producer, reported a record quarterly profit, while Goldcorp Inc. G-T quadrupled its profit and doubled its dividend. Shares of both companies shot up Thursday as results impressed investors and gold prices resumed their upward climb.
Gold, at about $1,342 (U.S.) an ounce, has risen about 30 per cent in the past year and remains near its all-time high of $1,387 reached earlier this month. The increase comes amid new predictions from mainstream investment banks such as RBC Capital Markets that if gold's rally turned into a full-blown investment bubble, prices could run to nearly $4,000 an ounce, well beyond the precious metal's inflation-adjusted peak of about $2,400 in 1980. Most analysts, however, see more limited gains ahead, and some say gold prices could stage an abrupt turn lower, especially if the U.S. dollar overcomes its recent weakness.
Gold "does have significant room to go," said Chuck Jeannes, chief executive officer of Goldcorp.
Underpinning the gains in gold, Mr. Jeannes and other supporters believe, is a fading faith in fiat currencies, the paper money issued by central banks in ever-greater quantities. The spectre of so-called currency wars has bolstered this view, and gold bulls argue the commodity provides a store of wealth whether the flood of global currency liquidity leads to inflation or fails to revive stalled economies.
In a report this week entitled "Bonfire of the Currencies," longtime gold supporter Sprott Asset Management LP insisted gold producers have more healthy earnings gains ahead. "If you haven't participated in gold's recent rise, don't fret, because the fun has only just begun," the Sprott report said.
" The real fireworks might still be several quarters away. "- Myles Zyblock, RBC
"It's all about earnings. ... Investors seek out earnings growth wherever they can find it and we can't think of a single equity sector that exhibits better year-over-year earnings growth potential than the gold producers. ... As countries decide to burn their currencies in the devaluation race, gold has responded, and now it's the producers turn to perform. We'll gladly take the earnings," the report said.
Institutional strategist Myles Zyblock at RBC added: "The real fireworks might still be several quarters away."
Gold's climb to record heights hasn't drawn the widespread interest of investors to the biggest names in the industry. The hot spot for gold equities has been the smaller producers, mid-tier companies and juniors. Big investments in such companies as Osisko Mining have propelled the $1-billion (Canadian) Dynamic Precious Metals fund up 72 per cent in the past year.
Before trading Thursday, Barrick's shares had risen about 20 per cent in the last year- which made it just a median performer in the 234-member S&P/TSX index. Goldcorp badly lagged, with its return of 8 per cent ranking 191 out of 234 names.
" The share prices of Barrick and Goldcorp should be much higher, and they're not. "- Sheryl Purdy, Leede Financial Markets Inc.
But soaring earnings among the biggest producers is rekindling interest.
"People have ignored the big-cap companies to some degree, unfairly," said Robert Cohen, the fund manager for Goodman & Co. "They'll probably be more interested in them now."
On Thursday, Goldcorp's stock jumped 4.6 per cent as Barrick gained 2.4 per cent.
Barrick's profit in the third quarter was a record $839-million (U.S.). On an adjusted basis it was $829-million, up three-quarters from $473-million a year ago. (The adjusted basis was presented for comparison purposes and strips out massive losses Barrick took last year associated with its hedge book.)
Goldcorp, which reported results late Wednesday, made $464-million in the third quarter, more than quadruple the $114-million of a year earlier. The company doubled its dividend, paid monthly, to 36 cents a year- though the yield on the stock is less than 1 per cent.
Skepticism about gold still abounds, with critics wondering how a metal that has little industrial use can keep rising. It isn't a crucial component in any product in high demand. Even if the world entered severe distress, critics wonder whether gold could actually be used as a currency and medium of exchange, since gold quantities are relatively small.
Sheryl Purdy, a vice-president at Leede Financial Markets Inc. in Calgary, is among the skeptics. The stockbroker works at a Vancouver-Calgary firm that is full of gold bulls and has made significant money among mid-tier/junior names. Still, Ms. Purdy pointed to the relative underperformance of the big names Barrick and Goldcorp as an indication that there are more skeptics than believers.
"The share prices of Barrick and Goldcorp should be much higher and they're not," said Ms. Purdy. On the seeming inexorable rise in the price of gold, Ms. Purdy said: "I'm sitting on one side, saying, 'I don't get it, it's too far overdone.'"
______
GOLDEN NUMBERS
$839-million (U.S.)
Barrick's third-quarter profit, a record
$464-million
Goldcorp's third-quarter profit, more than quadruple a year ago
$1,342
The price of an ounce of gold on Thursday
Wednesday, October 27, 2010
Who is watching your back?
In our zeal to qualify for a mortgage, we strive to meet the debt service ratios used by all major mortgage lenders. The rule of thumb the lenders use is your mortgage payments, property taxes and heating bills should be less than 32% of your gross monthly household income.
They also consider other monthly obligations like car payments and credit card payments, and decree your total housing costs and debt payments should be less than 40% of your gross monthly household income.
It always seems to me the standard calculation of household expenses is out of date and does not reflect reality. Every household I encounter in my business has a monthly hydro and water bill for example. They also have cable costs, internet costs, cell phones and often land line phones.
And almost all houses need to be maintained. Who cuts the grass and ploughs the snow? Who fixes things when they break down? And then there are unforeseen major expenses like roof repairs, leaking basements, termite flare ups, ant infestations etc. And if you have a pool, that’s almost $1,000 just to open and close the pool each year, plus weekly cleanings and chemical treatments, and the extra heating and hydro pools while the pool is open.
And what about your children and your pets? Or the aging parent who may live with you? The lenders don’t ask if your teenage son plays hockey five days a week at an annual cost of more than $15,000 after tax dollars! They don’t (at least not obviously) care if you have one child or four – but we all know the monthly financial burden of raising children is not cheap.
They don’t stop to consider whether or not you plan to contribute towards your kids' post secondary education, or the increased costs of medication and care for your elderly parent.
No, the harsh reality is the only person who cares about all this stuff is you.
But we are conditioned to buy as much house as we can possibly afford – using metrics and approaches that are hopelessly out of date and not reflective of life’s realities.
Most home buyers we meet in our business stretch their budgets to the max to get into their ‘dream home’. They have no back up plan, no savings, and are often only one or two hiccups away from financial chaos.
These hiccups inevitably lead to the use of readily available credit such as lines of credit or credit cards. Balances accumulate, often at high interest rates, and a further monthly minimum payment obligation is slapped on top of an already over worked monthly budget.
Ah, budget. Yes, we all talk about “the budget”, but very few households actually have a set budget and even fewer live within the means of that budget.
I am sure that’s why we are seeing record levels of financial stress in Canadian homes – and that is with interest rates at all time low levels. God help us all when they pop higher in the years ahead.
Do yourself a favour, and take an honest hard look at the totality of your monthly obligations, and make sure you are not setting yourselves up for stress and failure. Some enlightened industry experts argue your household expenses should in fact be no more than 25% of your total household income – and they have a valid point.
Every one of our mortgage or credit counselling clients are given a detailed budget and financial framework to work with for going forward. Our concern is not just with fixing the problem of the day, but more importantly, making sure we set you up for success and happiness.
If you don’t take these considerations into account, no one else will. The lenders are protecting their behinds with their outdated approach to assessing your ability to make the mortgage payment – who is watching your back?
They also consider other monthly obligations like car payments and credit card payments, and decree your total housing costs and debt payments should be less than 40% of your gross monthly household income.
It always seems to me the standard calculation of household expenses is out of date and does not reflect reality. Every household I encounter in my business has a monthly hydro and water bill for example. They also have cable costs, internet costs, cell phones and often land line phones.
And almost all houses need to be maintained. Who cuts the grass and ploughs the snow? Who fixes things when they break down? And then there are unforeseen major expenses like roof repairs, leaking basements, termite flare ups, ant infestations etc. And if you have a pool, that’s almost $1,000 just to open and close the pool each year, plus weekly cleanings and chemical treatments, and the extra heating and hydro pools while the pool is open.
And what about your children and your pets? Or the aging parent who may live with you? The lenders don’t ask if your teenage son plays hockey five days a week at an annual cost of more than $15,000 after tax dollars! They don’t (at least not obviously) care if you have one child or four – but we all know the monthly financial burden of raising children is not cheap.
They don’t stop to consider whether or not you plan to contribute towards your kids' post secondary education, or the increased costs of medication and care for your elderly parent.
No, the harsh reality is the only person who cares about all this stuff is you.
But we are conditioned to buy as much house as we can possibly afford – using metrics and approaches that are hopelessly out of date and not reflective of life’s realities.
Most home buyers we meet in our business stretch their budgets to the max to get into their ‘dream home’. They have no back up plan, no savings, and are often only one or two hiccups away from financial chaos.
These hiccups inevitably lead to the use of readily available credit such as lines of credit or credit cards. Balances accumulate, often at high interest rates, and a further monthly minimum payment obligation is slapped on top of an already over worked monthly budget.
Ah, budget. Yes, we all talk about “the budget”, but very few households actually have a set budget and even fewer live within the means of that budget.
I am sure that’s why we are seeing record levels of financial stress in Canadian homes – and that is with interest rates at all time low levels. God help us all when they pop higher in the years ahead.
Do yourself a favour, and take an honest hard look at the totality of your monthly obligations, and make sure you are not setting yourselves up for stress and failure. Some enlightened industry experts argue your household expenses should in fact be no more than 25% of your total household income – and they have a valid point.
Every one of our mortgage or credit counselling clients are given a detailed budget and financial framework to work with for going forward. Our concern is not just with fixing the problem of the day, but more importantly, making sure we set you up for success and happiness.
If you don’t take these considerations into account, no one else will. The lenders are protecting their behinds with their outdated approach to assessing your ability to make the mortgage payment – who is watching your back?
Tuesday, October 26, 2010
Life can be cruel
You never know what's around the corner. Met a couple last week who retired early at 53, with guaranteed pension income of $74,000 between the two of them. And when they hit 65 (earlier for CPP if they so choose) their OAS and CPP will also kick in.
They had a $400,000 home bought and paid for - no mortgage. Savings in their RSP's. The epitome of fiscally responsible Canadian Citizens.
Then she got sick, diagnosed eventually with Leukemia. They have scoured the world for cures and treatments that will retard the insidious development of this killer disease. Last year, they paid $250,000 to a medical facility in the USA for a radical treatment - however, nothing changed.
They have now refinanced their house twice; depleted their savings completely, and are desparate for money in their quest for a medical miracle.
If there is in fact no cure, it will all be for naught - and the husband will be left with a boatload of grief and a mountain of debt.
Could they have avoided this?
Medically, I am not qualified to answer that question.
Financially, they may have had options with their life insurance policies - some companies will pay out an early death benefit while the insured still lives, if the illness is truly terminal.
Or, they may have chosen not to chase the Hail Mary cure - and at least left all the fruits of their hard work intact.
Who is to say what is right and what is wrong - until you've walked in those shoes (and let's hope none of us ever do), who knows what lengths we will go to to save the life of a loved one.
Another couple I know well were devastated to learn last June that the husband (also a youngish man of 50 or so) had advanced lung cancer. (It had already metastised to his vital organs when the diagnosis was made)
There was an initial flurry of similar activity as they sought alternative medicine treatments in Middle Europe, but after a month or so of this program, they subsided back to the reality of their circumstances. Now they are fighting the illness with chemotherapy, lots of love, prayer and positive thinking. My prayers are with them.
In the meantime, the ill husband has gone to great lengths to restructure his finances to ensure he leaves behind the most optimal situation possible for his wife and two children. We all hope these precautions won't be necessary.
Life is a bitch sometimes. Enjoy each and every day with the ones you love - value your health and happiness above all else, and pray that tragedy never darkens your family's doorstep.
They had a $400,000 home bought and paid for - no mortgage. Savings in their RSP's. The epitome of fiscally responsible Canadian Citizens.
Then she got sick, diagnosed eventually with Leukemia. They have scoured the world for cures and treatments that will retard the insidious development of this killer disease. Last year, they paid $250,000 to a medical facility in the USA for a radical treatment - however, nothing changed.
They have now refinanced their house twice; depleted their savings completely, and are desparate for money in their quest for a medical miracle.
If there is in fact no cure, it will all be for naught - and the husband will be left with a boatload of grief and a mountain of debt.
Could they have avoided this?
Medically, I am not qualified to answer that question.
Financially, they may have had options with their life insurance policies - some companies will pay out an early death benefit while the insured still lives, if the illness is truly terminal.
Or, they may have chosen not to chase the Hail Mary cure - and at least left all the fruits of their hard work intact.
Who is to say what is right and what is wrong - until you've walked in those shoes (and let's hope none of us ever do), who knows what lengths we will go to to save the life of a loved one.
Another couple I know well were devastated to learn last June that the husband (also a youngish man of 50 or so) had advanced lung cancer. (It had already metastised to his vital organs when the diagnosis was made)
There was an initial flurry of similar activity as they sought alternative medicine treatments in Middle Europe, but after a month or so of this program, they subsided back to the reality of their circumstances. Now they are fighting the illness with chemotherapy, lots of love, prayer and positive thinking. My prayers are with them.
In the meantime, the ill husband has gone to great lengths to restructure his finances to ensure he leaves behind the most optimal situation possible for his wife and two children. We all hope these precautions won't be necessary.
Life is a bitch sometimes. Enjoy each and every day with the ones you love - value your health and happiness above all else, and pray that tragedy never darkens your family's doorstep.
Monday, October 25, 2010
MLS system heading for a total revamp
The winds of change were blowing outside a St. John’s hotel Sunday afternoon, as representatives of the country’s 101 real estate boards voted 97 per cent in favour of a deal that some warned could mean the end of the Canadian Real Estate Association.
At the very least, it will change the current face of the Multiple Listing Service (MLS).
The controversy began earlier this year when Competition Bureau Commissioner Melanie Aitkin announced she was investigating complaints of anticompetitive behaviour, including concerns CREA kept its members from offering services that would lower costs for consumers.
That sparked intense negotiations between CREA and the Competition Bureau in the months leading up to Sunday’s vote. And if CREA members didn’t vote in favour of the deal, there were looming threats of a court battle next spring with the federal government.
CREA president Georges Pahud said he welcomed the decision to ratify the agreement and end the Competition Bureau battle.
“We are pleased that after careful consideration and reflection, real estate boards and (local real estate) associations from across Canada have endorsed the agreement.”
“The commissioner and CREA have agreed that its rules as well as those of members should not deny or discriminate against realtors wishing to offer mere posting services. CREA does not believe that such rules exist today, but if they do, they must be repealed or boards will lose their license to operate under the MLS trademarks” Pahud said in a statement.
Reaction from Canada’s estimated 100,000 agents was swift.
“If this vote goes through, it’s time for the full time real estate sales people to leave the CREA,” Greg Chiang, of ReMax Omega in Newmarket, Ontario, wrote in an email prior to the vote.
“We will pull all our listing(s) from the MLS system. Let all the FSBOs start their own MLS system …It takes money to build up a great real estate system, (and) that is why most discount systems fail. The FSBOs want to take a free ride on our backs …use the system that we as full time realtors have paid for many years to develop and make what it is today.”
Others questioned why the Competition Bureau was even getting involved.
“I don't understand why the brokerage community has been targeted, and why
the system we have built up with our fees over the years should be treated
like public property,” Steve Glogowski, an associate vice-president of Royal LePage Signature Realty in Toronto, said in another email.
“Brokers do not have a monopoly on selling property. Everyone is free to advertise and negotiate their sale in the newspapers or on the web and not use the MLS,” he added.
Glogowski suggested instead of “caving in”, CREA should disband and hand over the MLS system to its members. “How can a system with dozens of owners be considered a monopoly?” he asked. “If people think they will save a few bucks by selling on their own, they are sadly mistaken.”
The deal with the Competition Bureau could result in buyers listing at an unrealistic price and not getting serious offers, not negotiating effectively based on experience and having a have increased chance of fraud, he said.
As rumours of the deal filtered out in advance of the vote, some entrepreneurial realtors saw opportunity. Details emerged late last week that the largest of those private sale companies, Moncton, N.B.-based PropertyGuys.com, had signed a deal with Harvey Real Estate Co. Ltd, a tiny brokerage in Hamilton, Ont.
The arrangement would see Harvey listing PropertyGuys.com client’s properties in Ontario on the MLS site for a fee, if the client wishes. The MLS profile would then link to a client’s customized PropertyGuys.com profile.
The broker has been posting PropertyGuys.com listings for a week now and there is still a backlog, according to a report in the local New Brunswick Business Journal. It added PropertyGuys.com expects the overall opening of the marketplace to boost their listings by 30 to 40 per cent in the next year alone.
At the very least, it will change the current face of the Multiple Listing Service (MLS).
The controversy began earlier this year when Competition Bureau Commissioner Melanie Aitkin announced she was investigating complaints of anticompetitive behaviour, including concerns CREA kept its members from offering services that would lower costs for consumers.
Some of the biggest complaints involved the popular MLS system, with complaints agents were charging full commission just to post a listing. If clients didn’t use an agent, they couldn’t list their property on MLS.
That sparked intense negotiations between CREA and the Competition Bureau in the months leading up to Sunday’s vote. And if CREA members didn’t vote in favour of the deal, there were looming threats of a court battle next spring with the federal government.
CREA president Georges Pahud said he welcomed the decision to ratify the agreement and end the Competition Bureau battle.
“We are pleased that after careful consideration and reflection, real estate boards and (local real estate) associations from across Canada have endorsed the agreement.”
“The commissioner and CREA have agreed that its rules as well as those of members should not deny or discriminate against realtors wishing to offer mere posting services. CREA does not believe that such rules exist today, but if they do, they must be repealed or boards will lose their license to operate under the MLS trademarks” Pahud said in a statement.
Reaction from Canada’s estimated 100,000 agents was swift.
“If this vote goes through, it’s time for the full time real estate sales people to leave the CREA,” Greg Chiang, of ReMax Omega in Newmarket, Ontario, wrote in an email prior to the vote.
“We will pull all our listing(s) from the MLS system. Let all the FSBOs start their own MLS system …It takes money to build up a great real estate system, (and) that is why most discount systems fail. The FSBOs want to take a free ride on our backs …use the system that we as full time realtors have paid for many years to develop and make what it is today.”
Others questioned why the Competition Bureau was even getting involved.
“I don't understand why the brokerage community has been targeted, and why
the system we have built up with our fees over the years should be treated
like public property,” Steve Glogowski, an associate vice-president of Royal LePage Signature Realty in Toronto, said in another email.
“Brokers do not have a monopoly on selling property. Everyone is free to advertise and negotiate their sale in the newspapers or on the web and not use the MLS,” he added.
Glogowski suggested instead of “caving in”, CREA should disband and hand over the MLS system to its members. “How can a system with dozens of owners be considered a monopoly?” he asked. “If people think they will save a few bucks by selling on their own, they are sadly mistaken.”
The deal with the Competition Bureau could result in buyers listing at an unrealistic price and not getting serious offers, not negotiating effectively based on experience and having a have increased chance of fraud, he said.
As rumours of the deal filtered out in advance of the vote, some entrepreneurial realtors saw opportunity. Details emerged late last week that the largest of those private sale companies, Moncton, N.B.-based PropertyGuys.com, had signed a deal with Harvey Real Estate Co. Ltd, a tiny brokerage in Hamilton, Ont.
The arrangement would see Harvey listing PropertyGuys.com client’s properties in Ontario on the MLS site for a fee, if the client wishes. The MLS profile would then link to a client’s customized PropertyGuys.com profile.
The broker has been posting PropertyGuys.com listings for a week now and there is still a backlog, according to a report in the local New Brunswick Business Journal. It added PropertyGuys.com expects the overall opening of the marketplace to boost their listings by 30 to 40 per cent in the next year alone.
Friday, October 22, 2010
Household debt to outpace income says TD Bank
When interest rates rise, 10 per cent of Canadian households could be in financial trouble, according to a TD Economics study.
TD chief economist Craig Alexander said household debt, which includes mortgages, has become excessive as Canadians get more accustomed to easy borrowing.
“One in 10 is a high ratio,” Alexander told CBC News. “It looks to us that Canadians’ personal finances have gotten stretched.”
Alexander also expects those debt levels to increase more rapidly than income growth.
The TD study said that even if the Bank of Canada’s overnight rate only rises to 3.5 per cent by 2013, family debt might still rise five per cent annually. That should be a concern, the report said, given its prediction that incomes will likely grow only by four per cent a year.
Tuesday, October 19, 2010
Before you travel - change your cell phone plan !
In the past two weeks, I have had several callers with a recurring ugly theme. They, or their kid, or their spouse travelled to the USA and started using their cell phone exactly the same way they usually do.
Case I - daughter is a chronic texter - the bill three weeks later was over $2,400 !
Case II - husband was on a driving holiday through the Mid West - thought his Canadian long distance plan worked in the States. The bill was $1,350 !
Case III - lady and her fiancee were on holiday in Washington and they both like to do separate things - so one did the museum thing and the other did monuments etc. They stayed in constant touch with each other via cell phone calls and texting. The bill was $875 !
Case IV - Another guy co signed for his 17 year old son's cell phone plan the year before, and forgot he was "involved" with the account. A four day school trip to Chicago resulted in a $1,600 surprise bill. The son could not pay, and if dad did not cover the bill, BOTH their credit histories would get wrecked.
Worse, none of these people could afford to pay these bills - they ended up unpaid; forced into collection status, and their credit histories were wrecked, and still are.
All it takes is a five minute phone call to your cell phone provider BEFORE you leave, and for $20 or so, you can protect yourself. Even if you forget till you get to your destination, it's never too late.
Case I - daughter is a chronic texter - the bill three weeks later was over $2,400 !
Case II - husband was on a driving holiday through the Mid West - thought his Canadian long distance plan worked in the States. The bill was $1,350 !
Case III - lady and her fiancee were on holiday in Washington and they both like to do separate things - so one did the museum thing and the other did monuments etc. They stayed in constant touch with each other via cell phone calls and texting. The bill was $875 !
Case IV - Another guy co signed for his 17 year old son's cell phone plan the year before, and forgot he was "involved" with the account. A four day school trip to Chicago resulted in a $1,600 surprise bill. The son could not pay, and if dad did not cover the bill, BOTH their credit histories would get wrecked.
Worse, none of these people could afford to pay these bills - they ended up unpaid; forced into collection status, and their credit histories were wrecked, and still are.
All it takes is a five minute phone call to your cell phone provider BEFORE you leave, and for $20 or so, you can protect yourself. Even if you forget till you get to your destination, it's never too late.
How to avoid mortgage fraud
October 18, 2010
Six suggestions for avoiding mortgage fraud
By DIANNE NICE
Globe and Mail Update
Globe and Mail Update
Don't be talked into a deal that's too good to be true
Whenever the housing market starts to heat up, so does mortgage and real estate fraud. Buyers rush through deals to avoid losing out, but can end up being scammed if they're not careful.
While there are no statistics on these types of fraud in Canada, in the United States, it is estimated to cost victims between $4-billion and $6-billion (U.S.) a year.
"Mortgage scams are carried out in all different forms and involve a multitude of people, some who don't even know they're being taken advantage of," says Diane Scott, president of the Calgary Real Estate Board.
Ms. Scott says at least two types of mortgage fraud have occurred in Calgary this year. One is property flipping, in which a dishonest seller artificially inflates the value of a property using a phony appraisal and then sells it for a large profit. The phony appraisal often remains with the property through multiple transactions, making it difficult to determine the property's true worth, and the end buyer is left paying for a mortgage that is much higher than the home's value.
The other involves "straw buyers," who are offered money to lend their identity and good credit record for use on fraudulent mortgage applications. The fraudster uses the information to apply for a loan, then disappears with the money, leaving the straw buyer on the hook for the mortgage payments.
Other types of real estate scams include title fraud, where your identity is stolen and used to assume the title of your property, which can then be used to sell your home or get a new mortgage. The criminal takes the mortgage money and runs. You may not even find out about the fraud until the lender contacts you or someone pulls up in a moving van, claiming to be the new owner of the house.
And there's also foreclosure fraud, in which a homeowner having trouble paying a mortgage is offered a loan in exchange for up-front fees and an agreement to transfer the property title to the scammer, who is then able to take the victim's loan payments, sell the house or remortgage it and leave with the money.
While a lawyer, realtor or licensed mortgage broker can help ensure all legal precautions are taken, it's still important to do your homework before you buy, Ms. Scott says. Here's her advice on how to avoid becoming a victim of fraud:
1. Beware of unusual offers. Never lend your identity to anyone or sign documents you do not fully understand. "If it sounds too good to be true, then it probably is," Ms. Scott says.
2. Do the math. Look at the listing history on the property and do a comparative market analysis. Check the number of sales and price ranges for the community. If the home's listing price is much higher than the average value of neighbouring homes, it could mean someone is flipping the property or has had it fraudulently appraised.
3. Don't assume the seller is honest. Get your own realtor or independent representation for your purchase. If the seller objects, something is wrong.
4. Do a land title search. This will show the name of the property owner, any mortgages or liens registered on the title, as well as previous sales and transfers. You can also buy title insurance to protect against title fraud.
5. Get your own appraisal. You may want to include, as part of your offer to purchase, the option to have the property appraised by a member of the Appraisal Institute of Canada [http://www.aicanada.ca].
6. Secure your deposit. Make sure your money is being held in a real estate trust account by a realtor or lawyer. This will ensure your money is safe until the deal closes.
While there are no statistics on these types of fraud in Canada, in the United States, it is estimated to cost victims between $4-billion and $6-billion (U.S.) a year.
"Mortgage scams are carried out in all different forms and involve a multitude of people, some who don't even know they're being taken advantage of," says Diane Scott, president of the Calgary Real Estate Board.
Ms. Scott says at least two types of mortgage fraud have occurred in Calgary this year. One is property flipping, in which a dishonest seller artificially inflates the value of a property using a phony appraisal and then sells it for a large profit. The phony appraisal often remains with the property through multiple transactions, making it difficult to determine the property's true worth, and the end buyer is left paying for a mortgage that is much higher than the home's value.
The other involves "straw buyers," who are offered money to lend their identity and good credit record for use on fraudulent mortgage applications. The fraudster uses the information to apply for a loan, then disappears with the money, leaving the straw buyer on the hook for the mortgage payments.
Other types of real estate scams include title fraud, where your identity is stolen and used to assume the title of your property, which can then be used to sell your home or get a new mortgage. The criminal takes the mortgage money and runs. You may not even find out about the fraud until the lender contacts you or someone pulls up in a moving van, claiming to be the new owner of the house.
And there's also foreclosure fraud, in which a homeowner having trouble paying a mortgage is offered a loan in exchange for up-front fees and an agreement to transfer the property title to the scammer, who is then able to take the victim's loan payments, sell the house or remortgage it and leave with the money.
While a lawyer, realtor or licensed mortgage broker can help ensure all legal precautions are taken, it's still important to do your homework before you buy, Ms. Scott says. Here's her advice on how to avoid becoming a victim of fraud:
1. Beware of unusual offers. Never lend your identity to anyone or sign documents you do not fully understand. "If it sounds too good to be true, then it probably is," Ms. Scott says.
2. Do the math. Look at the listing history on the property and do a comparative market analysis. Check the number of sales and price ranges for the community. If the home's listing price is much higher than the average value of neighbouring homes, it could mean someone is flipping the property or has had it fraudulently appraised.
3. Don't assume the seller is honest. Get your own realtor or independent representation for your purchase. If the seller objects, something is wrong.
4. Do a land title search. This will show the name of the property owner, any mortgages or liens registered on the title, as well as previous sales and transfers. You can also buy title insurance to protect against title fraud.
5. Get your own appraisal. You may want to include, as part of your offer to purchase, the option to have the property appraised by a member of the Appraisal Institute of Canada [http://www.aicanada.ca].
6. Secure your deposit. Make sure your money is being held in a real estate trust account by a realtor or lawyer. This will ensure your money is safe until the deal closes.
Housing price correction looming?
The current high buy/rent ratio may indicate a vulnerable housing market said Desjardins Securities, but others aren’t placing too much weight on the measurement.
Canadian house prices rebounded from the recession, hitting a new record in May and bringing the buy/rent ratio to about 1.85x. This means mortgages are increasingly difficult to afford compared to rent, as house prices increase and rents remain stable.
So, excluding major factors such as taxes and maintenance, homeowners pay about twice what renters pay.
“This is precipitously close to the 2.3x level reached in December 2007 and the 2.5x level reached in 1988, which preceded house price corrections of 13 per cent and 10 per cent, respectively,” Ed Sollbach and Deep Jaitly of Desjardins wrote in a research note.
They added that when the buy/rent ratio hit an “unsustainable” 3.6x in Toronto in 1989, it was followed by a 29-per-cent decline in house prices.
However, at that time unemployment was also rising and a spike in interest rates to 14 per cent forced many homeowners to sell.
The problem with the rent/own ratio is that half of the provinces employ rent control, so prices can’t rise with the broader housing market. For example, house prices in some Toronto neighbourhoods have gained 30 per cent in the last year but Ontario limits rent increases to 2.1 per cent.
“Maybe that’s just telling us that rents are just too low,” said Gregory Klump, the chief economist at the Canadian Real Estate Association in a recent interview with The Globe and Mail. “I’m not a fan of the price-to-rent ratio because it’s so skewed by the fact that rents are subject to rent control.”
Friday, October 8, 2010
So many tough stories out there
For the past few weeks, I have been advertising my credit counselling services in Toronto's major newspapers. The phone has been ringing off the hook. Interestingly, very few people call hoping to enter into a consumer proposal or even bankruptcy. Most want to borrow MORE MONEY, as a way to solve their financial problems.
No wonder some surveys say that six out of ten Canadians would be in financial trouble if their paycheque was as little as a week late.
Here are some types of people who have called for help.
The strong but illogical
These people are home owners and often have equity in their homes. But they have one or two car payments; several credit card debts (typically $20,000 to $30,000) and some new financial emergency to deal with.
They want to borrow money (typically $10,000 to $20,000) on an unsecured basis at a very low interest rate. Usually, their credit score or their debt servicing (relative to their income) will mean they would not qualify for such a loan.
But when I point out their cheapest source of capital is the equity in their home (either consider a refinance of their first mortgage; or increase their existing HELOC; or maybe a second mortgage even), their eyes glaze over and they stop listening.
The hopeless
They invariably have damaged or bad credit (or simply no credit history); and no one will lend them money. They are in a bind - they just need (typically $1,000 to $5,000) for a short while, and by the way can they pick it up this afternoon? Their income is sometimes very high; often marginal - but with a poor credit history - most doors will be closed to these people.
I hate to hear of people who got into payday loans = these seem to be the financial equivalent of crack cocaine = and just as damaging. It's a bus that once you get on it's very hard to get off.
I always tell people "banks love to lend money; the trick is to look like you don't really need it - that's when they will be most generous"
Want to float a business
Either it's a new business venture; or an existing business fallen on hard times; but another $30,000 to $50,000 would solve everything !! (One lady wanted $500,000 on spec - just in case she came across a good opportunity!
Most small(ish) businesses will need the owner's personal guarantee when it comes time to borrow money. So not only must the business make sense and be financially viable; the owner should ideally have a healthy net worth, a good income, and an excellent personal credit rating. Most callers go quiet when they hear that short list.
The unrealistic
Often people are already in debt over their heads ($40,ooo to $100,000 in unsecured debts) and they are looking for either a consolidation loan (a practical thought but much harder to do than people think) or even more unsecured credit.
These people should be instead considering a consumer proposal. One combined payment; debts reduced by more than 50% usually, and no interest payments.
The last word
For the most part, if borrowing money at this time really does make sense for your circumstances - you gotta have a squeaky clean credit history to have any chance. I want to educate thousands in the years ahead about the better way to live.
And if borrowing money at this time does not make sense for your circumstances, then something else does. Talk to us - chances are we can help you figure that out.
No wonder some surveys say that six out of ten Canadians would be in financial trouble if their paycheque was as little as a week late.
Here are some types of people who have called for help.
The strong but illogical
These people are home owners and often have equity in their homes. But they have one or two car payments; several credit card debts (typically $20,000 to $30,000) and some new financial emergency to deal with.
They want to borrow money (typically $10,000 to $20,000) on an unsecured basis at a very low interest rate. Usually, their credit score or their debt servicing (relative to their income) will mean they would not qualify for such a loan.
But when I point out their cheapest source of capital is the equity in their home (either consider a refinance of their first mortgage; or increase their existing HELOC; or maybe a second mortgage even), their eyes glaze over and they stop listening.
The hopeless
They invariably have damaged or bad credit (or simply no credit history); and no one will lend them money. They are in a bind - they just need (typically $1,000 to $5,000) for a short while, and by the way can they pick it up this afternoon? Their income is sometimes very high; often marginal - but with a poor credit history - most doors will be closed to these people.
I hate to hear of people who got into payday loans = these seem to be the financial equivalent of crack cocaine = and just as damaging. It's a bus that once you get on it's very hard to get off.
I always tell people "banks love to lend money; the trick is to look like you don't really need it - that's when they will be most generous"
Want to float a business
Either it's a new business venture; or an existing business fallen on hard times; but another $30,000 to $50,000 would solve everything !! (One lady wanted $500,000 on spec - just in case she came across a good opportunity!
Most small(ish) businesses will need the owner's personal guarantee when it comes time to borrow money. So not only must the business make sense and be financially viable; the owner should ideally have a healthy net worth, a good income, and an excellent personal credit rating. Most callers go quiet when they hear that short list.
The unrealistic
Often people are already in debt over their heads ($40,ooo to $100,000 in unsecured debts) and they are looking for either a consolidation loan (a practical thought but much harder to do than people think) or even more unsecured credit.
These people should be instead considering a consumer proposal. One combined payment; debts reduced by more than 50% usually, and no interest payments.
The last word
For the most part, if borrowing money at this time really does make sense for your circumstances - you gotta have a squeaky clean credit history to have any chance. I want to educate thousands in the years ahead about the better way to live.
And if borrowing money at this time does not make sense for your circumstances, then something else does. Talk to us - chances are we can help you figure that out.
When one of you is a spender, & the other is a saver
This article in the October 05, 2010 Globe and Mail, written by Noreen Rasbach, hit home on a point that many couples grapple with.
Their story, as told by Ms. Velasquez, is common: The Kitchener, Ont., couple, who together earn about $130,000 a year, was constantly short of cash. "I felt for me it was always, 'Well, where's the money?' or 'Where did the money go?'
"It was very stressful."
Ms. Velasquez, 29, and Mr. Verrinder, 42, also had different attitudes toward money: He was a spender, she was more of a saver.
"And when he spends, he spends big," she says.
Theirs is the story with which many Canadian couples can identify. A national survey by Credit Canada and Capital One Canada last year found that 86 per cent of couples say they argue about money and 48 per cent say they don't believe their spouses have the same philosophy when it comes to managing money.
Opposites attract: So say therapists and personal-finance experts, who see the saver-spender divides in a large number of couples. These couples have opposite approaches to money, and can develop strong frustration and resentment toward their spouses.
"I deal with a lot of women across the country, and the perfect emotional financial storm happens when there's misalignment, there's a lack of trust and there are differing financial values," says Patricia Lovett-Reid, senior vice-president with TD Waterhouse Canada Inc.
"I have seen many couples who actually don't understand each other's spending or saving personalities until a year or two into the relationship and then - wow - fireworks," says Alison Griffiths, a personal-finance author and host of television show Maxed Out.
"But I don't believe that finances are like leopards and spots. I do believe that people can alter their financial personalities."
That begins by having a conversation about money, experts say, preferably with a third party who can cut through the intense emotions. "When those conversations start, there is a floodgate of emotions that get unleashed," says Karin Mizgala, a financial planner who also is co-founder of the Women's Financial Learning Centre in Vancouver.
"Typically when the conversation happens, it's a fight. There are pent-up fears and insecurities on the part of the saver, who sees that his or her financial well-being may be jeopardized by their partner. On the spender's part, there can be a real sense that they don't want to be told what to do, that they're tired of having every move being watched."
Those conversations should also touch on how each spouse was raised and what influenced their attitudes about money, says Ed Santana, a psychotherapist and executive-director for the Ontario Association for Marriage and Family Therapy.
"When they understand where the other person is coming from and when they [learn] some of their choices about money, [their fight] becomes less personal," he says.
Mr. Santana and financial experts also agree on some of the ways to bring together spenders and savers to find the middle ground.
The first step: Figure out exactly how much the household spends and what the money goes toward.
The next: Find common goals and let each other know individual goals. Whether it's getting out of debt, or saving for a house, a car or a vacation - setting up a budget and a financial plan to meet those goals can help couples stay on the right path.
It's what Devon Beaton and Kristin Campbell of Calgary did. The couple - she's 20 and he's 22 - are engaged and had planned to get married this past summer. But first they had to sort out their financial differences - he was a saver and she was a spender.
The difference has caused friction at times, she says, but they have learned not to fight and to talk it out.
"I think we've both kind of rubbed off on each other," Ms. Campbell says. "We've both grown to accept each other. He tries to not be a penny pincher and I try not to spend as much. It's a compromise."
The couple talks regularly about what they can and can't afford. In the "can't" category: the summer wedding. When they realized they would have to go into debt for it, Ms. Campbell says, they decided to postpone it.
Ms. Lovett-Reid advises that couples also rotate financial responsibilities, so that each has an intimate knowledge of the household finances.
"If there's a dominant person in the family that handles the money, then switch it for six months, and the other will get a far better appreciation and understanding of how much money is coming in and where it is being spent," she says.
In the case of Ms. Velasquez, getting involved with the family's finances was a huge breakthrough. The couple may have had different attitudes toward money, but she says that she wasn't really taking any responsibility for the finances.
"Things are really good now. I'm more involved. We keep track of everything we spend. We probably talk about [household finances] every week.
"We definitely talk about it more without fighting about it."
The couple followed a lot of the experts' advice - they went to a third party, the Meridian Credit Union, where financial consultant Amie Daminato worked with the couple to come up with a budget plan, a savings plan and a financial wish list.
Ms. Velasquez says having financial goals - such as saving for retirement and their child's education - has made the couple focus on what's really important.
And a few months ago, when the couple's car broke down, they realized just how far they have come.
"It wasn't, 'Oh my God, how are we going to pay for that.' It was, 'Oh, we have money in savings.' It wasn't stressful at all."
Bridging the spender-saver divide
By NOREEN RASBACH
Globe and Mail Update
Globe and Mail Update
Many couples fight about money - here's what experts say you can do to find middle ground
A few years back, Valentina Naranjo Velasquez and her husband Gary Verrinder found themselves in a place that is probably very familiar to a vast majority of Canadian couples: They began to fight about money.
Their story, as told by Ms. Velasquez, is common: The Kitchener, Ont., couple, who together earn about $130,000 a year, was constantly short of cash. "I felt for me it was always, 'Well, where's the money?' or 'Where did the money go?'
"It was very stressful."
Ms. Velasquez, 29, and Mr. Verrinder, 42, also had different attitudes toward money: He was a spender, she was more of a saver.
"And when he spends, he spends big," she says.
Theirs is the story with which many Canadian couples can identify. A national survey by Credit Canada and Capital One Canada last year found that 86 per cent of couples say they argue about money and 48 per cent say they don't believe their spouses have the same philosophy when it comes to managing money.
Opposites attract: So say therapists and personal-finance experts, who see the saver-spender divides in a large number of couples. These couples have opposite approaches to money, and can develop strong frustration and resentment toward their spouses.
"I deal with a lot of women across the country, and the perfect emotional financial storm happens when there's misalignment, there's a lack of trust and there are differing financial values," says Patricia Lovett-Reid, senior vice-president with TD Waterhouse Canada Inc.
"I have seen many couples who actually don't understand each other's spending or saving personalities until a year or two into the relationship and then - wow - fireworks," says Alison Griffiths, a personal-finance author and host of television show Maxed Out.
"But I don't believe that finances are like leopards and spots. I do believe that people can alter their financial personalities."
That begins by having a conversation about money, experts say, preferably with a third party who can cut through the intense emotions. "When those conversations start, there is a floodgate of emotions that get unleashed," says Karin Mizgala, a financial planner who also is co-founder of the Women's Financial Learning Centre in Vancouver.
"Typically when the conversation happens, it's a fight. There are pent-up fears and insecurities on the part of the saver, who sees that his or her financial well-being may be jeopardized by their partner. On the spender's part, there can be a real sense that they don't want to be told what to do, that they're tired of having every move being watched."
Those conversations should also touch on how each spouse was raised and what influenced their attitudes about money, says Ed Santana, a psychotherapist and executive-director for the Ontario Association for Marriage and Family Therapy.
"When they understand where the other person is coming from and when they [learn] some of their choices about money, [their fight] becomes less personal," he says.
Mr. Santana and financial experts also agree on some of the ways to bring together spenders and savers to find the middle ground.
The first step: Figure out exactly how much the household spends and what the money goes toward.
The next: Find common goals and let each other know individual goals. Whether it's getting out of debt, or saving for a house, a car or a vacation - setting up a budget and a financial plan to meet those goals can help couples stay on the right path.
It's what Devon Beaton and Kristin Campbell of Calgary did. The couple - she's 20 and he's 22 - are engaged and had planned to get married this past summer. But first they had to sort out their financial differences - he was a saver and she was a spender.
The difference has caused friction at times, she says, but they have learned not to fight and to talk it out.
"I think we've both kind of rubbed off on each other," Ms. Campbell says. "We've both grown to accept each other. He tries to not be a penny pincher and I try not to spend as much. It's a compromise."
The couple talks regularly about what they can and can't afford. In the "can't" category: the summer wedding. When they realized they would have to go into debt for it, Ms. Campbell says, they decided to postpone it.
Ms. Lovett-Reid advises that couples also rotate financial responsibilities, so that each has an intimate knowledge of the household finances.
"If there's a dominant person in the family that handles the money, then switch it for six months, and the other will get a far better appreciation and understanding of how much money is coming in and where it is being spent," she says.
In the case of Ms. Velasquez, getting involved with the family's finances was a huge breakthrough. The couple may have had different attitudes toward money, but she says that she wasn't really taking any responsibility for the finances.
"Things are really good now. I'm more involved. We keep track of everything we spend. We probably talk about [household finances] every week.
"We definitely talk about it more without fighting about it."
The couple followed a lot of the experts' advice - they went to a third party, the Meridian Credit Union, where financial consultant Amie Daminato worked with the couple to come up with a budget plan, a savings plan and a financial wish list.
Ms. Velasquez says having financial goals - such as saving for retirement and their child's education - has made the couple focus on what's really important.
And a few months ago, when the couple's car broke down, they realized just how far they have come.
"It wasn't, 'Oh my God, how are we going to pay for that.' It was, 'Oh, we have money in savings.' It wasn't stressful at all."
Tuesday, September 28, 2010
Time to review your will
I am always amazed at how few of my clients have prepared a last will and testament. There are so many good reasons to have one, and I would be hard pressed to think of a reason why not. It is something people always put off till tomorrow. The following article, written by Diane Nice, appeared the Toronto Globe and Mail on September 27 2010.
If you don't review your will after getting married, you could leave your loved ones empty-handed when you pass away, says Barry Fish, a wills lawyer and co-author of Where There's an Inheritance: Stories from Inside the World of Two Wills Lawyers.
"We have reviewed many wills where a person's will was dated in the 1990s and, several years later, that person entered into a marriage. It invariably comes as a shock to people in this position when we tell them that their marriage has revoked their will and that they have no will at all," Mr. Fish says.
"The opposite situation arises where a person who is separated is often surprised to learn that his or her separation does not revoke the will that he or she had made while still married to the person from whom they separated."
Mr. Fish also advises those who are separated to double check their beneficiary designations on life insurance policies, RRSPs, RRIFs, TFSAs and deferred annuities. "These, too, must be changed, in addition to the will, if the separated spouse is no longer to be named on them. The will alone will not effect such a change."
Here are some other things Mr. Fish says to keep in mind when reviewing your will:
1. Have a backup plan. You need to name a replacement in the event that your executor dies, becomes ill or is incapacitated, otherwise someone will have to apply to the courts to do the job. The same applies to beneficiaries: If you don't name a backup beneficiary, with some exceptions, the law may decide what happens to your gifts.
2. Count your blessings. Have you had any children since you wrote your will? If so, you'd better make sure they are included as beneficiaries, or risk having them cut out completely.
3. Protect your child's inheritance. While the inheritance you leave your child is protected from a divorcing spouse, the growth on that inheritance is not. Be sure to include a family law clause to protect the income and capital gains made from that inheritance in the event that your child separates or divorces after your death.
4. Take stock of your assets. Outdated descriptions of your assets can create confusion when you die. If your will says "123 John Street" goes to your child but you have since moved, your child does not automatically get your new property. You need to include the phrase "any home I'm living in at my death" in the bequest.
5. Leave no grey areas. Ambiguous wording in your will can lead to more than one interpretation. If you leave one child your "antiques" and the other child questions the meaning, they could be headed to court.
6. Protect your disabled child. Some parents leave outright bequests to children who are on government disability support plans, unaware that this can put these benefits at risk. By including what's called an absolute discretionary trust in their wills for the benefit of their disabled children, parents can protect them from losing governmental disability benefits when the parents die.
7. Plan for death and taxes. If you hold shares in your own company, you have the right to make two wills. One will covers the company shares and the other will covers everything else you own. When done correctly, the dual will structure can save significant probate tax on the value of the company shares.
September 27, 2010
Holy matrimony! Time to review your will
By Dianne Nice
Globe and Mail Update
Globe and Mail Update
First comes love, then comes marriage, then comes a review of your will
First comes love, then comes marriage, then comes a review of your will.
If you don't review your will after getting married, you could leave your loved ones empty-handed when you pass away, says Barry Fish, a wills lawyer and co-author of Where There's an Inheritance: Stories from Inside the World of Two Wills Lawyers.
"We have reviewed many wills where a person's will was dated in the 1990s and, several years later, that person entered into a marriage. It invariably comes as a shock to people in this position when we tell them that their marriage has revoked their will and that they have no will at all," Mr. Fish says.
"The opposite situation arises where a person who is separated is often surprised to learn that his or her separation does not revoke the will that he or she had made while still married to the person from whom they separated."
Mr. Fish also advises those who are separated to double check their beneficiary designations on life insurance policies, RRSPs, RRIFs, TFSAs and deferred annuities. "These, too, must be changed, in addition to the will, if the separated spouse is no longer to be named on them. The will alone will not effect such a change."
Here are some other things Mr. Fish says to keep in mind when reviewing your will:
1. Have a backup plan. You need to name a replacement in the event that your executor dies, becomes ill or is incapacitated, otherwise someone will have to apply to the courts to do the job. The same applies to beneficiaries: If you don't name a backup beneficiary, with some exceptions, the law may decide what happens to your gifts.
2. Count your blessings. Have you had any children since you wrote your will? If so, you'd better make sure they are included as beneficiaries, or risk having them cut out completely.
3. Protect your child's inheritance. While the inheritance you leave your child is protected from a divorcing spouse, the growth on that inheritance is not. Be sure to include a family law clause to protect the income and capital gains made from that inheritance in the event that your child separates or divorces after your death.
4. Take stock of your assets. Outdated descriptions of your assets can create confusion when you die. If your will says "123 John Street" goes to your child but you have since moved, your child does not automatically get your new property. You need to include the phrase "any home I'm living in at my death" in the bequest.
5. Leave no grey areas. Ambiguous wording in your will can lead to more than one interpretation. If you leave one child your "antiques" and the other child questions the meaning, they could be headed to court.
6. Protect your disabled child. Some parents leave outright bequests to children who are on government disability support plans, unaware that this can put these benefits at risk. By including what's called an absolute discretionary trust in their wills for the benefit of their disabled children, parents can protect them from losing governmental disability benefits when the parents die.
7. Plan for death and taxes. If you hold shares in your own company, you have the right to make two wills. One will covers the company shares and the other will covers everything else you own. When done correctly, the dual will structure can save significant probate tax on the value of the company shares.
Have you heard of "rare earth metals" ?
Scanning the ROB in today's Globe and Mail, I came across this interesting read about "rare earth metals" - a topic I knew very little about. The article is written by Shirley Won, Investment Funds Reporter for the Globe and Mail.
Potential shortages due to market's dependence on China spark growing interest. But risks exist
Gold and silver may be stealing the limelight thanks to surging prices, but some obscure metals are also making their way onto investors' radar screens.
Rare earth metals, a group of 17 elements used to make everything from hybrid cars to mobile phones, came into the spotlight last week following reports that China had blocked exports of the commodities to Japan.
Beijing denied the reports, but the dispute underlined the market's dependency on China. The country, which produces 90 per cent of the global supply of rare earths, has already slashed export quotas on the metals this year by 40 per cent from 2009, a move which has pushed up prices and spurred new mining projects.
Potential shortages of rare earths, combined with growing demand for the materials, is sparking new interest in investment opportunities in the area, ranging from newly listed junior miners to an exchange-traded fund poised to list in the United States. But the sector is fraught with risks for investors, market watchers say.
China aside, the biggest reason to invest is the growing demand for the "heavy" or higher-grade rare earths used in hybrid and electric cars, said Jon Hykawy, an analyst at Toronto-based Bryon Capital Inc. "The rarest elements may come into short supply over the next two or three years."
The problem is not finding rare earths, but extracting them economically. The best way to play this sector is to buy several producers because the risk is too high to bet on one, Mr. Hykawy said.
The analyst has "speculative buys" on Canadian-listed Rare Element Resource Ltd. and Great Western Minerals Group Ltd.; U.S.-listed Molycorp Inc. and Australian-listed names like Lynas Corp. Ltd. and Arafura Resources Ltd. Molycorp, which is restarting its Mountain Pass mine in California, and Lynas are closer to production so they are less risky bets, Mr. Hykawy said.
'Strategic' Play
Hedge fund manager Steve Palmer of AlphaNorth Asset Management Inc., likes the "strategic nature" of rare earths, and has invested in juniors such as Stans Energy Corp. and Ucore Rare Metals Inc.
Ucore, which focuses on the Bokan area in Alaska, will benefit from a new desire by the U.S. to reduce its reliance on China for rare earths, which have military applications, he said. A U.S. senator has already introduced a bill promoting a domestic rare earth industry.
Van Eck Global, a U.S.-based provider of ETFs, has filed a preliminary prospectus for the Market Vectors Minor Metals ETF, which will track a minor metals index that includes producers of rare earths. But because it will invest in about 30 public companies, not all of which produce rare earths, it is not really a pure play on the sector, Byron Capital's Mr. Hykawy said.
Investors can also play rare earths through Toronto-based Dacha Capital Inc. (soon to be renamed Dacha Strategic Metals Inc.). The investment holding company began buying and stockpiling rare earths from China earlier this year, and stores them in warehouses in South Korea and Singapore, on the assumption that prices are on a long upward trend.
Dacha faces the risk that China could cut off rare earth exports, but, if that happens, the material stored outside the country would be more valuable while new projects coming on stream will provide new inventory, chief executive officer Scott Moore said. Unlike the risk in spending money in advancing a mining project, "I can sell all my inventory, turn it into cash and redirect it back to shareholders," he added.
Rare, but essential
What are rare earth elements or metals?
They are a collection of 17 elements that have become increasingly important in the manufacture of light weight, super-miniaturized components. The scarcer heavy rare earths, such as dysprosium and terbium, command a premium price compared with light rare earths.
Where are rare earths used?
Batteries and magnets for electric and hybrid cars, mobile phones, iPods, digital cameras, wind turbines, computer monitors, superconductors, solar panels and military hardware like fighter jets and nuclear weapons.
Monday, September 20, 2010
Are you misplacing hundreds of $$ ?
I found this article on www.msn.ca. It was written by By Liz Pulliam Weston, September 17, 2010 - and hits the mark in several places.
Every time you buy a duplicate of something you already own, leave a rebate unclaimed or forget to pay a bill on time, you're burning money.
Nancy Lester Anderson of Sacramento, Calif., just found $100 worth of expired gift cards in her "to do" pile.
Christine Moore of Quincy, Ill., missed out on $300 of manufacturer rebates on her new appliances because she misplaced the paperwork.
Tom Wyatt of Beaverton, Ore., estimates he's spent $100 to $200 replacing tools he already has.
"Every time I need to do something around the house, I have to go buy a new tool," he wrote on my Facebook fan page. His repeated refrain: "I know that I have one of these, I just can't FIND IT!!!!"
The National Association of Professional Organizers has never commissioned a survey on what the typical U.S. household pays for clutter and disorganization, says its president, Laura Leist. But if such a survey were conducted, Leist and I bet the toll would be in the hundreds of dollars a year. For some families, it's in the thousands.
Exhibit A is the self-storage industry, which rakes in $22 billion annually, according to the Self Storage Association. One in 10 U.S. households rents a storage locker, which means an average annual cost of about $2,000 per household for storage.
Easier to find space than time?
There are reasons to rent a storage facility besides being unable to part with your clutter, of course. About 4% of the industry's units are rented by members of the military, who may store stuff while they're deployed. Storage facilities are a handy place to put stuff during a remodel or when you're trying to "stage" your home to sell.
But some of Leist's clients rent "two or three or five" units simply because they can't face the task of sorting through their possessions and discarding what they don't need.
"They don't want to deal with what's inside" the storage units, said Leist, a certified professional organizer and the author of "Eliminate Chaos: The 10-Step Process to Organize Your Home and Life."
That's just the tip of the iceberg of costs we pay for not being sufficiently organized. Consider:
* U.S. credit card issuers will collect more than $7 billion in late fees this year, according to Odysseas Papadimitriou, a former lending executive and the CEO and founder of CardHub.com.
* U.S. banks collected more than $37 billion in overdraft fees last year, according to research firm Moebs Services, before new rules kicked in that restricted such charges. One in four checking accounts had an overdraft fee during another 12-month period, according to a 2008 FDIC survey (.pdf) of 39 banks. Four percent of those banks' accounts had 10 to 19 bounced transactions, paying an average $451 in fees, while 5% had 20 or more, paying a whopping $1,610 on average.
* Each year, hundreds of millions of dollars in U.S. tax refunds expire unclaimed because people fail to file their tax returns within the three-year time limit. The unclaimed refunds typically average between $550 and $600, according to the Internal Revenue Service.
* Unpaid parking tickets and library fines have become big business for collection agencies, which increasingly have taken over dunning duties from municipalities. Municipalities are owed more than $40 billion, according to an estimate by Kaulkin Ginsberg, a collection industry research company. An overlooked ticket or forgotten library book thus can become a collection account on your credit reports, tanking your credit scores and perhaps leading to higher interest rates.
* More than $32 billion of unclaimed property is sitting in U.S. treasurers' escheat offices, waiting for the owners of about 117 million abandoned accounts to claim the money. The accounts range from utility security deposits to life insurance payouts to the contents of safe-deposit boxes (although items of value may be sold and only the money kept; paperwork without commercial value, such as birth certificates and photos, may be shredded).
Not every dollar of these costs is due to lack of organization, granted. But failing to have good systems for dealing with our lives and possessions means many of us end up paying money we shouldn't or simply leaving money on the table.
Paying the price in time and hassle
The costs don't have to be big to be annoying. Christina Brodbeck of Grand Terrace, Calif., spent 20 minutes one morning searching for her 6-year-old son's missing shoe. He'd outgrown his other footwear and was down to one pair that could be worn to school.
"All we had were flip-flops, which are banned at school," Brodbeck confessed. "So, we had to go to the store to buy him a pair of tennis shoes that were proper for school. . . . It was an ugly morning. The kids were late for school (and) I was late for work."
The great thing is that Brodbeck learned something from the experience and changed how her household works.
"Now shoes come off at the front door and go into a bin right beside the door," Brodbeck said. "We also have a backup pair now as well."
In our household, the great clutter catastrophe was missing library books. I spent a small fortune in late fees and replacement costs for children's books that disappeared, sometimes permanently, before developing a system where borrowed books "live" in a canvas bag. The bag doesn't get taken out of the house unless it's on the way back to the library. That worked great -- until I checked out two books for myself, without the bag, and promptly left them on a city bus.
My bus slip-up illustrates what organizer Leist says: It's not enough to set up systems and organize your stuff. You have to maintain those systems -- or create systems that maintain themselves.
Such as automatic banking. Emily Stanley Halla of Wakefield, R.I., said she avoids late fees by having most of her bills auto-debited from her bank account. If you're squeamish about giving a biller direct access to your money, you often can opt to have the bill charged to a credit card.
Bing!
The system that Bethany Thurman Leslie of Kansas City, Mo., has worked out is pretty simple as well: She avoids procrastination. "I pay my bills the day they come in the mail, put laundry away as soon as I take it out of the dryer, put stuff where it goes as soon as I get home from a shopping trip or the library -- so I don't have time to lose things or forget them!"
Karri Doxtad-Wilde of Sioux City, Iowa, has a "10 things" rule. She uses the four D's (do it, delete it, delay it or delegate it) for sorting mail, papers and stuff. "Then I organize my 'do it' pile from highest priority to least and never let it add up to more than 10 things," Doxtad-Wilde wrote. "This seems to work fairly well."
Four keys to getting organized
If you're ready to lower the costs of disorganization and clutter, professional organizers and productivity experts have some tips:
Make the time. Leist warns against waiting until you "find the time" to tackle organization chores. "Make the time, because you're never going to find the time," she said.
Oh, and expect whatever you're organizing to take longer than you think: "If you think it's going to take two hours, it's going to take four or six," Leist said. "Multiply your estimate by two or three."
Tackle first what bugs you the most. This suggestion from organization expert Julie Morgenstern, the author of "Organizing From the Inside Out," allows you to get a sense of accomplishment by fixing a top-of-mind problem.
Don't rely on your brain. Productivity guru David Allen, the author of "Getting Things Done," warns that our brains are poorly structured for remembering lengthy to-do lists and multiple due dates. Our brains will bug us over and over about certain unfinished tasks but won't necessarily remind us in time to pay the light bill, for example. So it's important to set up reminders that actually work, such as e-mail and text alerts. If your phone has a timer, you can set it after you feed a parking meter to remind you to get back before it expires.
Get help. There are books and blogs galore on organizing, many of which are extremely helpful -- although, like anything else, too many can add to your clutter and/or procrastination issues. But if you're really stuck, paying for a professional organizer can help. If such a consultation results in fewer costs from late fees, storage facilities and duplicate purchases, it may even pay for itself.
Every time you buy a duplicate of something you already own, leave a rebate unclaimed or forget to pay a bill on time, you're burning money.
Nancy Lester Anderson of Sacramento, Calif., just found $100 worth of expired gift cards in her "to do" pile.
Christine Moore of Quincy, Ill., missed out on $300 of manufacturer rebates on her new appliances because she misplaced the paperwork.
Tom Wyatt of Beaverton, Ore., estimates he's spent $100 to $200 replacing tools he already has.
"Every time I need to do something around the house, I have to go buy a new tool," he wrote on my Facebook fan page. His repeated refrain: "I know that I have one of these, I just can't FIND IT!!!!"
The National Association of Professional Organizers has never commissioned a survey on what the typical U.S. household pays for clutter and disorganization, says its president, Laura Leist. But if such a survey were conducted, Leist and I bet the toll would be in the hundreds of dollars a year. For some families, it's in the thousands.
Exhibit A is the self-storage industry, which rakes in $22 billion annually, according to the Self Storage Association. One in 10 U.S. households rents a storage locker, which means an average annual cost of about $2,000 per household for storage.
Easier to find space than time?
There are reasons to rent a storage facility besides being unable to part with your clutter, of course. About 4% of the industry's units are rented by members of the military, who may store stuff while they're deployed. Storage facilities are a handy place to put stuff during a remodel or when you're trying to "stage" your home to sell.
But some of Leist's clients rent "two or three or five" units simply because they can't face the task of sorting through their possessions and discarding what they don't need.
"They don't want to deal with what's inside" the storage units, said Leist, a certified professional organizer and the author of "Eliminate Chaos: The 10-Step Process to Organize Your Home and Life."
That's just the tip of the iceberg of costs we pay for not being sufficiently organized. Consider:
* U.S. credit card issuers will collect more than $7 billion in late fees this year, according to Odysseas Papadimitriou, a former lending executive and the CEO and founder of CardHub.com.
* U.S. banks collected more than $37 billion in overdraft fees last year, according to research firm Moebs Services, before new rules kicked in that restricted such charges. One in four checking accounts had an overdraft fee during another 12-month period, according to a 2008 FDIC survey (.pdf) of 39 banks. Four percent of those banks' accounts had 10 to 19 bounced transactions, paying an average $451 in fees, while 5% had 20 or more, paying a whopping $1,610 on average.
* Each year, hundreds of millions of dollars in U.S. tax refunds expire unclaimed because people fail to file their tax returns within the three-year time limit. The unclaimed refunds typically average between $550 and $600, according to the Internal Revenue Service.
* Unpaid parking tickets and library fines have become big business for collection agencies, which increasingly have taken over dunning duties from municipalities. Municipalities are owed more than $40 billion, according to an estimate by Kaulkin Ginsberg, a collection industry research company. An overlooked ticket or forgotten library book thus can become a collection account on your credit reports, tanking your credit scores and perhaps leading to higher interest rates.
* More than $32 billion of unclaimed property is sitting in U.S. treasurers' escheat offices, waiting for the owners of about 117 million abandoned accounts to claim the money. The accounts range from utility security deposits to life insurance payouts to the contents of safe-deposit boxes (although items of value may be sold and only the money kept; paperwork without commercial value, such as birth certificates and photos, may be shredded).
Not every dollar of these costs is due to lack of organization, granted. But failing to have good systems for dealing with our lives and possessions means many of us end up paying money we shouldn't or simply leaving money on the table.
Paying the price in time and hassle
The costs don't have to be big to be annoying. Christina Brodbeck of Grand Terrace, Calif., spent 20 minutes one morning searching for her 6-year-old son's missing shoe. He'd outgrown his other footwear and was down to one pair that could be worn to school.
"All we had were flip-flops, which are banned at school," Brodbeck confessed. "So, we had to go to the store to buy him a pair of tennis shoes that were proper for school. . . . It was an ugly morning. The kids were late for school (and) I was late for work."
The great thing is that Brodbeck learned something from the experience and changed how her household works.
"Now shoes come off at the front door and go into a bin right beside the door," Brodbeck said. "We also have a backup pair now as well."
In our household, the great clutter catastrophe was missing library books. I spent a small fortune in late fees and replacement costs for children's books that disappeared, sometimes permanently, before developing a system where borrowed books "live" in a canvas bag. The bag doesn't get taken out of the house unless it's on the way back to the library. That worked great -- until I checked out two books for myself, without the bag, and promptly left them on a city bus.
My bus slip-up illustrates what organizer Leist says: It's not enough to set up systems and organize your stuff. You have to maintain those systems -- or create systems that maintain themselves.
Such as automatic banking. Emily Stanley Halla of Wakefield, R.I., said she avoids late fees by having most of her bills auto-debited from her bank account. If you're squeamish about giving a biller direct access to your money, you often can opt to have the bill charged to a credit card.
Bing!
The system that Bethany Thurman Leslie of Kansas City, Mo., has worked out is pretty simple as well: She avoids procrastination. "I pay my bills the day they come in the mail, put laundry away as soon as I take it out of the dryer, put stuff where it goes as soon as I get home from a shopping trip or the library -- so I don't have time to lose things or forget them!"
Karri Doxtad-Wilde of Sioux City, Iowa, has a "10 things" rule. She uses the four D's (do it, delete it, delay it or delegate it) for sorting mail, papers and stuff. "Then I organize my 'do it' pile from highest priority to least and never let it add up to more than 10 things," Doxtad-Wilde wrote. "This seems to work fairly well."
Four keys to getting organized
If you're ready to lower the costs of disorganization and clutter, professional organizers and productivity experts have some tips:
Make the time. Leist warns against waiting until you "find the time" to tackle organization chores. "Make the time, because you're never going to find the time," she said.
Oh, and expect whatever you're organizing to take longer than you think: "If you think it's going to take two hours, it's going to take four or six," Leist said. "Multiply your estimate by two or three."
Tackle first what bugs you the most. This suggestion from organization expert Julie Morgenstern, the author of "Organizing From the Inside Out," allows you to get a sense of accomplishment by fixing a top-of-mind problem.
Don't rely on your brain. Productivity guru David Allen, the author of "Getting Things Done," warns that our brains are poorly structured for remembering lengthy to-do lists and multiple due dates. Our brains will bug us over and over about certain unfinished tasks but won't necessarily remind us in time to pay the light bill, for example. So it's important to set up reminders that actually work, such as e-mail and text alerts. If your phone has a timer, you can set it after you feed a parking meter to remind you to get back before it expires.
Get help. There are books and blogs galore on organizing, many of which are extremely helpful -- although, like anything else, too many can add to your clutter and/or procrastination issues. But if you're really stuck, paying for a professional organizer can help. If such a consultation results in fewer costs from late fees, storage facilities and duplicate purchases, it may even pay for itself.
Wednesday, September 15, 2010
Household debt reaches worrisome levels
The following article was written by Julian Beltrane of the Canadian Press, and published online at www.msn.ca on September 15, 2010. It is a grim reminder to many of us of the harsh reality many Canadians live beyond their means - bolstered only by access to credit. A day of reckoning will come for many.
OTTAWA - Canadians are taking on too much debt, with potentially serious consequences for both their own finances and the Canadian economy.
The warning from economists and a leading global think-tank comes amid fresh evidence that floor-low interest rates the past two years have induced households to borrow more than they may be able to comfortably afford.
Even Canadians instinctively seem to sense their vulnerability.
A new survey reveals that 81 per cent said that if they won $1 million in the lottery their first thought wouldn't be what new shiny car they could buy, but paying off debts.
"People are worried that interest rates are going to increase because, once that happens, their debt loads are going to get bigger," said Cindy Forget, chairman of the Canadian Payroll Association, which did the poll.
More to the point, the new survey found that 59 per cent of employees said they were living from paycheque to paycheque, and that about half put aside only five per cent, or even less, of net income in savings.
The Bank of Canada began driving down interest rates more than two years ago — eventually setting the trendsetting policy rate at the hyper-low level of 0.25 per cent — to stimulate a faltering economy.
But now analysts say the good medicine is becoming toxic, which is why bank governor Mark Carney appears determined to continue hiking interest rates — the last increase coming last week — despite a hard-braking economy.
Lured by low mortgage interest rates, Canadians have been borrowing and buying homes at an unsustainable rate, the Paris-based Organization for Economic Co-operation and Development said Monday.
"[But] this situation is bound to change as the Bank of Canada withdraws monetary stimulus and longer-term rates move up in response," the think-tank said. "In any case, household debt credit needs to slow down, which may well moderate private spending and residential investment in the coming quarters."
The agency found household net worth fell for the first time in a year in the second quarter, mainly due to lower stock prices. Net worth declined by $34 million to $5.9 trillion in the April-to-June quarter, a period when the Toronto Stock Exchange index declined almost 6.2 per cent.
On the plus side, the key debt-to-income ratio fell from a record 148 per cent to 145.7 per cent, while the debt-service ratio fell to a four-year low of 7.2 per cent. But that may well be a temporary improvement doomed to be reversed in the third quarter.
Reached in Toronto, federal Finance Minister Jim Flaherty said market pressures have already caused a softening in Canada's housing market, but if the government has to do more to curb overborrowing, it will.
"Rates are much more likely to go up than go down in the future and they [Canadians] have to make sure they can afford to pay the monthly payments on their mortgages," he said.
The new data is illustrative of both the ability of Canadians to carry large levels of debt, for now, and their vulnerability in the future.
The main danger is not so much that Canadians will be unable to meet their debt obligations — although some could be driven into insolvency, said Scotiabank economist Derek Holt.
But if Canadians are tapped out just trying to pay interest and principle on debt, they won't spend on consumer items, thereby slowing economic growth.
That's what happened to Canadian governments in the 1980s and first half of the 1990s when they were running up huge deficits.
"Household debt has moved in to vacate the space left by once heavily leveraged Canadian governments and corporations," he noted.
"I think the issue is significant enough to cause concern that Canada is frittering away many of the hard won advantages that have been created in repairing public and corporate finances over the past twenty years."
TD Bank economist Diana Petramala cautions that the near future is not rosy in terms of debt and net worth.
Debt ratios have been rising sharply since 2007, and even the second quarter's slight decrease appears temporary, a result of a 15 per cent annualized surge in tax refunds.
Meanwhile, any improvement in stock market performance will likely be more than offset by the 3.7 per cent decline in house values since April, which are expected to fall further.
"Weak asset growth in combination with still strong liability growth will likely have households feeling buried under more debt than they ever have," Petramala said.
By Julian Beltrame, The Canadian Press, thecanadianpress.com, September 15, 2010
OTTAWA - Canadians are taking on too much debt, with potentially serious consequences for both their own finances and the Canadian economy.
The warning from economists and a leading global think-tank comes amid fresh evidence that floor-low interest rates the past two years have induced households to borrow more than they may be able to comfortably afford.
Even Canadians instinctively seem to sense their vulnerability.
A new survey reveals that 81 per cent said that if they won $1 million in the lottery their first thought wouldn't be what new shiny car they could buy, but paying off debts.
"People are worried that interest rates are going to increase because, once that happens, their debt loads are going to get bigger," said Cindy Forget, chairman of the Canadian Payroll Association, which did the poll.
More to the point, the new survey found that 59 per cent of employees said they were living from paycheque to paycheque, and that about half put aside only five per cent, or even less, of net income in savings.
The Bank of Canada began driving down interest rates more than two years ago — eventually setting the trendsetting policy rate at the hyper-low level of 0.25 per cent — to stimulate a faltering economy.
But now analysts say the good medicine is becoming toxic, which is why bank governor Mark Carney appears determined to continue hiking interest rates — the last increase coming last week — despite a hard-braking economy.
Lured by low mortgage interest rates, Canadians have been borrowing and buying homes at an unsustainable rate, the Paris-based Organization for Economic Co-operation and Development said Monday.
"[But] this situation is bound to change as the Bank of Canada withdraws monetary stimulus and longer-term rates move up in response," the think-tank said. "In any case, household debt credit needs to slow down, which may well moderate private spending and residential investment in the coming quarters."
- The caution was released before Statistics Canada issued its latest report on household worth showing Canadians got slightly poorer in the second quarter, the first such reversal since the recession.
The agency found household net worth fell for the first time in a year in the second quarter, mainly due to lower stock prices. Net worth declined by $34 million to $5.9 trillion in the April-to-June quarter, a period when the Toronto Stock Exchange index declined almost 6.2 per cent.
On the plus side, the key debt-to-income ratio fell from a record 148 per cent to 145.7 per cent, while the debt-service ratio fell to a four-year low of 7.2 per cent. But that may well be a temporary improvement doomed to be reversed in the third quarter.
Reached in Toronto, federal Finance Minister Jim Flaherty said market pressures have already caused a softening in Canada's housing market, but if the government has to do more to curb overborrowing, it will.
"Rates are much more likely to go up than go down in the future and they [Canadians] have to make sure they can afford to pay the monthly payments on their mortgages," he said.
The new data is illustrative of both the ability of Canadians to carry large levels of debt, for now, and their vulnerability in the future.
The main danger is not so much that Canadians will be unable to meet their debt obligations — although some could be driven into insolvency, said Scotiabank economist Derek Holt.
But if Canadians are tapped out just trying to pay interest and principle on debt, they won't spend on consumer items, thereby slowing economic growth.
That's what happened to Canadian governments in the 1980s and first half of the 1990s when they were running up huge deficits.
"Household debt has moved in to vacate the space left by once heavily leveraged Canadian governments and corporations," he noted.
"I think the issue is significant enough to cause concern that Canada is frittering away many of the hard won advantages that have been created in repairing public and corporate finances over the past twenty years."
TD Bank economist Diana Petramala cautions that the near future is not rosy in terms of debt and net worth.
Debt ratios have been rising sharply since 2007, and even the second quarter's slight decrease appears temporary, a result of a 15 per cent annualized surge in tax refunds.
Meanwhile, any improvement in stock market performance will likely be more than offset by the 3.7 per cent decline in house values since April, which are expected to fall further.
"Weak asset growth in combination with still strong liability growth will likely have households feeling buried under more debt than they ever have," Petramala said.
By Julian Beltrame, The Canadian Press, thecanadianpress.com, September 15, 2010
Wednesday, July 7, 2010
FIRST TIME HOME BUYERS
First-Time Buyers represent the largest group of purchasers in today’s real estate market. Recognizing this, Lenders and Insurers have developed progressive ways to allow for many Canadians to purchase their first home, which would otherwise not have been possible under traditional programs. The most common program utilized today by First-Time Buyers is the 95% high-ratio financing program through both the Canadian Mortgage and Housing Corporation (CMHC), and Genworth Financial (formerly GE Mortgage Insurance). Learn more about High Ratio Mortgage Insurance.
There are other programs available for First-Time Buyers in order to assist them with the purchase of their first home. Applicants are often enticed by some lenders with 5% down by offering cash back programs for the down payment or for the purchase of appliances etc. Just be aware that these mortgages are offered a significantly higher than discounted rates, and the cash back is pro-rated in the case that you re-finance your mortgage.
There are also programs available through Genworth Financial and secondary mortgage lenders through a self-insured program, that allow for 95% financing with higher premiums for the greater risk they take on these types of transactions.
These can vary significantly and applicants should consult with a mortgage professional for details on how these programs work. CMHC also permits first-time buyers to borrow their 5% from any other source under certain conditions. For further assistance in understanding these programs and how they work, please feel free to contact us at 416 989 1000.
Minimum down payment requirements for non-owner-occupied homes will increase to 20% from 5%, and the way that rental income is considered has been scaled back as well. This rule will have the most dramatic impact of all three changes, but only on real estate investors.
The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $25,000, from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. For more information please click on the link: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html
If you buy land or an interest in land in Ontario, you must pay Ontario's land transfer tax. If you are a first time home buyer, you may be eligible for a refund for all or a part of the tax. For more information, please follow this link. http://www.rev.gov.on.ca/en/tax/ltt
Land Transfer Tax Calculator:
http://www.torontorealestateboard.com/LTT_splash/ltt_calculator.html
There are other programs available for First-Time Buyers in order to assist them with the purchase of their first home. Applicants are often enticed by some lenders with 5% down by offering cash back programs for the down payment or for the purchase of appliances etc. Just be aware that these mortgages are offered a significantly higher than discounted rates, and the cash back is pro-rated in the case that you re-finance your mortgage.
There are also programs available through Genworth Financial and secondary mortgage lenders through a self-insured program, that allow for 95% financing with higher premiums for the greater risk they take on these types of transactions.
These can vary significantly and applicants should consult with a mortgage professional for details on how these programs work. CMHC also permits first-time buyers to borrow their 5% from any other source under certain conditions. For further assistance in understanding these programs and how they work, please feel free to contact us at 416 989 1000.
Minimum down payment requirements for non-owner-occupied homes will increase to 20% from 5%, and the way that rental income is considered has been scaled back as well. This rule will have the most dramatic impact of all three changes, but only on real estate investors.
The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $25,000, from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. For more information please click on the link: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html
If you buy land or an interest in land in Ontario, you must pay Ontario's land transfer tax. If you are a first time home buyer, you may be eligible for a refund for all or a part of the tax. For more information, please follow this link. http://www.rev.gov.on.ca/en/tax/ltt
Land Transfer Tax Calculator:
http://www.torontorealestateboard.com/LTT_splash/ltt_calculator.html
HST and real estate
Do I have to pay Tax?
The harmonized sales tax introduced by the Liberal Government in Ontario went into effect in July 2010. Although tax is collected at a rate of 13% on the sale price of good and services, it doesn't apply to every type of home or every type or real estate.
New Home purchases are subject to HST but may qualify for an HST rebate. Resale homes are sold without HST. Land may be exempt from tax, but realtors and other professionals must charge HST on the purchase price. However, if the home is going to be your primary place of residence, it may qualify for a partial HST rebate, depending on sale price.
You can get the HST Rebate application here
You do not have to pay HST on the purchase price of a used residential home. Revenue Canada defines "used residential property" to include a previously occupied house, condominium, summer cottage, vacation property or non-commercial hobby farm.
HST applies to most of the services provided in completing the real estate transaction. For example, 13% HST is applied to the commission a realtor charges for facilitating a sale. The tax is paid by the person responsible for paying the commission - generally the seller.
HST also applies to many of the other services involved in the real estate transaction, including appraisal feed, referrals, surveys and legal assistance. HST is charge on these fees regardless of whether the house purchase is itself HST exempt or not.
One exception is that mortgage broker fees are HST exempt if the fees are charged separately from any taxable real estate commissions. As well, mortgages and interest on mortgages are HST exempt.
HST is not normally due and payable when the real estate transaction is completed - generally the "closing date". In some cases, HST could be payable on transfer of possession. Your realtor can answer your questions about closing dates and HST payments. For additional information contact you local Revenue Canada Tax Services Office.
The harmonized sales tax introduced by the Liberal Government in Ontario went into effect in July 2010. Although tax is collected at a rate of 13% on the sale price of good and services, it doesn't apply to every type of home or every type or real estate.
New Home purchases are subject to HST but may qualify for an HST rebate. Resale homes are sold without HST. Land may be exempt from tax, but realtors and other professionals must charge HST on the purchase price. However, if the home is going to be your primary place of residence, it may qualify for a partial HST rebate, depending on sale price.
You can get the HST Rebate application here
You do not have to pay HST on the purchase price of a used residential home. Revenue Canada defines "used residential property" to include a previously occupied house, condominium, summer cottage, vacation property or non-commercial hobby farm.
HST applies to most of the services provided in completing the real estate transaction. For example, 13% HST is applied to the commission a realtor charges for facilitating a sale. The tax is paid by the person responsible for paying the commission - generally the seller.
HST also applies to many of the other services involved in the real estate transaction, including appraisal feed, referrals, surveys and legal assistance. HST is charge on these fees regardless of whether the house purchase is itself HST exempt or not.
One exception is that mortgage broker fees are HST exempt if the fees are charged separately from any taxable real estate commissions. As well, mortgages and interest on mortgages are HST exempt.
HST is not normally due and payable when the real estate transaction is completed - generally the "closing date". In some cases, HST could be payable on transfer of possession. Your realtor can answer your questions about closing dates and HST payments. For additional information contact you local Revenue Canada Tax Services Office.
Tuesday, July 6, 2010
$ reasons why homeownership makes sense
Home ownership can be the best investment you’ll ever make – despite the regular headaches. If you’re in the market to buy a home, think about a few tax tips that could save you a bundle in taxes.
1. Principal residence exemption. You’re likely aware that selling a home can be a tax-free event. The reason? Each “family unit” is entitled to designate one property as their principal residence. A family unit consists of you, your spouse or common-law partner, and any unmarried children under age 18. You have to ordinarily inhabit a place to call it your principal residence, but you’ll be entitled to an exemption to shelter any capital gains on a sale of your principal residence later. If you own more than one property, speak to a tax pro about the exemption because the rules can be complex.
2. Home Buyers’ Plan (HBP). The HBP will allow you to borrow, tax-free, up to $25,000 from your registered retirement savings plan (RRSP) for the purpose of buying or building a home.
You must be a first-time home buyer, which will be the case if you or your spouse (or common-law partner) haven’t owned a home that you occupied as a principal residence in the year of the RRSP withdrawal or the preceding four years.
You generally must repay the amount back to your RRSP over a 15-year period. Be aware that I’ve simplified the rules here. Check out Canada Revenue Agency’s publication RC4135, available at cra.gc.ca, for more.
3. First-Time Home Buyers’ Tax Credit. The 2009 federal budget introduced a new tax credit for first-time home buyers. If you buy a home and you and your spouse (or common-law partner) haven’t owned a principal residence that you occupied in the year of your purchase or the preceding four years, then you may be entitled to a tax credit worth up to $5,000, multiplied by 15 per cent (the applicable percentage for 2010), or $750. The credit can be claimed by either spouse, or both, as long as the total doesn’t exceed the allowable $750.
4. Deducting expenses. You may be entitled to claim a deduction for a portion of home costs such as mortgage interest, property taxes, utilities, repairs, landscaping, and more. How? Two ways.
First, think about establishing a home-based business and a home office which is your principal place of business, or is used on a regular and continuous basis for meeting clients. If this doesn’t suit your fancy, then consider renting out part of your residence to a tenant.
Your property will still be considered your principal residence even when you use it to earn income (from rents, or a business) as long as the partial use of the place for income-producing purposes is ancillary to the main use as your principal residence, you don’t make any structural change to the property, and you don’t claim capital cost allowance (CCA) on the property. Finally, don’t forget to claim moving expenses if you make a qualifying move to a new residence.
5. Multiplying exemptions. It may be possible to shelter the capital gains on more than one principal residence. This generally involves putting each property into separate names rather than holding them jointly. The rules are complex enough to make your head spin, so speak to a tax pro for more details.
With thanks to Tim Cestnick, who is managing director at WaterStreet Family Wealth Counsel and author of 101 Tax Secrets for Canadians.
1. Principal residence exemption. You’re likely aware that selling a home can be a tax-free event. The reason? Each “family unit” is entitled to designate one property as their principal residence. A family unit consists of you, your spouse or common-law partner, and any unmarried children under age 18. You have to ordinarily inhabit a place to call it your principal residence, but you’ll be entitled to an exemption to shelter any capital gains on a sale of your principal residence later. If you own more than one property, speak to a tax pro about the exemption because the rules can be complex.
2. Home Buyers’ Plan (HBP). The HBP will allow you to borrow, tax-free, up to $25,000 from your registered retirement savings plan (RRSP) for the purpose of buying or building a home.
You must be a first-time home buyer, which will be the case if you or your spouse (or common-law partner) haven’t owned a home that you occupied as a principal residence in the year of the RRSP withdrawal or the preceding four years.
You generally must repay the amount back to your RRSP over a 15-year period. Be aware that I’ve simplified the rules here. Check out Canada Revenue Agency’s publication RC4135, available at cra.gc.ca, for more.
3. First-Time Home Buyers’ Tax Credit. The 2009 federal budget introduced a new tax credit for first-time home buyers. If you buy a home and you and your spouse (or common-law partner) haven’t owned a principal residence that you occupied in the year of your purchase or the preceding four years, then you may be entitled to a tax credit worth up to $5,000, multiplied by 15 per cent (the applicable percentage for 2010), or $750. The credit can be claimed by either spouse, or both, as long as the total doesn’t exceed the allowable $750.
4. Deducting expenses. You may be entitled to claim a deduction for a portion of home costs such as mortgage interest, property taxes, utilities, repairs, landscaping, and more. How? Two ways.
First, think about establishing a home-based business and a home office which is your principal place of business, or is used on a regular and continuous basis for meeting clients. If this doesn’t suit your fancy, then consider renting out part of your residence to a tenant.
Your property will still be considered your principal residence even when you use it to earn income (from rents, or a business) as long as the partial use of the place for income-producing purposes is ancillary to the main use as your principal residence, you don’t make any structural change to the property, and you don’t claim capital cost allowance (CCA) on the property. Finally, don’t forget to claim moving expenses if you make a qualifying move to a new residence.
5. Multiplying exemptions. It may be possible to shelter the capital gains on more than one principal residence. This generally involves putting each property into separate names rather than holding them jointly. The rules are complex enough to make your head spin, so speak to a tax pro for more details.
With thanks to Tim Cestnick, who is managing director at WaterStreet Family Wealth Counsel and author of 101 Tax Secrets for Canadians.
Friday, June 25, 2010
Credit cards, debit cards, and cash when in Europe
Twelve European countries—and about 300 million people—now use the euro currency. The major holdouts in Western Europe are Britain, Denmark, Norway, Sweden, and Switzerland (but Swiss ATMs give euros, prices are listed in both Swiss francs and euros, and travelers can get by in that country with euro cash). When you cross a border into Eastern Europe, forget about euros and learn about Polish zlotychs, Hungarian forints, Croatian kunas, Slovenian tolars, and more. Although 10 more countries (mainly in Eastern Europe) are joining the EU this year, none will adopt the euro immediately.
Cash Machines (ATMs) and Currency Conversion Fees
Throughout Europe, cash machines are the standard way for travelers to change money. Confirm with your bank (or credit card company) that your card will work in Europe and alert them that you’ll be making withdrawals while traveling. Otherwise, the bank might freeze your card if it detects unusual spending patterns in, say, Marseille instead of Miami. You don’t have to give them specific dates—just tell them you’ll be in France in July.
Many banks add a two to five percent conversion fee, a commission of about one percent, and a transaction fee each time you use an ATM. And the ATM you use might charge its own fee, too. To limit fees, make fewer visits to the ATM and withdraw larger amounts.
Note that some cash machines won’t let you take out more than a specific amount (don’t take it personally). The machines have a transaction maximum, forcing you to make several withdrawals and incur several fees to get the amount you want. When choosing how much to withdraw from a cash machine, request a big amount in the hopes you’ll get it.
ATMs are short on instant documentation. Few ATMs or their receipts list the exchange rate, and some machines don’t dispense receipts at all.
More versatile than ATM cards, debit cards can be used to purchase items from stores, as well as to get cash. And in case you run across a nonfunctioning cash machine, debit cards issued by Visa or MasterCard can be used for over-the-counter cash advances (with a fee) at banks that accept those bank cards. When you use a debit card, the money you withdraw comes directly out of your account. This is great if you want to avoid paying interest, but it can be downright scary if a thief gets your card (see Theft Prevention below).
Credit cards work fine throughout Europe, although you'll need to pay hefty interest charges (around 18 percent) on your purchases.
Don't count on charging everything with your bank card; many merchants require a minimum purchase of about $30. Visa and MasterCard are more widely accepted than American Express.
Prepaid debit cards are the new kids on the block. You can load up your card with cash for your trip, then reload it online or by phone as you travel. The card works in ATMs just like a regular debit card but provides more security. Prepaid cards generally work only in ATMs, so the thief would have to know your PIN code to get at your money.
But prepaid debit cards have disadvantages. As with any other card, fees add up—for buying the card, reloading the card, overdrawing your account, "cashing out," and canceling the card at the end of your trip. And if the card is lost, it's virtually impossible to get a new one on the road in Europe—so bringing some form of backup is wise.
Many credit card companies sell prepaid cards, but AAA and American Express seem to offer the best deals with fewer fees. Either card can be reloaded with more funds ($5 fee each time).
AAA's Cash Passport is more convenient since it has a Visa logo that allows it to work in most European ATMs (www.aaa.com). If the card is lost or stolen, AAA will arrange for you to get cash in Europe (by wire or at a bank), but stolen cash will not be refunded.
Holding on to Your Money
Your bank cards can be stolen as easily in Europe as in the U.S. There is no surefire protection, but you can take some precautions.
Minimize spreading your numbers around. When booking a room from home, you don’t need to send your bank card information in your initial email or fax. Wait to see if a room is yours, then send your information as a deposit.
When on the road, use your debit card only for withdrawing funds from cash machines and use cash or your credit card to make purchases. (If you use a debit card for everything, you increase the risk that an unscrupulous salesclerk will use your number to order goods off the Internet without your signature.)
Take a minimum number of bank cards with you (but bring at least two—one to provide a backup if the other is demagnetized or munched by a machine). Keep your cards safely in your money belt or neck pouch, hidden out of sight.
Scams are commonplace. Beware the “friendly” bystander who helps you use the ATM and learns your PIN code while a thin plastic sheath or gummy substance in the slot grabs your debit card. After you walk away to report the loss, the thief retrieves your card with a tweezers. He could conceivably empty your account. You’d likely lose only a small liability fee, but why take unnecessary risks? Don't let anyone know your PIN code. Memorize it—you’d be surprised at how many people foolishly write it on their card.
Consider asking your bank to set a daily withdrawal limit for your ATM or debit card (but note that a daily limit applies only to cash machine withdrawals, not purchases). In case of problems, carry the phone numbers of your bank and credit card company in your luggage. Upon returning home, call your debit and credit card vendor to verify your balance and bill.
Bouncing Back if You Lose Bank Cards
You can stop thieves from using your ATM, debit, or credit card by reporting the loss immediately to the proper company. Call their 24-hour U.S. numbers collect.
Providing the following information will help expedite the process: the name of the financial institution that issued you the card, full card number, the cardholder's name as printed on the card, billing address, home phone number, circumstances of the loss or theft, and identification verification: Social Security number or birthdate and your mother's maiden name. (Packing along a photocopy of the front and back of your cards helps you answer the harder questions.) You can generally receive a temporary card within two business days in Europe.
If you promptly report your card lost or stolen, you typically won't be responsible for any unauthorized transactions on your account, although many banks charge a liability fee.
Cash
Whatever type of bank card you bring, it’s smart to carry several hundred U.S. dollars in your money belt for emergencies. I’ve been in Greece and Ireland when every bank went on strike, shutting down without warning. But hard cash is cash.
Paper money of any Western country is good at banks anywhere. The currencies in the more established Eastern European countries—like the Czech Republic, Poland, Hungary, and Slovenia—are stable and easily exchangeable. But the currencies of countries at the easternmost fringes of Europe—Bulgaria, Romania, the Baltics, and Turkey—are still soft. Don't plan on exchanging soft money elsewhere in Europe. Blow it on souvenirs, splurge dinners, and all the ice cream you can eat. It's the kind of challenge that makes travel fun.
RICK STEVES (www.ricksteves.com) is the host of the PBS series Rick Steves' Europe and the author of over 30 European travel guidebooks, including Europe Through the Back Door, all published by Avalon Travel Publishing.
Cash Machines (ATMs) and Currency Conversion Fees
Throughout Europe, cash machines are the standard way for travelers to change money. Confirm with your bank (or credit card company) that your card will work in Europe and alert them that you’ll be making withdrawals while traveling. Otherwise, the bank might freeze your card if it detects unusual spending patterns in, say, Marseille instead of Miami. You don’t have to give them specific dates—just tell them you’ll be in France in July.
Many banks add a two to five percent conversion fee, a commission of about one percent, and a transaction fee each time you use an ATM. And the ATM you use might charge its own fee, too. To limit fees, make fewer visits to the ATM and withdraw larger amounts.
Note that some cash machines won’t let you take out more than a specific amount (don’t take it personally). The machines have a transaction maximum, forcing you to make several withdrawals and incur several fees to get the amount you want. When choosing how much to withdraw from a cash machine, request a big amount in the hopes you’ll get it.
ATMs are short on instant documentation. Few ATMs or their receipts list the exchange rate, and some machines don’t dispense receipts at all.
Debit and Credit Cards
More versatile than ATM cards, debit cards can be used to purchase items from stores, as well as to get cash. And in case you run across a nonfunctioning cash machine, debit cards issued by Visa or MasterCard can be used for over-the-counter cash advances (with a fee) at banks that accept those bank cards. When you use a debit card, the money you withdraw comes directly out of your account. This is great if you want to avoid paying interest, but it can be downright scary if a thief gets your card (see Theft Prevention below).
Credit cards work fine throughout Europe, although you'll need to pay hefty interest charges (around 18 percent) on your purchases.
Don't count on charging everything with your bank card; many merchants require a minimum purchase of about $30. Visa and MasterCard are more widely accepted than American Express.
Pre-Paid Debit Cards
Prepaid debit cards are the new kids on the block. You can load up your card with cash for your trip, then reload it online or by phone as you travel. The card works in ATMs just like a regular debit card but provides more security. Prepaid cards generally work only in ATMs, so the thief would have to know your PIN code to get at your money.
But prepaid debit cards have disadvantages. As with any other card, fees add up—for buying the card, reloading the card, overdrawing your account, "cashing out," and canceling the card at the end of your trip. And if the card is lost, it's virtually impossible to get a new one on the road in Europe—so bringing some form of backup is wise.
Many credit card companies sell prepaid cards, but AAA and American Express seem to offer the best deals with fewer fees. Either card can be reloaded with more funds ($5 fee each time).
AAA's Cash Passport is more convenient since it has a Visa logo that allows it to work in most European ATMs (www.aaa.com). If the card is lost or stolen, AAA will arrange for you to get cash in Europe (by wire or at a bank), but stolen cash will not be refunded.
Holding on to Your Money
Your bank cards can be stolen as easily in Europe as in the U.S. There is no surefire protection, but you can take some precautions.
Minimize spreading your numbers around. When booking a room from home, you don’t need to send your bank card information in your initial email or fax. Wait to see if a room is yours, then send your information as a deposit.
When on the road, use your debit card only for withdrawing funds from cash machines and use cash or your credit card to make purchases. (If you use a debit card for everything, you increase the risk that an unscrupulous salesclerk will use your number to order goods off the Internet without your signature.)
Take a minimum number of bank cards with you (but bring at least two—one to provide a backup if the other is demagnetized or munched by a machine). Keep your cards safely in your money belt or neck pouch, hidden out of sight.
Scams are commonplace. Beware the “friendly” bystander who helps you use the ATM and learns your PIN code while a thin plastic sheath or gummy substance in the slot grabs your debit card. After you walk away to report the loss, the thief retrieves your card with a tweezers. He could conceivably empty your account. You’d likely lose only a small liability fee, but why take unnecessary risks? Don't let anyone know your PIN code. Memorize it—you’d be surprised at how many people foolishly write it on their card.
Consider asking your bank to set a daily withdrawal limit for your ATM or debit card (but note that a daily limit applies only to cash machine withdrawals, not purchases). In case of problems, carry the phone numbers of your bank and credit card company in your luggage. Upon returning home, call your debit and credit card vendor to verify your balance and bill.
Bouncing Back if You Lose Bank Cards
You can stop thieves from using your ATM, debit, or credit card by reporting the loss immediately to the proper company. Call their 24-hour U.S. numbers collect.
Providing the following information will help expedite the process: the name of the financial institution that issued you the card, full card number, the cardholder's name as printed on the card, billing address, home phone number, circumstances of the loss or theft, and identification verification: Social Security number or birthdate and your mother's maiden name. (Packing along a photocopy of the front and back of your cards helps you answer the harder questions.) You can generally receive a temporary card within two business days in Europe.
If you promptly report your card lost or stolen, you typically won't be responsible for any unauthorized transactions on your account, although many banks charge a liability fee.
Cash
Whatever type of bank card you bring, it’s smart to carry several hundred U.S. dollars in your money belt for emergencies. I’ve been in Greece and Ireland when every bank went on strike, shutting down without warning. But hard cash is cash.
Paper money of any Western country is good at banks anywhere. The currencies in the more established Eastern European countries—like the Czech Republic, Poland, Hungary, and Slovenia—are stable and easily exchangeable. But the currencies of countries at the easternmost fringes of Europe—Bulgaria, Romania, the Baltics, and Turkey—are still soft. Don't plan on exchanging soft money elsewhere in Europe. Blow it on souvenirs, splurge dinners, and all the ice cream you can eat. It's the kind of challenge that makes travel fun.
RICK STEVES (www.ricksteves.com) is the host of the PBS series Rick Steves' Europe and the author of over 30 European travel guidebooks, including Europe Through the Back Door, all published by Avalon Travel Publishing.
Wednesday, June 23, 2010
New home sales in USA plunge 33%
Alan Zibel, AP Real Estate Writer, On Wednesday June 23, 2010, 10:37 am EDT
WASHINGTON (AP) -- Sales of new homes collapsed in May, sinking 33 percent to the lowest level on record as potential buyers stopped shopping for homes once they could no longer receive government tax credits.
The bleak report from the Commerce Department is the first sign of how the end of federal tax credits could weigh on the nation's housing market.
The credits expired April 30. That's when a new-home buyer would have had to sign a contract to qualify.
"We fear that the appetite to buy a home has disappeared alongside the tax credit," Paul Dales, U.S. economist with Capital Economics," wrote in a note. "After all, unemployment remains high, job security is low and credit conditions are tight."
New-home sales in May fell from April to a seasonally adjusted annual sales pace of 300,000, the government said Wednesday. That was the slowest sales pace on records dating back to 1963. And it's the largest monthly drop on record. Sales have now sunk 78 percent from their peak in July 2005.
Analysts were startled by the depth of the sales drop.
"We all knew there would be a housing hangover from the expiration of the tax credit," wrote Mike Larson, real estate and interest rate analyst at Weiss Research. "But this decline takes your breath away."
Economists surveyed by Thomson Reuters had expected a May sales pace of 410,000. April's sales pace was revised downward to 446,000.
The government offered an $8,000 credit for first-time buyers. Current homeowners who buy and move into another property could receive up to $6,500.
New-home sales fell nationwide from April's levels. They dropped 53 percent from a month earlier in the West and 33 percent in the Northeast. Sales in the South dropped 25 percent. The Midwest posted a 24 percent decline.
Builders have sharply scaled back construction in the face of a severe housing market bust. The number of new homes up for sale in March fell 0.5 percent to 213,000, the lowest level in nearly 40 years. But due to the sluggish sales pace in May, it would still take 8.5 months to exhaust that supply, above a healthy level of about six months.
The median sales price in May was $200,900. That was down 9.6 percent from a year earlier and down 1 percent from April.
New-homes sales made up about 7 percent of the housing market last year. That's down from about 15 percent before the bust.
The drop in new-home sales means fewer jobs in the construction industry, which normally powers economic recoveries but has remained lackluster this time.
Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders. The impact is felt across multiple industries, from makers of faucets and dishwashers to lumber yards.
Tuesday, June 22, 2010
In USA, 500 people arrested for mortgage fraud
Nearly 500 people have been arrested in a U.S.-wide crackdown on mortgage fraud since the operation began March 1. Federal officials found that Las Vegas was one of the major centres where scams were situated to falsley inflate house prices.
"I heard this many times," said Scott Hunter, a Las Vegas FBI agent who has interviewed hundreds of people lured into buying homes by crooked real estate agents, brokers and loan officers, to the Associated Press. "They said, 'Don't let your good credit go to waste. You can purchase these properties. This is how you acquire wealth.'
And when the party stopped and they were not able to keep inflating the prices on these houses, the whole thing collapsed."
Daniel Bogden, Nevada's U.S. attorney, said 123 defendants were charged, convicted or sentence within his state since the crackdown, named Operation Stolen Dreams, began. According to AP, Bogden estimated the losses in Nevada at almost $250 million.
"I heard this many times," said Scott Hunter, a Las Vegas FBI agent who has interviewed hundreds of people lured into buying homes by crooked real estate agents, brokers and loan officers, to the Associated Press. "They said, 'Don't let your good credit go to waste. You can purchase these properties. This is how you acquire wealth.'
And when the party stopped and they were not able to keep inflating the prices on these houses, the whole thing collapsed."
Daniel Bogden, Nevada's U.S. attorney, said 123 defendants were charged, convicted or sentence within his state since the crackdown, named Operation Stolen Dreams, began. According to AP, Bogden estimated the losses in Nevada at almost $250 million.
Canadian household net worth hits $6 trillion!
Canadian household net worth hit $6 trillion in the first quarter of 2010. It increased by 1.3 per cent, and is the fourth consecutive quarterly improvement in household net worth. This means 96 per cent of net worth lost during the economic crash has been recovered, according to David Onyett-Jeffries, economist with RBC Economics, as reported on Muddy York's Toronto Real Estate blog.
Other numbers from RBC show a strong Canadian housing market. Non-financial assets, where real estate contributes 85.5 per cent, is up 0.8 per cent to $24.9 billion from the previous quarter.
Mortgage debt increased by $16.4 billion in the first quarter, signalling continued growth in the real estate market. Over all, household liabilities rose by 1.5 per cent to $1.4 trillion.
Other numbers from RBC show a strong Canadian housing market. Non-financial assets, where real estate contributes 85.5 per cent, is up 0.8 per cent to $24.9 billion from the previous quarter.
Mortgage debt increased by $16.4 billion in the first quarter, signalling continued growth in the real estate market. Over all, household liabilities rose by 1.5 per cent to $1.4 trillion.
Wednesday, June 16, 2010
Money Top Source of Stress for North American Couples
Money Top Source of Stress for North American Couples, Survey Finds
Partners go to extremes to avoid fighting about finances
American Express 6/16/2010
Partners go to extremes to avoid fighting about finances
American Express 6/16/2010
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Wednesday, May 26, 2010
OECD urges Canada to raise interest rates
By CBC News, cbc.ca, Updated: May 26, 2010 11:40 AM
OECD urges Canada to raise rates
Canada should raise interest rates "without delay" and let economic stimulus measures expire to avoid inflation, the OECD said in its annual forecast Wednesday.
The Organization for Economic Co-operation and Development recommended the Bank of Canada continue to raise rates to more normal levels over this year and through 2011.
The advice comes six days before the bank is scheduled to announce whether it will increase its benchmark lending rate from record low levels.
Many economists had been predicting that with signs of growing economic recovery, the bank would start raising rateson June 1, but that has become less certain amid concerns that the effects of the European debt crisis may spread, slowing recovery in North America and growth in emerging economies.
The OECD said the bank should proceed with higher rates, and that the government should outline spending cuts and the details of how it plans to reduce its deficit.
The OECD has also raised its forecast for Canadian economic growth, to 3.6 per cent this year and 3.2 per cent next year.
It said the Canadian economy is recovering "vigorously" from the recession, lifted by a recovery in trade and government stimulus.
It did, however, warn the "high rate of household indebtedness" could undermine the recovery. In its overall forecast for its member countries, the OECD said the world economy is recovering "faster than expected."
But, it said, the debt crisis and overheating in emerging-market economies present increasing risks.
'Critical time for the world economy'
It projected OECD countries will grow by 2.7 per cent this year and 2.8 per cent in 2011.
Its forecast called for the U.S. economy to lead the OECD, with expansion of 3.2 per cent in both 2010 and 2011.
It predicts Japan's growth will be 3.0 per cent this year and 2.0 per cent in 2011.
European members of the OECD will be weighed down by the debt crisis, it said, and will growth at 1.2 per cent in 2010 and 1.8 per cent in 2011.
The need to deal with the debt crisis and still get deficits under control will require careful policy co-ordination, said Angel Gurria, the OECD's secretary general.
"This is a critical time for the world economy," he said in a statement.
Monday, May 17, 2010
Some Bankruptcy Myths
For most people, bankruptcy is the adult version of the child's bogeyman in the closet at night. There are plenty of myths about it, and most of the time, those myths only serve to make a tough situation even tougher. But like that bogeyman, the fears diminish when you figure out what is really going on.
Here are five myths about bankruptcy and some truths that might help to turn a light on.
Bankruptcies involve expensive lawyers
In Canada, practising lawyers are not allowed to be bankruptcy trustees. This is different from the U.S., where bankruptcies are nearly always handled by lawyers. Licensed Canadian trustees might have gone through law school, but under Canadian law, they may either work as a trustee or a lawyer, not both.
"Small bankruptcies and consumer proposals do not require a court file, because a bankruptcy trustee is an officer of the court. So the filing of the bankruptcy is deemed to be accepted without going before a judge," says Colleen Craig, a bankruptcy trustee in Victoria, British Columbia.
As well, "since the law changed in 1997, there has been no requirement to advertise a simple, personal bankruptcy in the papers." So, if you're worried about your privacy, you can relax; the whole world does not have to know.
According to Toronto attorney Mark Laugesen, many people confuse restructuring proceedings with bankruptcy. Restructuring is a corporate process, and both corporate bankruptcies and restructuring usually require the services of an attorney, while a personal bankruptcy does not.
They'll take everything but the house
Many people believe that as part of declaring bankruptcy, you're giving up almost all of your worldly possessions. But that's not necessarily so, says Frank Kisluk, an Ontario bankruptcy trustee who has written two books on consumer debt and bankruptcy. "Out west you have homestead protection -- a certain amount of your equity is protected -- but in Ontario, your principal residence is not protected. If you have a home with equity, that equity goes to the creditors."
Different provinces have different rules about what you can keep. But while you are in bankruptcy, you can't keep much. In fact, you can only make a small amount of money
($1,870 a month for an individual). If you make more than that, the period of your bankruptcy may be extended. Deciding to declare bankruptcy means making a commitment to a very modest standard of living for at least nine months.
All of your debts are erased or paid
For better or worse, there are several instances when debts endure even after declaring bankruptcy. Alimony and child support are not changed by a declaration of bankruptcy. Student loan debts also remain after bankruptcy unless it has been at least seven years since your last day of school, although this can be challenged as a hardship after the bankruptcy is settled.
When you become bankrupt, all of your assets are transferred to your trustee. You are no longer responsible for your debts, but neither do you hold your assets.
Once you have declared bankruptcy, it is no longer your job to pay off your old debts. If your creditors cannot be located, the money goes into an account to be held indefinitely by the government. There is a database online where creditors can claim the funds owed to them if a trustee can't find them. It's interesting to note that the largest unclaimed amount in the database is currently over $100,000.
There's a set period of time when you are considered bankrupt
When a bankruptcy ends, the person who declared bankruptcy is discharged by the court; however, a discharge is not always automatic.
"Coming out of bankruptcy is a bit like coming out of a washing machine," says Craig. "You are eligible to be discharged at a certain time, but there are three people who can oppose your discharge: the trustee, the Office of the Superintendent or your creditors. Opposed discharges go automatically to court -- the worst that can happen is that you are deemed to be bankrupt forever." Craig says this happens very rarely and usually only in cases where fraud occurred.
More commonly, a bankrupt individual might not have fulfilled all the conditions of his or her agreement and will then be required to stay in bankruptcy for a total of 21 months.
You'll never get credit again
After nine months most bankruptcies are discharged.
"People assume they'll never have credit again, but it's not unusual for people to be able to re-establish all the credit they need in one to two years after declaring bankruptcy," says Kisluk.
Everyone's case is different, but it's always worth taking the time to discover the truth. With the closet monster gone, it's easier to sleep, breathe and, ultimately, get on with your life.
The above article was written by Stephanie Farrington, Bankrate.com on Thursday, November 26, 2009. Stephanie is a writer based in Victoria.
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