by admin | Consumer Proposal, Credit Counseling, Uncategorized
5 Important Points to Consider when Saving for Emergencies
Emergencies have a tendency to hit us like a bolt from the (proverbial) blue and they are unheralded as they are unexpected. This is why we should always have a contingency plan in place for such unforeseen eventualities. There are certain steps we may take to ensure that we are never caught ‘wanting’ just when our need is dire.
1. You must have an element of (financial) balance in life
Saving can be defined as “Putting aside some money for utilizing that amount later”. It is always important to save at least a small part of your monthly earnings for the proverbial ‘rainy day’. If it is not possible to save hefty amounts at once, then try to save at least ten to fifteen percent of your salary/income day in day out. However, it is imperative that the amount saved is done so with absolute consistency. Even if you manage to save up to only fifteen percent of your total earning every month without using your original savings, (thus defeating the purpose of the whole exercise) then within a short period of time you would be able to accumulate a fairly big amount of money that you may then be able to use for any eventuality.
2. Always keep a strict watch over your spending habits
It is important that you keep a strict eye on your overall spending habits and pre-planned budget for your weekly, monthly and even yearly expenses. The weekly and monthly budget would be for day to day needs while the yearly budget would account for any big expenses you have in mind. A portion of your budget must be dedicated to ‘contingency planning’ and moreover, this budget must be rigidly followed so that you are well placed to take care of any pressing need that may arise.
3. Expenditure Journal
You should keep a monthly expenditure journal so as to be able to understand your own spending patterns for the duration of the month and how best to manage your budget.
4. Don’t try to keep up with the Joneses
Thanks to runaway consumer spending, we tend to copy others more well off then us irrespective of our monetary stability (Or lack of it thereof). If your best friend has just purchased the latest model smart phone, then let it be. It should not be a motivating force for you to set about acquiring one on your own if you cannot afford it. Remember, in case of an emergency you would not be able to sell that smart phone at its original cost but may well end up recovering only a small part of your initial outlay.
5. Understand the gap between dreams and reality
It is always sensible to understand your own financial limitations. Remember dreams are unending and they have tendency of being markedly bigger than our incomes. Trying to fulfill each and every dream would inevitably mean a lifetime of being indebted to others and in effect being helpless in case of any financial emergency.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
How refinancing can help modify your house
Basically refinancing your mortgaged home denotes the pay off, of loan and its replacement by another loan. There may be many uses for refinancing such as taking advantage of LIRs (lower interest rates) utilizing the huge equity of your home to buy something of high value, or to allow massive renovations to your house in order to turn it into a dream home.
Broadly speaking refinancing should not be undertaken for small projects such as putting up a spare window or replacing a warped door or covering the gate with a fresh coat of paint but for bigger projects. These may include putting up a sunroom near the front garden or creating a spare bedroom or completely overhauling your house. This would have the dual purpose of not only allowing your house to look better and be a more comfortable for you and your family but it would also greatly appreciate the overall value of your property.
Such refinancing may allow the homeowner a substantial amount of funds for large scale home improvement projects. Once the prospective home owner has been declared to be eligible for refinancing by the financial institution, (this outcome may be dependent on his credit history) they may potentially be able to refinance a sum of money that may even be greater than the original mortgage amount they had acquired initially. This excess liquid cash may then be utilized for any costly home improvement project.
To get the most value for the funds you have acquired through refinancing, it is advisable to go for only those renovations to your house that increases the overall value of the property. Since not every home improvement plan has the potential to increase the value of your property so choose carefully as to what works best for you. (Bathroom, kitchen and sunroom upgrades are generally considered very popular in Canada these days)
Important points to consider before availing the refinancing option
However, the refinancing option for major home improvement upgrades should be undertaken only after careful deliberation due to a variety of reasons:
- If you have utilized a ‘cash back’ option in addition to your refinance, your cumulative debt may actually increase and in the long run you just might end up paying markedly higher monthly repayments.
- You should also keep in mind that home renovations are no guarantee that your property value might increase and once you have renovated your house you would be selling it at a profit and moreover, will also be able to pay off all your debts.
- The real estate market tends to be mercurial and subject to change with Canada being no exception to the rule. Should property prices register a steep decline once you have availed the refinance facility, you would be paying off more then you could earn from selling your home
- It pulls equity out of your home, thus effectively eroding your investment.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
Going bankrupt is a tough time indeed for anyone and it becomes even more stressful when a bankrupt individual decides to try and get a job in order to make his financial position more tenable. There are a veritable host of questions in his mind that might make the prospect of future employment quite daunting. However, it is not as bad as it looks. Here is why:
Effect of Bankruptcy on Job Applications
When it comes to government employment, no agency in Canada may consider your bankruptcy when deciding whether to hire you. Unfortunately, this rule does not apply to the private sector. And it is certainly possible that a prospective employer in the finance industry would be wary of hiring you especially when it comes to dealing with sensitive tasks such as making or supervising the disbursement of payrolls, general accounting and the like.
Honesty is the best policy
The key thing is to be upfront about it and to refrain from hiding your financial history if your prospective employer asks you. Rather than ‘fudging’ the question or out rightly lying (an almost certain way of losing out on your prospective job just when you need it the most) it is always better to speak the truth. If not for any other reason than the simple one that many prospective recruiters conduct a summary credit check on almost all would be employees as a matter of course. All details of your bankruptcy would be shown in that report and if you have lied, it would seriously tarnish your reputation as well as any chances of gainful employment in that organisation, since its altogether very easy to find out any information about your bankruptcy from your credit report.
While it is certainly true that all potential employers do require your specific permission before they can extract details of your credit history, however not giving consent to access such information would almost certainly compel any prospective recruiter that you have something to hide and so deny you any employment opportunities in that organisation. Therefore, it would always be in your own interest to be honest and up front about your bankruptcy during the application process.
Losing a job due to bankruptcy
As a general rule being bankrupt does not automatically mean that you would end up losing your job due to the fact that your personal financial history should not have any visible affect on your work. Your employers have no legal ground to dismiss you per se.
However, that does not always hold true and there are certain cases where your financial history may prove detrimental to your current and future job prospects, such as:
- Being employed in the financial industry including banks and other money lenders that deal with their clientele’s money (and therefore trust)
- If you are a credit councillor or an insolvency and bankruptcy lawyer, your current employers may not wish to allow you to continue in that position.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
Not all of us have the financial wherewithal to stay out of debt. Sometimes we simply want more then we earn or just want to impress our neighbours, friends or our spouse and so we spend more than we are capable of paying back, or alternately make financial decisions that lead to disasters. Under the circumstance we have to understand how it would affect our better half, both in terms of legal ramifications as well as the emotional toll on the marriage itself. While on his or her part, the spouse has to understand the tremendous trauma you are going through when you are on the verge of declaring bankruptcy and losing all of your property.
Legal ramifications
If you were to file for bankruptcy in Canada, just remember that doing so will ‘not ‘directly affect your wife, husband or common law partner. This is primarily due to the fact that your loans and bills are essentially ‘your” loans and the “In sickness and in health till death do us part” bit of your marital vows does not make your spouse liable to pay your debts. Once you declare bankruptcy your personal debts would be recovered from you through your property and your spouse will not be legally responsible for them.
It is however, a fairly common misconception that spouses are somehow responsible for each other’s debts. This is quite simply not true in spite of collection agents telling you that if you do not ‘pay up’ they will approach and extract the required amount from your spouse. This is nothing but a blatant ‘scare tactic’. You and you alone are wholly and solely responsible for your own personal debts.
However there is an exception to this cardinal rule and that is if it’s a ‘joint loan.’ Or alternately if your wife, husband or common law spouse has signed on as either a guarantor or a co-signee to the loan in which case he or she is also legally responsible for the debt as well. The loan may be either a bank loan or a credit card bill issued to the same account. However, in case of a supplementary credit card issued to him or her under your instructions and on the basis of your personal account than you will be responsible for paying the bills accrued on that particular card.
Movable and immovable assets
Quite apart from debt, once bankruptcy has been filed, a key problem (that a married couple may potentially face when either one of the spouses becomes insolvent) is the evaluation of who holds which assets. If your spouse holds property in his or her name only than it will not become part of bankruptcy proceedings. For example if your husband’s home is in his name only, then it would be party to bankruptcy proceedings provided you have filed for bankruptcy rather than him. However, if the property is in his name and moreover, he has become insolvent and filed for bankruptcy than he might lose the property, even though you would also be living in the same house.
by admin | Credit Counseling, Credit Repair, Uncategorized
So you want a bank loan for your business? It’s not all that easy since banks are entrusted with depositors’ money and therefore have to be very careful as to when and where they disburse these funds. Nevertheless, without disbursing loans that they charge interest on, the banks can’t really be in business which is why they can and indeed do give loans to business owners. Following are some key points to take into consideration when applying for a business loan:
1. Double check your credit score
Whenever you apply for a loan from a bank the very first thing they will check is your credit score. This is why it is absolutely essential that you know your credit score in advance before applying for a loan from ‘any’ financial institution whatsoever. Check and double check for any errors or discrepancies. Such errors may include any late payment that you may have made on time but that had erroneously being reported as late. Once such mistakes have been noted down, contact the relevant agency or credit bureau and get them rectified as soon as possible. Preferably before applying for the loan in the first place.
If you have a very high credit score (hovering around 900 in Canada), There is an excellent possibility that you will be able to acquire that coveted loan at an extremely attractive rate. However if your rating is average (If you have a mid-level score (650 to 700), you may certainly get a loan but the interest rates may be higher. But a credit score below 600 may make it very difficult to acquire a business loan because the bank will term you a high risk factor. In this scenario, even if you do manage to get the loan, the interest rates may be so high you might need to seek recourse to an alternative form of financing (such as borrowing from friends and family etc.), or you may reconsider your business expansion plans at this point in time.
Another important consideration to keep in mind is that having your loan application rejected would mean a drop in your overall credit score, effectively making it more difficult for any future borrowings later in life. So be very careful when applying for such a loan.
2. Figure out how much you need beforehand
Before applying for a loan it is necessary to figure out just how much money you need as a loan. You would have to show the bank precisely how you will utilize the amount so that they would be reassured that you would be able to pay back what you have borrowed, on time and with interest. You might need to create monthly cash flow predictions and then follow them to the letter if your loan request is approved by the bank.
3. Think long and hard
Before applying for a loan think long and hard as to why you need a loan and if it’s possible to do without it even if it leads to slower expansion of your business. Check for any alternative to borrowing from a commercial institution if a loan is absolutely necessary. This is because in the eventuality of anything going wrong the bank would be compelled to take legal action to recover its funds and that may include foreclosing on any mortgage or property that you might have put up as collateral.
