Saturday, December 10, 2011

More Year End Tax Tips

Giving gives back!
Your donations to CRA registered charities generate a 15% – 29% tax saving. Make sure to ask for an official receipt as you will not be refunded without it.

Public Transit pays off!
If you use public transit to get around, you and any eligible dependents that you have may be entitled to a 15% non-refundable tax credit. Environmentally friendly AND financially rewarding, public transport is taking you places!

Keep your receipts
No need to send your receipts when you NETFILE your tax return, although the CRA may send you a request later for:
• Medical expenses
• Charitable donations
• Child care expenses
• Spouse or child support payments
• Moving expenses
Use a big envelope or shoe box as your "official tax slip holder" and keep all tax related information there.

Save for retirement and save on your taxes!
If you invested in your RRSPs in 2011, your contributions are exempt from taxation as long as they stay in the plan. Invest early in the year to gain tax free interest on your investment and make your money work for you.

Important tax dates for tax season 2011
• Feb 13, 2012 – NETFILE Services are open
• Feb 29, 2012 - RRSP Deadline
• April 30, 2012 – Tax Filing Deadline
• June 15, 2012 – Self Employed Tax Filing Deadline
• September 30, 2012 – NETFILE services close for tax season 2011

Sunday, December 4, 2011

Additional CPP Changes effective January 1, 2012

Several changes are taking effect on January 1, 2012 that may affect you. You will not be affected by these changes if you started receiving a CPP retirement pension before December 31, 2010, and you remain out of the work force.

If you are between 60 and 65, receiving CPP and still working, you and your employer now must contribute to CPP. The additional contributions will count towards a Post Retirement Benefit (PRB).

If you are between 65 and 70, receiving CPP and still working, you and your employer now have the option to contribute to CPP. The additional contributions will count towards a Post Retirement Benefit (PRB).

If you are between 60 and 70 and not yet collecting CPP, the adjustment factor that will be used will change. For those taking the benefit before December 31, 20110 the adjustment was 0.5% per month above or below age 65. This percentage will gradually increase to 0.7% per month for those taking late retirement and 0.6% for those taking early CPP . These changes will take full effect by 2016.

In addition, the number of years with zero earnings that are automatically dropped from the calculation of the CPP pension will increase.

Starting in 2012, contributors no longer have to stop working or significantly reduce earnings for two consecutive months to receive the CPP retirement pension before the age of 65. This will make it easier for Canadians to make a gradual transition to retirement.

For more information, you can check the Service Canada web site or give me a call.

Service Canada has a retirement calculator on their web site to assist you in calculating your benefit.

Wednesday, November 16, 2011

2011 Tax Planning Tips

Tip 1 - Tax loss selling

The deadline for selling securities this year is December 23, 2011 if you need a tax loss to offset a capital gains realized earlier in 2011. Be mindful of the "superficial loss" rule when you sell an investment to realize the loss. If you buy the investment back within 30 days, the CRA can deny the loss and add it back to the adjusted cost base of the repurchased security.

Tip 2 - RRSPs / RRIFs / Annuities
Have you turned 71 in 2011? If so, you must convert your RRSP to a RRIF or an annuity before December 31, 2011. In addition, any final RRSP contribution must be done by December 31, 2011 as well. Talk to me, if you want to make an over contribution to your RRSP for this tax year.

If you have a child or grandchild who turned 15 in 2011, December 31, 2011 is the last chance to contribute to their RESP (if they do not have one already) and be able to collect the Canadian Education Savings Grant (CESG). The child must have a minimum of $2000 in their RESP by the end of the year they turn 15 in order to collect the government grants.

If you child is over 10 and you have unused RESP contribution room, consider making a contribution in 2011 to collect the CESG.

Tip 4 - Investment expenses and deductible interest
To deduct these expenses in 2011, they must actually be paid by December 31, 2011.

For more tax tips or clarification on these, give me a call.

Sunday, October 30, 2011

Canadian Debt Levels

The average Canadian had $1.49 of debt for every $1.00 they earned in the second quarter of 2011. (This debt includes mortgage and consumer loans.) Are you one of the many spending more than they earn? If so here are a couple of steps you should take to evaluate your spending / savings patterns.

The first step is to track your spending for a month – and yes, that includes all of the items that you buy with your spare change (such as coffee). Until you know what you spend your money on – it’s impossible to change your spending patterns. If you would like a template to track your money, let me know and I can send you one by email or snail mail.

Once you know what you’re spending your money on, you need to analyze your spending habits. Do you really need two Grande Starbucks Lattes every day?
You need to start paying down high interest debt. Start with your credit cards and take the money you’re no longer spending each month on frills and put that extra into your payments.

After each pay check – you need to arrange for a certain percent / amount to go directly into a savings vehicle – whether that’s an RESP, RRSP, TFSA or a Savings Account will vary depending on your financial plan. This is what your parents told you to do when you got your first job and it makes as much sense today as it did then.

Do you need help with any of these steps – give me a call and we can arrange to get together.

Sunday, September 25, 2011

Keep on top of your money

Back in May 2009, I came up with a "Tweet" of a Financial Plan - Control debt. Review insurance to protect lifestyle. Monitor spending. Save. Be tax smart. Develop & audit plan. Update will. Review planRecently, I saw an article in the Toronto Star - Improve your finances in just 30 minutes.

Both can be summarized the same way - be organized, have a system in place and stick with it. We'd all like life to be easy and not have to think about money and the "what ifs", but unfortunately, that's not reality. So the real question is how do you take care of your finances for both the planned and unplanned expenses in life without the planning getting out of control.

The system I recommend is to set aside some time every week or month to do these tasks. When you receive your mail, put all of the financial related items into an envelope or file folder. Similarly, take all the receipts out of your pockets and wallet and put them into the envelope as well.

Sit down regularly to go through this package and to ensure:
· There are no mistakes / unexplained charges on any of your bills
· Have a file folder for receipts you need to keep - items you'll declare as expenses on your taxes, warranty items, bills for repairs, etc.
· Once you've matched receipts to your bills for items like groceries, discard them

I use software to keep track of my expenses. I download my statements directly from my financial institutions and categorize everything. This way, at tax time, I can run a report and have summary numbers for all of my expenses.

At the same time as you are reviewing your statements, pay your bills. Most on-line banking systems let you date a payment for the future. If you pay by check, write it out and have it ready for when you want to send it out.

At the same time, set up a monthly rotation to review ongoing expenses such as your home and car insurance, life insurance, saving plans (RRSP, RESP, TFSA, etc), budget, etc.

Using a system ensures that you use a minimum amount of time for these tasks, and that you don't have to worry again.

Sunday, August 7, 2011

Making a claim on your insurance

This summer I have assisted several clients making an insurance claim. Like everything else in life, they seem to come in batches. While none were happy to be making a claim, they were all pleased to receive the insurance proceeds.

Life insurance claims are straight forward – the insurance company needs a death certificate and a claim form. The money in most cases is paid out in less than a month from when you notify me. In both cases this summer (even with a mail strike), I managed to deliver the checks to the beneficiaries in about 2 weeks.

Disability claims require more time and more paperwork. The client I am working with is an employee at one of the groups I insure. I was called as soon as he was off work. The employer and employee have completed their paperwork; we’re just waiting for the doctor to submit theirs.

Do you have long term disability coverage? If you’re an employee – look at your pay stub. If you show an amount deducted beside LTD – you have Long Term Disability coverage that probably starts if you’re off work for 17 weeks. If you have an amount listed besides WI (weekly Indemnity) or STD (Short Term Disability), then you have Short Term Disability as well. As opposed to health and dental benefits, disability only protects your income and not that of your spouse.

You should review your coverage whenever there’s a change in your life. Whether you require Life Insurance to protect your family, Critical Illness Insurance to receive a lump sum payment should you get a life threatening or life altering disease or Disability Insurance to pay you monthly while you are unable to work or a combination depends on your specific situation.

Give me a call. I’d be pleased to walk you through the calculations to determine how much insurance you need and what type meets your specific need.

Thursday, August 4, 2011

The more things change, the more they stay the same

We've all heard this proverb and have all probably used it, but what does it mean in your everyday life?

This week, I went on line and bought tickets, posted pictures and checked bus schedules - all activities that a few years ago would have required phone calls and / or a trip out of my office to accomplish. I spoke to a friend half way around the world on Skype for nothing (versus the expensive long distance phone call of 15 years ago). I could go on - we all have examples from our day to day lives.

The fundamentals of financial and estate planning have not changed. We are all concerned that we might outlive our money or whether we can maintain our standard of living for ourselves and our families - no matter what happens. What have you done about this? Many people bury their head in the sand and hope that nothing serious happens. Some people have reviewed their plans with a professional and know what would happen if - and many of these people are pleased to learn that they are in a much better position than they thought they were in.

Would you like to be one of the people who knows for sure? I am offering a confidential, complementary review of your current situation along with suggestions on how to ensure that you can maintain your lifestyle - to my clients and readers of this newsletter

Friday, June 17, 2011

Coping with a broken right arm – the dominant one of course

Back in June 2010, I was having wild and passionate sex and swinging from a chandelier. No one told me you had to reinforce the chandelier first ... and the next thing I knew, I had a displaced fracture of my right humerus. If you prefer version 2, I was out walking and tripped, lost my balance and fell off the sidewalk and broke my upper right arm – so that it was in two pieces.

This started the process of not having any use of my right arm for almost three months. I was lucky and didn’t need surgery, for all but 3 weeks got to wear a plastic (Sarmiento) cast as opposed to an “old fashioned” plaster cast. However, my arm was held to my side with a strap and held in place with a sling that I was not allowed to remove (24 hours a day).

There were loads of coping mechanisms that I learned – and here some of them are. Please feel to pass them on to anyone you know who might find them useful.

• Did you ever try to brush your teeth with your left hand? It was humorous. An electric toothbrush came to the rescue!
• With only one functioning arm – I discovered the easiest way to put on powder was with a powder puff.
• To wash myself, I switched to liquid soap and a face cloth from the bar soap I had used before. (I didn’t drop the soap and I didn’t have to chase the bar soap.)

• For the first three weeks, I needed to wear my top over the plaster cast – off to Value Village to buy some extra large men’s shirts with buttons up the front. Once the cast was changed, I could put my arm through the sleeves, but still needed a men’s shirt to fit over the cast – and the buttons as I couldn’t put anything over my head. Fortunately it was summer and short sleeves were fine – and I didn’t need a sweater or jacket.
• Pants – I couldn’t do up the zippers on my pants – so I needed pants with elastic waists. I went one step further and bought scrub pants as they have loads of pockets and therefore I didn’t need to carry a purse.
• Shoes – I converted to rubber soled loafers. My balance was off, so the flat shoes were essential and the loafers were easier to put on one armed.

Men – you can skip the next point.
• As for bras – if you can get away braless or with a sports bra – that would be my recommendation. You can also try bras that fasten in the front. I went with a size larger and assistance to put them on.

• I converted to preparing foods that only required heating with a microwave and that didn’t require much cutting. I also purchased shelf liner to put under my plate to prevent it from sliding around. I used a pizza cutter instead of a knife as I could do it one armed.
• My left arm was not strong enough to pour from containers larger than one litre – so I had someone pour liquid into single serving containers.
• When it came to washing dishes – I bought a smaller container of cleaner and used a protector in the bottom of the sink so that I could wash one handed.

Now that it’s almost a year post injury and I’m able to do almost everything I could do before the accident, my main suggestion to everyone is to do all of the exercises recommended and find a good physiotherapist. I’ve spoken to a number of people who had much less serious injuries and lost a lot more mobility than I did. So - persevere with your exercises. If you have any additional suggestions – please let me know and I’ll pass them on.

Friday, April 22, 2011

Do you have money put aside in case of an emergency?

From the 1970s through to the 1990s, this was a no-brainer, as interest rates were relatively good on the usual savings vehicles — high-interest savings accounts and Canada Savings Bonds. But in the last decade or so, interest rates have dropped to record lows, credit has become more easily available, and we have started expecting portfolio returns significantly higher than an emergency fund would generate.

So it's understandable that the emergency account would disappear from a lot of people’s lives.

In the current economic climate, credit has been tougher to obtain and unemployment rates are rising rapidly; EI pays very little compared to many people's spend-what-you-earn lifestyle, and using a home equity line of credit in a period of declining real estate values is neither wise nor likely possible. Thanks to all that, an emergency fund is an absolute must in these economic times.

The main reasons for creating an emergency fund are to provide protection in the event of a layoff; to provide cash in the event of a sudden disability or illness requiring time off work; and to provide funds for any other possible emergency (e.g. a new roof for the home, a new furnace, car repairs, etc.).

What's in a fund?
Creating an emergency fund does not mean investing aggressively in an equity portfolio and selling when the going gets good — the money needs to be safe and secure. It should also be liquid, so that you can get easy access to your cash if need be, but it shouldn't be so accessible that it can be frittered away.

Saving grace

While this account won't be the one you use to save up for that expensive house on the beach, the more you can save the better. Still, make sure that you know that the fund isn't designed to provide money for non-essentials such as entertainment, vacations, gifts or eating out. It is designed to ensure that you can maintain a roof over your heads, put food on the table and maintain payments for essentials.

Figuring out how much you need to save requires answers to a few questions, as the amount of savings depends to a large extent on individual situations. What is your level of debt? Do you have dependents? Is your spouse employed at the same company? Is your occupation one for which there is usually a demand, so any period of unemployment is likely to be short term? Or will you be faced with the possibility of retraining in another field, which will mean substantial time and financial costs? Do you have other investments of a sufficient amount that you could access if need be? Do you have family who would be likely to help out? The general rule is that you should have at least three to six months of living expenses in your emergency fund.

Goodbye Taxman

Until the advent of the tax-free savings account (TFSA), the amounts saved in these rainy-day funds always generated interest that was fully taxable. The TFSA provides a great savings vehicle for an emergency fund and there will be no tax on the interest! With a couple both building savings of $5,000 per year each in a TFSA, there will be a solid basis of an emergency fund right there. If you feel the RRSP is more important, taking the tax refund generated by the RRSP contribution and putting it into the TFSA allows accumulation of assets that are all tax sheltered.

Tax Time is Approaching

The deadline for filing your Canadian tax returns (unless you or your spouse owns a small business) is April 30th. The deadline for paying outstanding personal tax bill for everyone is April 30th. Have you started getting ready?

A couple of suggestions:
- Check your tax return for last year to make sure that you have included everything. I had a call from a client last week who did not receive his tax receipt for an RRSP contribution. (We’re assuming that it was lost in the mail.) It is your responsibility to file your taxes with the information from all of your slips.
- Even if you don't owe taxes, you should file your 2010 income tax return by April 30, 2011 to be eligible for some tax credits and benefits, such as the GST / HST tax credit, , the Canada Child Tax Benefit, the Universal Child Care Benefit, and the Children’s Fitness Tax Credit. I have a client (she’s a union employee and last year with all the odds and sods received almost $3000 back from the government. True, most was overpaid contributions.
- You can access your tax information on the Canada Revenue Agency web site using the My Account. This year, you will need a CRA user ID and password to use the service. If you don’t already have one, click on the No button to create one

Canada Revenue Agency lists a number of common ways Canadians can reduce their tax bill. Check it out.

If you have specific questions, perhaps I can help you out – or at the very least, steer you in the right direction.

Wednesday, March 23, 2011

March 22, 2011 Federal Budget

At this time, no one knows whether the budget will come to fruition, or if Canada will have an election. There are several tax incentives of interest should the budget pass in its current form.

Enhancing the Guaranteed Income Supplement (GIS) for Low Income Seniors – The budget proposes a new GIS top-up effective July 1, 2011 for seniors with little or no income other than OAS and GIS will receive additional annual benefits of up to $600 for single seniors and $840 for couples.

Children's Arts Tax Credit - This will allow parents to claim a 15 per cent non-refundable tax credit based on an amount of up to $500 in eligible expenses per child paid in a year for an eligible program of artistic, cultural, recreational or developmental activities. The program must be either a weekly program lasting a minimum of eight consecutive weeks or in the case of children's camps, a program lasting a minimum of five consecutive days
Family Caregiver Tax Credit - To provide new support to caregivers of dependents with a mental or physical infirmity, including spouses, common-law partners and minor children. This is an enhanced credit, proposed to begin in 2012.
Medical Expense Tax Credit (METC) - allows individuals with significant medical expenses to claim a credit in respect of eligible expenses incurred by himself or herself, his or her spouse or common-law partner, or his or her children under 18 years of age. Caregivers can also claim the METC in respect of a “dependent” relative. A "dependent" relative is a child who is 18 or older, a grandchild, parent, grandparent, brother, sister, uncle, aunt, niece or nephew, who is dependent on the taxpayer for support.
Under current rules, a caregiver may only claim the eligible expenses of a "dependent" relative that exceeds the lesser of 3 per cent of the dependant's net income and an indexed dollar threshold ($2,052 in 2011), to a maximum of $10,000. The 2011 Budget proposes to remove this $10,000 limit on eligible expenses that can be claimed under the METC in respect of a dependent relative. This is consistent with the normal METC rule, which has no maximum amount.

Tuition Tax Credit - Currently, tuition fees are eligible for a federal non-refundable credit of 15 per cent of the amount paid. The 2011 budget proposes to amend the tuition tax credit to recognize exams fees paid to an educational institution, professional association, provincial ministry or other similar institution to take an exam that is required to obtain a federally or provincially recognized professional status.
Education Tax Measures – Study Abroad - The tuition tax credit is currently available to a Canadian student in full-time attendance at a university outside of Canada in a course leading to a degree only to the extent that the tuition fees are paid in respect of a course of at least 13 consecutive weeks,
The 2011 budget proposes to change this requirement by reducing the minimum course-duration requirement that a Canadian student at a foreign university must meet from 13 consecutive weeks to three consecutive weeks.


Among various charity measures in the 2011 budget, the change that may have the most significant effect on individual donors is in the area of flow-through share donations,
Donation of Flow-through Shares - Over the past number of years, Canadians who wished to donate significant amounts to charity have been turning to flow-through shares as a means of funding their charitable giving at minimal cost. Flow-through shares are essentially shares issued by oil and gas, mining and renewable energy companies that renounce or "flow-through" their exploration, development and project start-up expenses to investors, who can deduct these expenses personally on their own tax returns. For tax purposes, flow-through shares are treated as having a tax cost or adjusted cost base (ACB) of zero when calculating any capital gain or loss from their ultimate disposition.
In a move that is expected to preserve $185 million of forgone tax revenue over the next five years, the government is changing the rules and is proposing to allow the exemption from capital gains tax on donations of flow-through shares only to the extent that a flow through investor's capital gain exceeds the amount paid for the shares, ignoring the deemed zero ACB of the flow-through shares.
So, following from the example above, if Jonathan were to buy $10,000 of flow-through shares issued today, his cost would still be $5,400, allowing for the flow-through deduction at 46%. Upon donation, his receipt would still be worth $4,600 (46% of $10,000), but his capital gains tax would be $2,300 (50% x 46% X $10,000) increasing the total cost of his donation from $800 to $3,100.

RESPs – Asset Sharing Among Siblings - To provide subscribers of separate individual plans with the same flexibility to allocate assets among siblings as exists for subscribers of family plans, the 2011 Budget proposes to allow transfers between individual RESPs for siblings, without any tax penalties and without triggering the repayment of Canada Education Savings Grants (CESGs), provided that the beneficiary of an RESP receiving the transfer of assets was under 21 when the plan was opened.
Registered Disability Savings Plans (RDSP) – Shortened Life Expectancy - RDSPs were introduced in the 2007 budget. They allow parents and others the option to contribute up to $200,000 towards the long-term financial security of a child with a severe disability. Investment income in an RDSP grows tax-free and can be supplemented with generous government credits and bonds in the form of the Canada Disability Savings Grants (CDSGs) and Canada Disability Savings Bonds (CDSBs).
The 2011 federal budget proposes to allow RDSP beneficiaries who have shortened life expectancies to withdraw more of their RDSP savings by permitting annual withdrawals without triggering the ten-year repayment rule.
An election will be available to take advantage of this new rule. If the election is filed for a beneficiary with a shortened life expectancy, withdrawals made at any time following that election will not trigger the repayment of CDSGs and CDSBs provided that the total of the taxable portions of the withdrawals does not exceed $10,000 annually.
Once an election has been made, no further contributions to the plan will be allowed, and no new CDSGs or CDSBs will be paid into the plan. After the death of the beneficiary, any CDSGs and CDSBs remaining in the plan that were received by the plan within the preceding 10 years must be repaid.
RRSPs / RRIFs – Anti Avoidance Rules - Rules similar to the existing TFSA anti-avoidance rules are being applied.

Individual Pension Plans - IPPs are defined benefit Registered Pension Plans (RPPs) established for small business owners and their spouse or other family member that are employed by the business.
The federal budget proposes two new tax measures that will apply specifically to IPPs.
• Minimum Withdrawals -The budget introduces a new rule that will require an IPP to pay out to a member, each year after the year in which he or she turns 71, the greater of the regular pension amount payable under the IPP terms and the minimum amount that would be required to be paid from the IPP to the member if the member's share of the IPP assets were held in a RRIF. According to the government, "This requirement will establish reasonable limits on deferrals of tax on IPP savings and generally ensure that such savings are received as income throughout the retirement period of the member, consistent with the basic purpose of RPPs" These rules will begin in 2012.
• Contributions for Past Service - The amount you can contribute to a defined benefit plan, including an IPP, is directly tied to the RRSP contribution limits. As a result, an IPP member's annual RRSP contribution limit is reduced by the estimated amount of annual saving in his or her IPP.
Employee Profit Sharing Plans - Finally, a heads up is warranted to business owners who use Employee Profit Sharing Plans (EPSPs). EPSPs allow business owners to share the profits of their business with their employees. While no changes have been formally announced in this budget, the government did indicate that it "will review the existing rules for EPSPs to determine whether technical improvements are required in this area."

Monday, February 28, 2011

Want to be Debt Free? Simple Steps to Get Your Plan on Track

When we think of financial goals, we often think in terms o how much we want to earn or how much we need to save for retirement. A financial goal that gets less attention, but that most of us share, is to be debt free. In fact, a recent Manulife Bank survey of 1000 homeowners1 found that 84% of them considered being debt-free to be a high financial priority (rating it 7, 8. 9 or 10 out of 10). One in three considered it to be their top financial priority.

With “being debt-free” pretty high up on most "to do" lists, you might think we'd be doing well, right? Unfortunately, the same survey also found that 27 per cent of homeowners actually increased their debt over the past year. A further 17 per cent had the same amount of debt as they did 12 months earlier. The remainder did manage to reduce their debt, but 19 per cent reduced it by less than they had expected. In other words, almost two-thirds of homeowners surveyed are not achieving one of their most important financial goals.


The results of the survey provide insights that suggest some fairly simple steps we can take to get our plans on track with our goals.

Sixty-five per cent did not shop around the last time their mortgage came up for renewal. Instead, they simply stayed with their current lender. Within this group, a third accepted the first offer that was presented to them


Shopping around and negotiating require time and energy and, for some of us, take us outside our comfort zone. Consequently, many of us take the path of least resistance and keep doing what we've always done in the past. The problem is that with our debt, as in many areas of our life, the path of least resistance isn't necessarily the best or most cost-effective.

Our mortgage is typically one of our largest financial obligations. Failing to shop around may end up costing us a lot of extra money in interest payments and keep us in debt much longer than necessary.


If you haven't shopped around recently, take some time to educate yourself about the different options available. Interest rates are important, but don't forget to look at product features too, since your ability to become debt-free may be determined as much by the flexibility your mortgage provides as by the rate you receive.
When your mortgage comes up for renewal, remember to look at all of your options and choose the one that's best for you.

Forty-three percent had credit card debt that they didn’t repay in full each month.


Credit cards can provide tremendous convenience in our day-to-day lives — allowing us to make purchases without carrying around much cash and even to earn reward points. The obvious downside is that they make it easy to spend beyond our means. And, if we don't pay our balances in full each month, we're charged interest at relatively high rates - often 20 per cent or more!

Carrying a balance on your credit card can cost you a lot of money over the long term and may make it more difficult for you to become debt-free.


Sit down and look at your credit card bills over the past few months and identify purchases that were "wants" rather than "needs." If you haven't done this before, you may be surprised at how many items fall into the "want" category and how quickly these can add up. Understanding where your money is going is the first step towards bringing your spending back within your budget. As for your existing credit card balance, make this your first priority when it comes to allocating extra cash because it's likely your most expensive debt.

Sixty-five percent had two or more debts outstanding


With investments, we often hear that diversification is key and that we "shouldn't put all of our eggs in one basket." This is good advice for investments. However, when it comes to debts, the opposite is true. Generally, when we have more than one debt, those debts are charged different interest rates. Ideally, we want to have all of our debt at the lowest rate. Anything else will keep us in debt longer than we need to be.


We sometimes associate the word "debt consolidation" with bankruptcy or someone in dire financial straits. In reality, it simply means combining all of your debts into one pool at the lowest possible rate — and it's one of the easiest ways to reduce the amount of interest you pay each month. There are a variety of products on the market that allow you to do this. Some of the most attractive products combine your debts with your mortgage and generally allow you to access very competitive interest rates.

Being debt-free is a goal that most of us share but many struggle to achieve. These are just three simple steps you can take to help you become debt-free sooner.

One additional step is to talk to your advisor. Your debt is an important part of your overall financial health and your advisor can help you find the tools and strategies you need to manage your debt more effectively and become debt-free sooner.

1 Source: Survey of 1,000 Canadian homeowners aged 30-55, conducted by Research House on behalf of Manulife Bank, April 2010.

Adapted from Manulife Solutions for financial planning. Winter Edition 2010/2011

Friday, January 28, 2011

RRSP versus TFSA versus Debt Management

It’s the time of year where we all make (and break) New Year’s Resolutions. Two top resolutions are weight loss and saving money and many of us have already broken their resolutions already. (In my case the diet – but I’m back on it.)

The question I am often asked is if I don’t have the cash flow to save as much as I should – where should I put my money? The answer is different for each of us, but the process to decide what is optimal remains the same. There are six basic steps:
1. Set Short and Long Term Goals and prioritize them
2. Know where you stand – put all of your personal insurance, group insurance, bank statements, savings statements, RRSP, pay slips, pension information, tax information, credit card statements and mortgage information in one place so that you can review them easily
3. Review this information with a financial planner – for both short and long term planning purposes
4. Develop a personalized plan – this may involve adjusting your spending and savings patterns – but you may learn that you are on track and don’t need to make any adjustments
5. Implement the plan
6. Monitor and Review the plan on a regular basis

I can help you to analyze your current situation, to develop a plan, to implement a plan, or simply to provide you with some tools that will enable you to do it yourself. (Be aware, that much like the DIY shows on TV that happen in a magical 30 minutes, financial planning is harder than it looks.)

Jonathan Chevreau once tweeted that a financial plan is Eliminate debt. Cut up plastic. Join pension. Buy home. Pay it off. Spend little. Save tons. Invest wisely. Be tax smart. Marry for life. Unfortunately, we don’t all live in a perfect place. However, we can all develop a perfect plan for our current situation.

Give me a call and we can set up an appointment.