Unimor Capital Corporation

Author: unimorweb

  • Maximizing Your Tax Return

    Maximizing Your Tax Return

    If you filed your taxes and found you’re getting a refund this year, you might be wondering how to use the money. Once you’ve determined you’ll be getting a tax refund this year, you’ve got options when it comes to using your extra cash. It can be tempting to spend the sudden windfall on a shopping spree, but if you’d rather play it safe this year, we’ve put together seven sensible — but satisfying — ways to use your tax return.

    1. Pay Down Your Debt
    If you’re carrying personal debt, you’re not alone. The average household debt hit $72,950 at the end of 2019, up 2.7% from the previous year, according to a recent consumer debt study. By using your refund to pay down your debt, not only will you lower your current balance, but you’ll also reduce the amount of interest you’ll pay on your remaining balance — and that will put more money in your pocket down the road.

    2. Open or Contribute to a Tax-Free Savings Account (TFSA)
    A TFSA is a great savings tool for both short- and long-term goals. It’s a flexible savings plan that lets Canadians who are 18 years and older save and invest tax-free, with competitive interest rates. Anything you contribute to a TFSA, as well as any income earned in the account (such as investment income and capital gains), is generally tax-free, even when it’s withdrawn.

    3. Boost Your Registered Retirement Savings Plan (RRSP)
    If you’re getting money back in the form of a tax refund, a smart way to use the money is to stash it away in your RRSP. An RRSP is one of the most effective retirement saving tools available to most Canadians. And since your money is sheltered and doesn’t get taxed until you withdraw it, your funds can grow even faster.

    Another benefit is that RRSP contributions are tax-deductible, which means they lower your annual taxable income for the next year. To find out your RRSP deduction limit, look at your latest notice of assessment or check with the Canada Revenue Agency (CRA).

    4. Spend a Little, Save More
    If you’d really like to treat yourself to something new with your tax refund, there’s a way to do it without feeling guilty. A good compromise is to buy one (reasonably priced) treat and put the rest of the money into your savings. Where you save the money is up to you. You’ve got plenty of options: a regular savings account, a Tax-Free Savings Account (TFSA), or an RRSP. Putting a good chunk of your tax return in your savings is a smart move, especially during tough financial times.

    5. Save for Your Kids’ Future
    If you have kids, you can use your tax refund to boost their education funds. The cost of university is steadily rising, and the sooner you can start saving for it, the better. A four-year degree is likely to cost more than $100,000 — making a Registered Education Savings Plan (RESP) one of the best investments you can make in your child’s future.

    6. Invest in Your Home
    We’re spending more time at home than ever, so why not use your tax refund to improve where you live? You can do this in a couple of ways. If you’re thinking of buying a new home, you can use your refund to save up for your down payment (you may even be eligible for a first-time home buyers’ tax credit). Or if you already own a home and you’re content, consider investing in renovations, whether it’s a big project like giving your bathroom a total refresh, or a smaller investment like creating an office nook to make working from home more enjoyable. It may seem like an indulgence, but by upgrading your home, you’re actually adding value to it for the future.

    Getting a tax refund can feel like an unexpected gift. To make the most of the money and bring yourself peace of mind, it’s a good idea to resist the urge to spend it all, and instead take the time to think about how you can use your refund to make the biggest impact.

  • How to Make Money Online

    How to Make Money Online

    Many people often wonder how they can make money online, and although there are many ways to do so, some are easier than others. What we do know, is that there are no get rich quick schemes, and anyone who tells you otherwise is lying. If you want to make money online, be prepared to put in the time and a fair amount of money in some cases. Treat your online endeavor like you’re running your own business. It’s that simple. The good news is that if you’re not afraid of working hard, you can earn a decent amount of money.

    Become a Freelance Writer
    If you love to write, there are many websites out there that will pay you to create content. While you don’t need a master’s degree, it helps if you know a specific area: personal finance, travel, parenting, etc. The more you write in a particular niche, the more you can establish yourself as a trusted voice. A great way to get noticed is to start a blog, which can function as a resume of sorts.

    Sell Homemade Goods on Etsy
    If you’re into arts and crafts, there’s money to be made by selling your creations on Etsy, one of the best websites for selling homemade goods. Millions of people browse Etsy, giving you a huge audience that you can sell your products.

    Rent Your Home on Airbnb
    Millions worldwide are making money by renting out their homes, or even a room in their home, via Airbnb. In fact, some have managed to make Airbnb their full-time business. The beauty of Airbnb is that you choose when to make your home available and the price you’ll charge.

    Sell Your Stuff
    This is a great way to make money immediately. If you find yourself in a cash crunch or financial emergency of sorts, get rid of stuff you don’t need by selling it online through sites like Kijiji, Facebook Marketplace, eBay, and Amazon. Most of these websites offer free listings for sellers.

    Start a Blog
    Earning income from your own blog can take a long time to grow, so you have to have something else driving you. Write for enjoyment, and eventually, the money might follow. Money-making bloggers earn income from various sources: ad revenue through Google Adsense, Mediavine (for higher traffic blogs), and affiliate marketing. Amazon Associates Program, or by selling products such as eBooks and online courses.

    Start a YouTube Channel
    Making money on YouTube can take a while, but it is definitely possible. The most common way is to earn revenue on ads displayed in and around your video content. The more views your videos receive, the more money you can make. You do need to hit a minimum threshold to qualify for YouTube’s Partner Program.

    Web Design
    Web design is a skill that can be entirely self-taught. The first step is to build a few websites of your own. Once you get the hang of it, you can offer your services to others. Depending on how developed your skills are, you can charge a decent sum of money. While it is a competitive field, experienced web designers can command thousands of dollars to build a site.

    Manage Facebook Ads for Local Businesses
    Ever notice the posts marked ‘sponsored’ that show up on your Facebook feed? Those are ads paid for by the endless number of companies vying for your attention. Businesses pay good money to place ads on Facebook, but they need someone to help them build the ads and run the campaigns. You can make good money by providing this service to small businesses in your area. Fitness clubs, coffee shops, even vet clinics, or chiropractic offices make for great potential clients. While you can teach yourself how to run Facebook Ads, I recommend taking an online course, which will not only help you create effective ad campaigns but show you how to land clients.

    Work for a Company Remotely
    There are a large number of companies that hire work from home employees. The types of jobs can vary, but they often involve customer service roles, data analysis, and market research. The best way to locate work from jobs is to visit the careers page on the company’s website, refine your search using keyword filters, like ‘remote’ and ‘work from home. Well-known brands, such as American Express, Staples, and Google, have all been known to hire work from home employees.

    Become a Website Tester
    If you spend a lot of time surfing the web, there’s a good chance you know what makes a great website. Some companies will pay you up to $30/hour to browse through website content and document your experience.

    Online Travel Agent
    This is a great way for travel buffs to make money online. Earn a commission income by helping travelers with their flight and hotel arrangements and other aspects of the vacation planning, like cruises, excursions.

    Professional Organizers
    If you are one of those ultra-organized people who have a place for everything, some people will pay you to go through their home and help them develop a plan to declutter. You can choose to do this as a coach or consultant or roll up your sleeves and help your clients do the heavy lifting, so to speak.

    Personal Shopper
    Believe it or not, this is a thing. Some people will pay someone else to do their shopping for them. If you love to shop and have a discerning eye, this could be a great way to make extra money. One nice thing about this job is that you can shop online and do most of your research there also, although you might prefer to head to the mall. It all depends on the kinds of items your client is looking for.

    eBay Reseller
    The business model is simple. Buy items at a steep discount, and then sell products online for a profit, as an eBay reseller. You can learn tricks to be able to spot bargains, but you also need to figure out the types of items that are in demand and will be easy to sell. The last thing you want is to be left holding onto a bunch of useless products.

    Home Staging
    When a house goes up for sale, it needs to stand out to get noticed. To draw in prospective buyers, realtors will often pay to have the home staged or, in other words, looking its best for the camera. Usually, this involves decluttering or adding accessories to spruce up the look and feel of a room. The changes are temporary, but the job requires a similar skill to interior decorating. To get started, you could provide the service to friends and family to create a portfolio of your work. Then, reach out to a few realtors in the area to let them know about your service and your rates.

    Graphic Designer
    If you know your way around programs like Photoshop or Adobe Illustrator, there’s a good chance you have the skills necessary to create or edit images for websites, advertising campaigns, or social media posts. Many businesses need these services but don’t have the budget to hire a dedicated graphic designer.

    Social Media Manager
    Do you spend hours on Snapchat and Instagram? If so, why not get paid for it. These days, every business needs to have a social media presence, but many entrepreneurs don’t have the time to stay on top. Some companies will outsource social media tasks to someone who can build an audience and create engaging content. Try reaching out to businesses in your area and offer to create and manage social media content for a monthly fee. You might be surprised by their willingness to pay for this service.

    Publish & Sell Stock Photos
    Perhaps you love taking pictures but have no interest in dealing with customer service demands with wedding or family photography. Instead, you could publish photos you’ve taken out of your own enjoyment and sell them online through stock photo sites.

    Become an Online Tutor
    If you love to teach and have skills in math or English, you can find work as an online tutor.

    Teach Music Online
    Turn your love for singing, or playing a musical instrument into extra income, by offering music lessons online. Lessons can be done over video via Skype, making it almost as though you’re in the room with your student. As for payment, it’s easier than ever with e-transfer or PayPal.

    Offer Bookkeeping Services
    If you know your way around booking software, such as QuickBooks, you can pick up work doing bookkeeping for small businesses. This is often very part-time work, a few hours per week, so depending on how much time you have, you could choose to take on several clients. Start by advertising your services through your local Facebook Community Group or by reaching out to small businesses in your area.

    Online Coaching
    If you have a well-developed skill set, along with some real-life experience in any number of fields, chances are some people will hire you as an online coach. Fitness & nutrition, sales, leadership, human resource management, you name it. The beauty of this online job is that you set the price and decide how much you want to work. Depending on the subject, this can be a very lucrative online business.

    Proof-Reader
    Closely related to freelance writing, another way to make money is by reading articles written by others. What I love about editing or proofreading is that it’s completely location-independent. You can work from anywhere; all you need is a laptop. If you have the skill, it’s a fairly easy job. There is no shortage of places where you can find work as a proof-reader, in addition to listing your services on sites like Upwork.

    House or Pet Sitting
    Many people prefer not to leave their house empty when they go away for vacation. Or, if they have pets, they’d much rather leave them at home where they’re comfortable, instead of dropping them off at a kennel. If you don’t mind staying in someone else’s home, you can make good money, with some added perks, by offering to house or pet sit for families in your neighbourhood.

    Audio or Video Editor
    Many content creators, such as recording musicians or videographers, don’t have the time to edit their own audio or video recordings. If you have the talent to do the job, you can make good money by helping them with the audio or video editing process. Any newer personal computer, equipped with the necessary editing software, should be sufficient, and files can be transferred online, making this a job you can do from anywhere.

    Final Thoughts: Making money online isn’t for the faint of heart. Although it takes time, there is something gratifying about working online from the comfort of your own home or anywhere you can get a Wi-Fi connection, for that matter. It’s also nice to have the flexibility to take breaks whenever you need them and be your own boss. The main thing to remember is that if you want to make anything more than pocket change online, you need to treat it like a business rather than a hobby.

  • Conversations to Haver Once Your Teen Starts Earning Money

    Conversations to Haver Once Your Teen Starts Earning Money

    Once your teen starts earning a paycheck, the importance of money conversations should not be overlooked. As a parent or guardian, it’s your job to facilitate money talks and encourage your teen to ask money-related questions when they arise.

    Below, we’ll dive deeper into why money goals are important for teens as well as how to help your teen save and plan for unexpected expenses. We’ll also discuss how to ensure money conversations are a regular part of your teen’s life.

    Key Takeaways:

    • Once teens begin to earn money, it’s vital that they save for short-term goals, long-term goals, and unexpected expenses.
    • Newly employed teenagers should dip their toes into investing.
    • Ongoing money conversations can help your teen avoid common money mistakes and set them up for a healthy financial future.

    The Importance of Setting Money Goals
    Financial goals are milestones you set for your money over specified periods of time. They’re just as important for your teen as they are for you. Encouraging teens to save money and set financial goals will help them learn about the importance of financial literacy and creating healthy habits around their finances.

    Short-Term Savings Goals
    Short-term savings goals are those your teen can achieve in less than a year. Saving for a concert next month is a good example of a short-term savings goal you can help them meet. Sit down with your child and look at how much money they earn on a weekly or monthly basis. Then, ask them about the price of the concert ticket and work together to determine how much they’ll need to save from their paycheck to buy it. Write down this information and hang up the short-term savings plan you create on your fridge or anywhere else your teen will see it often.

    Long-Term Savings Goals
    Long-term savings goals typically take more than a year to accomplish. Your teen may want to buy a car, go on a spring break trip with friends, or pay for college tuition. With long-term goals, it may make sense to introduce a budgeting method, such as: 50/30/20. The 50/30/20 budget method can ensure your teen has enough money for their needs, wants, and savings goals. They allocate 50% of their income to their needs, 30% to their wants, and 20% to their long-term savings goals.

    What Does Saving Look Like?
    Many teens graduate high school and go off to college without a real understanding of saving money and how to spend responsibly. When this happens, they may make financial mistakes that could follow them out of college and into their adult years. Teaching your teen how to budget appropriately and save will help them learn to live within their means when starting their career. To promote saving early on, you can help your teen open a savings account.

    Ideally, you’d choose a savings account at a bank or credit union near your home with digital tools like online banking that your teen will appreciate. Not all savings accounts are created equally, so shop around with your teen to find a no-fee savings account that works well for how they earn, access, and save money.

    Planning for Unexpected Expenses
    Teens should know that planning for unexpected expenses is different from saving for a particular financial goal. Saving for a financial goal, like buying a television, can be completed on a short-term or long-term basis. However, saving money for unexpected expenses helps you maintain financial stability in a job loss, car accident, or medical emergency that medical insurance does not cover. To prepare your teen for unexpected expenses, teach them how to build an emergency fund. Let them know that if their car breaks down, for example, an emergency fund can cover the cost without putting them into debt.

    Put Your Money To Work: Investment Options
    Consider setting up a custodial investment account for your teen. This type of account is set up by an adult for the benefit of a minor and offers the opportunity for parents to teach kids some basic investing skills. You can explain the investment options in your teen’s account and review statements with them.

    Teens may be more inclined to invest if they can put their money toward companies they love. For example, if your child is an athlete and supports Nike products, you can talk to your teen about Nike as a company, track how their stock is doing, and even buy some shares of it together for them to learn.

    Investing Large Money Gifts
    As your teen grows up, they’ll likely receive large monetary gifts from family members for special milestones like their bar or bat mitzvah, sweet sixteen, or graduation. While they may be tempted to spend this money on fun, big-ticket purchases like new furniture or electronics, saving it can make their life easier in the future. Encourage your teen to be smart with large gifts and allocate them toward long-term financial goals, like saving for college.

    What’s the Deal With Taxes?
    Since taxes are a key part of everyone’s finances, teach your teen the basics. Let them know that taxes are deducted from their paychecks, so they’ll pocket less money than they earn. Also, explain that they’ll need to file a tax return every year and can do so with the help of tax software or a tax professional. When you talk to your teen about taxes, keep things simple. Overcomplicating the conversation and telling them more than they need to know may overwhelm them.

     Keeping the Conversation Going
    You should make time to talk to your teen about money whenever they need to. Basic financial literacy is incredibly important because financial mistakes made early in life can change the entire trajectory of one’s economic life circumstances. Teaching teens about finances can save them from making crippling mistakes that haunt them throughout their lives, like starting a working career with debilitating student loan balances.

    Keep the money conversation going organically. In short, it’s important to create opportunities for children, adolescents, and teens to use money — saving it, spending it, and even making mistakes with it. And, when possible, to invite children, adolescents, and teens to participate in household financial decision making, like drafting a grocery list given a budget.

  • The 10 Best Organizational Tips

    The 10 Best Organizational Tips

    Getting your home organized can be very overwhelming. We don’t all have the time, patience, or dexterity to fold our shirts origami style or put our books in rainbow order and we can’t all live in a stoic concrete box like Kim Kardashian. Don’t get me wrong, I love a good pantry organizing TikTok as much as the next mom, but when it comes to organizing my home, I need a happy medium.

    If you’re not ready to go full Marie Kondo minimalist, fear not, I’m with you. I like order and organization, but you know what else? I like my stuff. In this post, I’m sharing the tips and products that have helped me make our home more organized and, most importantly, more functional.

    1. When in doubt, label it.
      If I had a dollar for every time I got asked, “Where is the [ITEM]?” or “Is this the right [ITEM]?” A label maker can help everyone find what they need, especially if you’ve removed items from their original packaging after watching one too many TikToks.
    1. Tackle the “junk drawer.”
      We’ve all got one. That drawer in the kitchen or office that just seems to be a magnet for anything and everything. But taking the time to organize it with some small bins or containers will make it much easier to navigate going forward.
    1. Invest in the right storage options.
      Walking into one of those organizational stores, I’ll always run the risk of blacking out and buying everything. Do I need to decant all of our cereal? No. But choosing the right options to store valuables like fine china, holiday decor or keepsakes is worth it. Measure your shelves and spaces before you go so you have an idea what will fit.
    1. Choose “functional” over “pretty.”
      If you spend hours, days or weeks making your home look pretty but then you can’t find anything, you’ve defeated the purpose. I’ll go back to the rainbow books option — it looks amazing, but I can’t always remember the color of that cookbook I need.
    1. Utilize dead spaces.
      There are probably lots of dead spaces in your home just begging to be used. Hang a shelf above a bathroom door for linens or tuck a rolling shelf between the refrigerator and the wall. Every bit of space can be utilized, you just have to get a little creative.
    1. Create zones.
      With so many of us working from home now, the areas of our home may be blurring together. That’s why it’s important to create work, dining, and hangout zones. Designate a zone for dropping bags and shoes and one for all of your home’s cleaning supplies.
    1. Think “up.”
      Get things off surfaces like countertops and the floor as much as you can. Hanging baskets, shelves and over-the-door organizers can help you lift the clutter away and to whomever created those sticky strips that don’t damage walls, I raise my glass to you.
    1. Keep the important things together.
      Essential items like keys, bills and other notices should always be easy for everyone to find. Choose a place you all pass by daily to keep the mail, hang a calendar for managing schedules and add a board for reminders and notes.
    1. Make your wardrobe visible.
      If you can’t see it, you probably won’t wear it. Spending the time to organize your closet will save you time and money down the road. Group like items together and think of a system that works for your lifestyle — if you pretty much always wear pants and a sweater during the week, put those items near each other. I also like to do a seasonal cleanout. Once a season has ended, if you haven’t worn something, it’s time for it to be donated or sold. One way to gauge what you’re actually wearing is to wrap an elastic around each hanger in your closet. Once you wear something, remove the elastic. Any elastics left at the end of the season will be easy to spot.
    1. Hide those cords.
      Exposed electric cords are like nails on a chalkboard for me. If I see one, I can’t stop staring at it. Cord hooks and management boxes can help you hide the clutter and be sure to use power strips with surge protectors when you can for added safety.

    ~ Kim Holderness

  • Fixed Rate vs Variable Rate Mortgages: Which Should You Choose?

    Fixed Rate vs Variable Rate Mortgages: Which Should You Choose?

    One of the biggest decisions you’ll face when getting a mortgage is whether to choose a fixed or variable rate mortgage. At the moment, it’s hard to go wrong with either one. After all, mortgage rates in Canada are at historic lows. But the type of mortgage rate you choose is something you should spend some time considering, as the best choice depends as much on your individual circumstances as it does on any economist’s interest rate outlook.

    What is a Variable Rate Mortgage?
    A variable-rate mortgage is a mortgage linked to the Bank of Canada Prime Lending Rate and fluctuates during the mortgage term. You can obtain an open or closed variable rate mortgage, but the most common term is a 5-year variable closed.

    For example, at the time of this writing, the Bank of Canada Prime rate is 2.45%. If a variable mortgage were priced at Prime -.90%, your interest rate would be 1.55%. If Prime were to increase by 0.25% to 2.70%, then your mortgage interest rate would rise accordingly to 1.80%. Even though variable mortgage rates fluctuate during the term, the monthly payment remains the same.

    What is a Fixed Mortgage Rate?
    A fixed mortgage rate stays fixed for the length of the mortgage term. It’s available in terms ranging from 6 months to 10 years, although the most popular term is a 5-year fixed rate. Unlike variable rates, which move with the Prime Lending Rate, fixed mortgage rates follow Canadian bond yields.

    Fixed rates are usually higher than variable rates, with the higher rate trade-off being cost certainty. Fixed-rate borrowers are willing to pay a premium to lock in their rate for a specific time period. Banks price fixed rates higher than variable rates because they present more risk to the mortgage lender due to the rate commitment made to the borrower.

    A History of Fixed vs. Variable Mortgage Rates
    If you look back at the past 20 years or so, variable mortgage rates have been consistently lower than fixed rates with only a couple of exceptions. This might make it seem like choosing a variable rate would be a no-brainer, but it’s not so clear-cut. At the moment, both types of mortgage rates are at historic lows, and the gap between them is very narrow. So, there are fewer savings to be had by going with a variable rate mortgage, while the risk of rising interest rates remains.

    Reasons to Choose a Fixed Mortgage Rate
    Here are three reasons why you might want to choose a fixed-rate mortgage:

    1. You expect interest rates to rise.
    While no one knows when the prime rate will rise and fall or by how much, the economy can provide signals that rates may be headed upwards or downwards. If you anticipate that mortgage rates may be on the way up and you can secure an attractive fixed-rate, all things being equal, it might be your best choice.

    2. You have limited budget flexibility.
    Perhaps you’re buying your first home, or your affordability has been stretched with the mortgage you’re taking on. If you lack the flexibility in your budget to handle a sudden increase in your mortgage payment, your best option is to choose the certainty of a fixed-rate mortgage.

    3. You are a risk-averse by nature.
    Regardless of your financial position, if you are risk-averse by nature and having a variable interest rate will cause you sleepless nights, it’s not worth the hassle. Go with the fixed-rate mortgage.

    Reasons to Choose a Variable Mortgage Rate
    Sometimes a fixed rate is the way to go. But here are four reasons why a variable mortgage might be the right choice:

    1. You expect interest rates to fall or remain flat.
    A variable-rate mortgage could be the best choice in a period of a stable or falling prime rate, even if it’s only slightly lower than the going fixed rate because the terms of a variable mortgage are generally more flexible than those of a fixed mortgage. (see #4)

    2. You have plenty of budget flexibility.
    The numbers don’t lie. Over the long term, you’ll be ahead of the game by choosing a variable rate. But there’s some risk involved. If your cash flow situation is good and you can withstand the potential of a sudden increase in your mortgage interest costs, a variable rate could be worth the risk.

    3. You are risk-tolerant by nature.
    If you are a person who can handle a fair amount of risk, then you probably have the fortitude to handle the potential ups and downs of a variable mortgage, all things being equal.

    4. You Plan to Sell Your House
    One of the biggest drawbacks of a fixed-term mortgage is the potential for astronomical penalties, should you decide or be forced to move in the middle of your mortgage term.

    Fixed-mortgages can be subject to something called an Interest Rate Differential charge or IRD. Variable mortgages are usually only subject to a more predictable 3-month interest penalty if the borrower breaks the mortgage early. So, if you think that you might move before the end of your mortgage term, the variable rate is probably a safer bet. You could opt for an open mortgage to avoid the penalty, but the interest rates will be far higher.

    How to Reduce Variable Rate Mortgage Risk
    If you opt for a variable rate, you are assuming some risk if interest rates rise suddenly in the middle of your term. Yes, there is the option of converting to a fixed rate, but that forces you to try and time the market, and that’s not likely to end in your favour.

    You can reduce the risk of a variable mortgage by increasing your monthly mortgage payment amount to match what you would be paying with a higher fixed rate. For example, let’s say you have a choice between a variable rate mortgage at 1.75% with a monthly payment of $1600 and a fixed-rate mortgage at 2.25% with a monthly payment of $1685.00.

    You could opt for the lower interest rate but increase your monthly payment to match the fixed-rate payment of $1685.00. This will increase the amount of money going towards your principal, increasing your interest savings, and providing you with a buffer should interest rates rise.

    The Bottom Line on Fixed vs. Variable Mortgage Rates
    There is no shortage of prognosticators ready to tell you that a fixed or variable rate is the best choice. They always seem to know what’s going to happen in the future. However, the truth is that no one knows exactly where interest rates are headed. There are far too many unknown variables that can alter the course of the economy. For example, how many rate forecasters saw COVID-19 coming at the outset of 2020.

    The bottom line is that choosing a fixed or variable rate has as much to do with your individual circumstances, such as your long-term plans, budget flexibility, and your personal risk tolerance level as it does with the cold hard numbers.

  • 5 Good Financial Habits to Bring Into the New Year

    5 Good Financial Habits to Bring Into the New Year

    When the New Year bells ring, finances are typically at the top of the resolutions list. It can be exciting and empowering to want to achieve your financial goals once and for all. However, what most people fail to realize is that you must strengthen those financial muscles first. It’s just like setting a fitness goal: you don’t set out to run a marathon without also changing your eating habits, sleeping habits, and workout habits. It’s the shift in these small habits that gets you prepared and moving towards your goal. The same is true for finances. If you intend to pay off your debts or save for that home in the coming year, you need to ensure that you are making changes to your everyday financial habits as well.

    1. Create a Budget
    It might be hard to hear this, but creating a budget is one of the best financial habits that you can have. Managing your money starts with knowing where your money is going, and without having a proper budget it can be quite easy to lose track of your monthly spending. How many times have you asked yourself, ‘Where did my money go?’ Creating a budget provides the clarity and control you need to stay on top of your finances.

    Keeping a budget ‘in your head’ is not wise. We can hardly remember what we did last week, so how do you expect to remember all the places where your money has gone? Create a well-formed budget by pulling together at least the last 6 months of all banking transactions. Use that data as a basis for how you would like to spend your money going forward. Be sure to include your savings goals and debt repayment goals within your budget as well. A budget is meant to capture your entire financial picture and should show how all your monthly income is being allocated.

    2. Check in With Your Money
    Having a budget is one thing, but using it is another. Most people fall into the trap of only looking at their finances at the end of the month, which makes it difficult to adjust spending before it’s too late. As with any major plan or project, there are check-in points. The same is true for your finances. Setting up weekly money meetings is important to ensure you stick to your budget and achieve your financial goals. Set up a time each week to track your spending and review it against your budget. Have you ordered delivery meals one too many times this week? Did you order another thing online that was not planned? Put a plan in place for the upcoming week of the changes that need to be made to avoid running over your budget.

    Having a pulse on your finances also allows you to be financially proactive instead of reactive. By knowing how your money is allocated, you can easily adjust and adapt in the event of any unexpected circumstance. This is how you remain in financial control.

    3. Say No
    This might be one of the hardest habits to develop, but it’s the most powerful. If you have gotten into the habit of saying yes to you, your kids, and your family, it might be time to release that habit now. Achieving your financial dreams starts with being financially responsible and that means sticking to your plan, living within your means, and saying ‘No’ to anything that is outside of your plan.

    Don’t go on this journey alone. Make sure you have communicated your new financial focus to your family. Have a family meeting to discuss your financial goals and priorities, share your budget and let your family know upfront that spending will be different this year. Tell a trusted friend about your commitment and ask them to keep you accountable. And, when you find yourself tempted to give in, remember why you started on this journey to begin with.

    4. Build Your Emergency Fund
    If there is anything that is certain, it’s that life is uncertain. You never know when life might send you on an unexpected path, so you must always ensure you are financially ready and prepared. This is where having an adequate emergency fund can help you to maintain financial security. Whether it’s losing a job, the car breaks down or the furnace needs to be prepared, life always seems to happen. In these circumstances, most people use their credit cards or line of credit to make it through but having an emergency fund ensures you avoid this debt spiral.

    The goal should be to have 6 to 12 months of your income saved in an emergency fund. Calculate how much that would be for you and your family and then develop the habit of savings towards this goal each month. You can create your own financial security if you prioritize this one important financial habit.

    5. Stop Celebrating the Minimums
    Paying the minimums on your credit cards is no reason to celebrate. If you are serious about getting out of debt, you will need to create the habit of paying more than what is due. If becoming debt-free is a meaningful goal for you, then you must take it a step further and create a debt repayment plan. A goal without a plan is only a wish, and wishing your debts away is not going to cut it. Look at your budget and see how much excess cash you have after all your expenses. Reduce or eliminate any unnecessary expenses. Determine how much money you can put towards your debts each month and then create a plan to do just that. To ensure you stick to the plan, set up automatic monthly debt payments so that the money is actually paid to your debts before you can spend it.

    And while we are on the topic, also make sure you pay all your debts on time. This can greatly impact your credit score which needs to remain intact should you ever wish to leverage credit for significant purchases such as a home or a car.

    Implementing these habits will create a more stable and secure financial future for you and your family.

     

  • How to Prevent Food Waste in Your Home

    How to Prevent Food Waste in Your Home

    Food waste is an invisible and expensive habit in our homes. No one wants to waste food, and no one walks into a grocery store and says, “Hey, I’m going to buy all this delicious food today and then throw it out next week.”

    So if your fridge is filled with good intentions but you still manage to garbage your groceries, I’ve got the goods on how to prevent food waste and save up to $1,000 per year.

    What is food waste?
    Food waste is the forgotten food stuffed at the back of your fridge, the odds and ends that could’ve been a meal but you’re uncertain how to whip it into a recipe, lingering leftovers, and the packaged products a little past the so-called “Best Before” date. All these foodie situations could become food waste. Food waste is the food that’s ok to eat, but it’s being discarded, composted, or left to spoil without a plan to turn it into a snack or meal.

    Food waste happens thanks to a chain of different (and expensive) behaviors starting with grocery planning, food shopping, meal preparation, leftovers, odd ingredients, and ending with everything in the trash or compost bin.

    How much food do we waste?
    I didn’t believe the number at first, so I asked a behavioral scientist who studies food waste to help out. Angela Cooper, PhD, an Associate at BEworks, says the problem is “pretty big”. Over $30-billion of food is wasted per year and about half of that is occurring in people’s homes. We might think it’s the restaurants or it’s the grocery stores, but we as consumers and as homeowners — we’re the culprits.

    How much money is wasted?
    Canadian households on average waste over $1,000 per year, says Cooper. That’s $92 a month, $21 a week, or $3 a day. The really tragic part is over 60% of that food is edible. This is what we call avoidable food waste — this is stuff that can be eaten — but maybe it just doesn’t look as nice, it’s a little bit shriveled or not the freshest looking, and this is what gets tossed. [This food] still has use, but a lot of people have an aversion to it.

    How does food waste affect the environment?
    Food waste has a massive environmental toll, says Cooper. In Canada, over two million tons of CO2 is produced from food waste which is about the equivalent of two million cars on the road. There’s been research that shows if food waste were a country, it would be the third largest CO2 emitting country in the world after China and the US.

    How to prevent food waste?
    BEworks, a behavioral economics firm, did a significant research study with Unilever Hellmann’s to help prevent food waste. After studying over 900 families, they found some very simple solutions that reduced food waste by 30% — saving families at least $300 per year.

    Step 1: Place a Bowl in Your Fridge for “Food Recovery”
    We all have ingredient odds and ends that get lost or buried in our fridge. Cooper says the simple act of using a bowl to collect a rogue celery stalk, half tomato, or apple slice “increases salience”, or in simple terms — hits you in the face when you open the fridge! The idea is if you see it, you’re more likely to use it.

    Step 2: Pick a ‘Use-Up Day’
    Pick one day per week to make a ‘Use-Up’ meal. Perhaps it’s the day before your next grocery haul, maybe it’s the beginning of the week or just a random day.

    Step 3: The ‘3+1 Approach’ & a ‘Magic Touch’
    So what to do with a bowl of odd ingredients? Here’s where the science of simplicity comes to play. BEworks and Hellmann’s found that giving families a simple formula for how to make a meal with food on hand made it easy to use it up.

    They call it the ‘3+1 Approach’, where you bring together ingredients from three categories: a base (bread, rice, pasta), vegetable or fruit (pick one or a few), a protein of choice (chicken, eggs, tofu, beans), plus a ‘magic touch’ in the form of spices or sauce to bring the dish together and add flavour. This is designed to encourage people to substitute, swap out, and think a little bit more flexibly because recipes can be constricting. A wrap with chicken, lettuce, leftover bell pepper with tomato, and a dollop of hummus or mayo could be a 3+1 use-up recipe for lunch.

    So grab a bowl, choose a ‘Use-Up Day’, and try the ‘3+1 Approach’ for a meal. Making these simple switches could reduce your food waste by 30% (or more) plus save you hundreds per year in trashed groceries.

  • How to Deal with Mortgage Arrears

    How to Deal with Mortgage Arrears

    These days, many Canadians are finding it hard to keep up financially, a result of the COVID-19 pandemic which caused many to lose income or their jobs altogether. Prices on many things have gone up and some are now being forced to go into arrears on their mortgage.

    If you signed your mortgage years ago, you would have had no way to predict such an unprecedented global event and now you have to adapt. The biggest fear for many borrowers is to go into arrears and lose their homes. There’s good news, however. Banks are well aware that people’s financial situations can change unexpectedly, especially in times like these. Because of that, there are various options open to you if you feel the need for extra support. In this article, we will cover the current state of mortgage arrears in Canada and options for those in financial trouble.

    After an explosion of mortgage arrears, Canada is slowly starting to recover.
    If you have gone into arrears on your mortgage, just know that you’re not alone. In October of 2020, the rate of mortgages in arrears in Canada peaked at 1.59%. This is the highest rate of arrears in Canadian history, after a previous peak in the 1980’s. In an effort to help borrowers during the pandemic, banks and lenders offered many deferrals on their mortgage payments. In addition, the rate of mortgages being extended went up greatly.

    We will go into deferrals and extensions in more detail below, but one thing important to know is that in the large part they are working. Canada Mortgage Housing Corporation data now shows that of the mortgages that went into deferrals during 2020, the vast majority of deferrals ended and were able to continue payments once again. Additionally, the rate of extensions on insured and uninsured mortgages is in decline.

    The figures for mortgages in arrears are now on their way back down from the peak. Generally, the rate of arrears can be an indicator of economic health. This means a lower rate of arrears indicates that more Canadians are in a healthy financial position, and our economy is recovering from recession.

    How excess mortgage lending puts Canadians at risk.
    For many years now, the ratio between the value of Canadian mortgage loans and the income of borrowers has been high. That means that today, a large amount of a household’s disposable income goes towards their home. This wasn’t helped by the recent boom in housing prices.

    Unfortunately, this puts some financial risk upon the borrower. A slim margin between income and the value of mortgages leaves little wiggle room when financial pressures crop up. This means it is easier than ever for Canadians to find themselves unable to keep up with payments.

    This is one reason why the government instituted the mortgage stress test, to ensure that lenders would be protected from borrowers falling into arrears. This is also why mortgages with a down payment of less than 20% are required to be insured.

    What to do if you are in financial trouble.
    The most important first thing you can do before going into arrears is to attempt to reduce your costs and contact your lender. Be upfront and honest about your current situation and ask about what arrangement you can come to based on what you are able to pay.

    Lenders will be more likely to help you come to an arrangement if you contact them before going into arrears. Therefore, do your best to contact them before you miss any payments if at all possible. If you can not reach a solution with your lenders, your next step should be to consult a lawyer or credit counsellor. They can help you explore alternative solutions that may be available.

    Common Options to Avoid Mortgage Arrears

    Payment Deferrals: A mortgage deferral is a special agreement that mortgage owners can make with their bank when they find themselves unable to pay their regular mortgage payments. The deferral lasts for an agreed period, during which time you do not have to make any payments.

    Once the period is up, you will once again begin paying your mortgage payments and will be responsible to pay off any missed payments and interest. Likely either your regular payment or amortization period will have to be adjusted as a result of the deferral.

    If you expect financial hardships to be a temporary situation for you, a deferral can help you out in a pinch. If you are likely to continue experiencing hardships after your deferral expires, it might not be the best option for you.

    Some of the factors that financial institutions consider when deciding if you are eligible for a mortgage deferral include:

    • Are you or your family unemployed due to the pandemic, or have you suffered a significant loss of income as a result of the pandemic?
    • Is your mortgage insured or uninsured?
    • Is your mortgage in otherwise good standing?
    • Is the property your principal residence or not?

    Payment deferrals can affect your mortgage in a big way. The effects of a deferral can impact your payments, your interest, and your mortgage principal. If you defer your payments, you are effectively keeping the same principal value on your mortgage while it accrues interest. At the end of the deferral, you will still need to pay the same amount plus any additional interest. The bank will collect your deferred interest after the fact by adding it to your mortgage principal, which is then used to calculate your future interest payments. In effect, this means after your deferral you may actually pay interest on interest.

    Extending the Amortization Period of Your Mortgage: By extending the amortization period of your mortgage, you are essentially agreeing to pay it out over a longer period of time in return for a lower regular payment. Depending on your situation, you may be able to extend out to a limit of 25, 30, or 40 years. The exact length available will differ between insured mortgages and uninsured mortgages. Remember that the longer your period, the longer you pay interest. This option may allow you to save on payments but can add up to thousands of dollars in interest.

    Switching to a Blended or Extended Mortgage: A blended mortgage means that your financial institution will allow you to benefit from current, possibly lower interest rates. Now, they won’t give you a lower interest rate outright. Rather, they will blend your current rate with the lower one, thus the name. Unfortunately, this option will only be available if a better rate exists to blend with. In addition, you can often extend your mortgage term to take advantage of the lower rate for longer.

    Locking in a Fixed Rate: If you have a variable rate mortgage, you may be able to opt to convert it to a fixed rate. Technically you can do this any time as a security measure to protect yourself from fluctuating variable interest rates, but it will only save you money if you lock into a lower fixed rate than your current variable rate. If you decide to take this option, make sure you act promptly, as rates can change often.

    Skip a Payment or Make Interest-Only Payments: Your bank may offer other payment options that stop short of a complete deferral. One such option is to skip only one or two payments. This is essentially like a mini-deferral. Another option is to agree to lower your payments temporarily, without stopping them altogether. A third option allows you to pay only interest for a period while deferring the principal payments to be paid later.

    Home Equity Line of Credit (HELOC): A HELOC allows you to borrow and pay back credit against your home’s equity. HELOC’s have a variable interest rate and the credit limit can change at any time as well, so they are not the best option for paying mortgage payments.

    Other options beyond working with your lender include getting a loan or assistance from family, renting out a portion of your home for extra income, selling off valuable assets to raise funds, or taking on a second job. It can be a stressful and scary situation to be in arrears on your mortgage payments. The biggest takeaway is to remember that many people have been there before you. That’s why lenders have many measures in place to help you recover in hard times. If you find yourself in this position, consult your bank as soon as possible on the best options for you.

  • All Bills & No Fun Makes a Very Dull Budget

    All Bills & No Fun Makes a Very Dull Budget

    The term ‘fun money’ means different things to different people. You might think of it as money for entertainment or eating out. It could be your growing vacation fund or the cash you spend on a painting class or round of golf could fall into this category. Essentially, fun money is what you spend to enjoy yourself.

    Working just to pay bills — and budgeting only to stay on top of financial obligations — gets old fast. Instead of depriving yourself of what brings you joy, including some fun money in your budget will give you a more balanced financial life.

    The Importance of Adding Fun Money to Your Budget
    Restrictive budgets can work for a very short term but aren’t sustainable in the long run. When there is a lot of pent-up spending desire, the flood gates can burst, and rebound spending often happens. To avoid binge shopping, allocate some of your monthly earnings to spending that brings you joy. Having fun money to spend however you like will motivate you to stick to your financial plan. Who wants to stay involved with a plan that is all work and no play? Perhaps you treat yourself to the movies whenever you add another $500 to your emergency fund or celebrate with a spa visit.

    How to Budget for Fun
    While you want to make sure to pay all your monthly obligations — like rent, utilities, and your car loan — you don’t have to treat your fun money as an afterthought. Set up automatic deposits to save up for fun expenses. How much you put aside will depend on your individual financial situation. If you follow the 50/30/20 budgeting method, you’d earmark 30% of your income for discretionary spending, which includes what you spend for your enjoyment. Separating your fun money from your main checking account and other savings allows you to spend from that stash guilt free. Another smart budgeting approach is to think of your fun money in terms of what you value most and want to prioritize.

    Realistically, you will not be able to fully accomplish all your want-based goals. However, knowing what you value and prioritize over other things will allow you to shift your mindset from what you can’t do to what you can do.  Sometimes this will include making trade-offs or sacrifices. Eating soup all week and sticking to a low grocery budget frees up funds to go out with friends on the weekends if that’s a big priority. You have to consider the trade-off of now versus later.

    Fun Money Doesn’t Have to Break the Bank
    When you’re spending money for enjoyment, identifying the reason why you’re making that particular choice could lead you to discover that you can spend less to fulfill the same need. Going out with friends may be linked to a need for connecting with others or belonging. But you don’t have to run up an expensive bar tab. Maybe you and your friends take turns hosting a weekly potluck dinner. Or perhaps you join a book club or running group.

    After identifying what you value, investigate cheaper ways to pursue it. If you enjoy switching up your wardrobe, participate in a clothing swap or visit thrift stores. If you love traveling, consider a road trip instead of flying.

     

     

  • Ways to Finance a Home Renovation

    Ways to Finance a Home Renovation

    Ways to Finance a Home Renovation

    With the pandemic keeping more of us at home, for more hours of the day, about a fifth of homeowners have their eye on a renovation in the near future. The big question for many is: What’s the best way to pay for it?

    Since the COVID-19 pandemic entered our lives, Canadians have been spending a lot more time at home—and in many cases, it’s inspired both indoor and outdoor renovation projects. New consumer research suggests 23% of Canadians have completed a renovation in the past year and an additional 21% are considering a renovation in the near future. The shift to backyard visits may have made a new deck or freshly landscaped patio more appealing, and in some cases, remote work or virtual school has highlighted the need for a space that functions as a home office. Others are noticing overdue cosmetic updates or are using this time to complete repairs around the house.

    While these home renovations are often necessary, and some are even exciting, most Canadians don’t have the means to pay for these projects outright. 25% of Canadians have saved money during the pandemic as a result of reduced spending on dining out, entertainment, clothing and commuting costs. Families in this fortunate position are using newfound space in their budget to create emergency savings, invest or pay down debt or to help fund a large purchase. Even with these savings in hand, however, Canadians will need to borrow at least part of the cost of their planned reno projects. The big questions for many are: What are the options available? And which is the best for them?

    Can you afford to finance your reno?
    Generally speaking, it’s okay to borrow money for a renovation as long as you can adequately service the debt it creates. This means understanding how the interest rate and repayment structure of your loan will impact your finances. What will the monthly payment be on a $30,000 loan or a $50,000 line of credit, for example, and can you afford to add that to your budget?

    With so many borrowing options available from your bank and other lenders, if you have a steady income, you’ll likely have access to some form of credit. However, that doesn’t necessarily mean you should go for it. If you don’t qualify for a secured loan or line of credit, you probably shouldn’t do the renovation. Getting turned down by a lender reflects your credit history, debt, income, and other factors—including the size and affordability of your project. You may want to consider scaling back the renovation or holding off until you’ve saved up a larger proportion of the cost.

    Home Equity Line of Credit (HELOC)
    A home equity line of credit, commonly referred to as a HELOC, is a revolving line of credit that is secured by the equity in your home. Nearly all banks and credit unions offer this type of lending, and because a HELOC is secured to your home, interest rates are significantly lower when compared to unsecured loans and lines of credit.

    Homeowners can typically borrow up to 80% of the appraised value of their home minus the amount owing on their mortgage. For example, if your house is worth $750,000 and you owe $300,00 on your mortgage, you would be able to borrow up to $300,000 on a HELOC. Interest payments are structured, but otherwise, the homeowner is able to move money in and out of the line as they please. Most major financial institutions offer interest rates based on the lender’s prime rate (for example, prime +1%).

    Once you’re approved, the funds can be used for anything you choose: a renovation, a new car, unexpected expenses. Many homeowners opt to set up a HELOC with their lender just to have credit available immediately if needed. However, this type of credit can be dangerous if you’re prone to overspending or bad at setting boundaries. As you make payments back to the line, that credit becomes available again, allowing you to re-borrow funds. If you are only making the minimum payment each month—usually just the interest owing on the amount you’re currently using—while you continue to draw additional funds from the line of credit, your debt can skyrocket. It’s best to use a HELOC for planned expenses only and avoid using it for discretionary spending or filling gaps in your monthly budget.

    If you’re worried you may overspend on a HELOC, ask your lender to set a limit you’re comfortable with. Just because you get approved for the maximum amount doesn’t mean you have to take it. So, if you only need half of what they’re offering, ask them to meet you there.

    Refinancing your Mortgage
    When you refinance a mortgage, you’re adding to the amount of money you borrowed from a bank or other lender to purchase your home. This new amount is then rolled into balance on your mortgage. This means you won’t have a separate loan or line of credit payment to deal with—it’s all covered by your mortgage payment. Mortgage refinancing is more structured than a HELOC, this is an attractive option for many homeowners and often has the lowest possible interest rate, because it’s a first mortgage that is secured by the equity in your home.

    Refinancing a mortgage is a great option for those with a tendency to spend, as there’s less need for discipline, you get a lump sum loan, to cover the cost of your renovation and the repayment is fixed. You can’t really abuse that money and you can’t get extra.

    If you add to your mortgage principal, you will owe more and, subsequently, you could have a higher monthly payment. However, if you add to the loan while locking into a lower rate, you may actually end up with a lower monthly payment (yes, even if you’ve borrowed more money). For example, if you originally owed $450,000 on your mortgage at 4% interest with an amortization of 25 years, your monthly payment would have been $2,375. If you added a $100,000 loan at the time of your mortgage renewal and locked into a lower rate of 1.8%, you’d owe $100,000 more but have a monthly payment of $2,278—slightly lower than your original monthly mortgage payment.

    Unsecured Personal Loan or Line of Credit
    A personal loan is a lump sum that you’ll repay with interest on a set schedule. A personal line of credit operates like a HELOC, with a limit you will continually regain as you repay the funds borrowed, but at a higher interest rate because it’s not secured to your home. The interest rates on personal loans and personal lines of credit are typically similar.

    While this type of credit may come in handy in an emergency, it isn’t ideal for planned renovation expenses. Not only do these options come with much higher interest rates than secured forms of credit, but you will also likely have access to less money, which limits what you can do.

    However, if you find yourself in a bind, an unsecured personal loan or line of credit with a reputable financial institution can be helpful. If you can pay it off quickly, it’s better than using a credit card. But it’s not inexpensive or ideal for the average person. While the interest rate on a HELOC may be the lender’s prime rate + 1%, interest on a personal loan might be anywhere from 6% to 12% or more, depending on the lender and terms, as well as your personal credit rating and existing debt load. The interest rate on a standard credit card will likely be 19% or higher.

    The bottom line? In an emergency, a personal loan can be a lifesaver, but it isn’t ideal for most homeowners and should not be used for discretionary spending.

    What else should you be thinking about when borrowing funds for a home renovation?
    A renovation can cost a lot of money, but it typically adds value to your home—something to consider if you have plans to move in the near future. If you’re borrowing money on a HELOC or other form of credit to renovate, your home’s value should go up, if you’re selling, this could be a great investment. But if you’re not selling, you still have to pay it back. Real estate value aside, a home renovation can bring a lot of personal satisfaction and improve your quality of life.