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 | Consumer Proposal, Credit Counseling, Credit Repair, Uncategorized
Credit card fraud is an all encompassing term for a form of theft and/or fraud that may be perpetrated though the illegal use of a credit card, in order to purchase goods or services as a fraudulent source of finance in a monetary transaction The purpose may be to either acquire anything without paying for it or alternately to gain access to funds in an account that the individual has no legal right to operate.
There are many broad categories of credit card fraud, these include:
Credit Card theft
Having a card stolen can be a traumatic experience and it becomes even more so if you find yourself being billed for products that you never purchased. Unfortunately, credit card theft is a pretty common phenomenon and it is imperative that a lost card should be reported and blocked ‘as soon as possible’ to avert such losses.
On the plus side though, it is not as easy for prospective thieves to actually steal credit cards and buy stuff with them. This is because more and more merchants now ask for at least some form of identification when they are being paid though credit cards. Additionally many credit card facility providing financial institutions also add a photograph of the owner’s face to the card’s front side as a security measure. While these may not be fool proof measures but they have helped mitigate losses resulting from credit card theft to an extent.
Account takeover
An account can be said to be ‘taken over’ when a fraudster manages to acquire the personal information of a credit card holder (such as mother’s maiden name, date of birth, home address and other personal information). The prospective swindler then approaches the cardholder’s bank all the while pretending to be the original card holder, he informs them that he has lost his card and has also shifted his address. Once the card is delivered to him in the name of the original owner, he may be able to steal at will till the original card holder finds out what is happening and has the card blocked.
Skimming
This is by far the most common method of credit card fraud. Skimming works by putting a legitimate card in a machine that looks just like an actual credit card reader. But in reality the machine, unlike a conventional card reader saves all the details of the card. These details are then extracted and computer hackers may use them to make unsecure transactions or even create new cards from them altogether.
”Borrowing” the card
When you hand over your card to a gas station attendant or a waiter in a restaurant when making a payment, he has the opportunity to note down your card number as well as other details. These can then be used to make unauthorized online transactions in your name.
Phishing
This is also another well known form of credit card fraud. Instead of stealing or ‘borrowing,’ the fraudster deceives his victims into disclosing their credit card details. He may call them pretending to be a bank officer or send them emails promising them winnings in a lottery ticket. Some net savvy swindlers have even been known to create websites identical to original bank sites. Once the data is entered, the thieves go to work immediately transferring either funds or buying expensive products online.
Conclusion
Irrespective of the method used, using a credit card without due authorization is considered stealing in Canada and as such is considered a criminal offence in the eyes of the law.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
The rather unusually named ‘debt snowball’ strategy is a method many credit counselling agencies espouse as a means to help reduce your overall debt burden over an extended period of time. This stratagem is not all that difficult to master one you are able to understand it completely.
Essentially, how the system works is that if you have more than one credit card debt, you are required to pay off the smallest debts first while making only minimum payments of the larger debts regardless of how large they are.
Once the smallest debts have been completely eliminated, you may than move on to the next smaller one while following the same concept of paying more for the smaller debts and keeping away ever impending solvency by making minimum payments of the larger debts, overall.
Slowly and gradually, as all your smaller debts are eliminated one by one, you may then increase the payment amounts of your larger debts rather than continue to pay the minimum amounts you were making before to your credit card service providers. Eventually, your larger credit card debts would also be paid and you would be finally able to live a debt free life once again.
How it works
The ‘Debt Snowball’ method aims to get rid of smaller debts first even if they are charging low interest rates and encourages you to make only minimum payments of even high interest loans regardless of how much higher they may be.
According to this strategy, the money that you earn every month will be utilized to pay off the smallest debts first (however, you have to make sure that it does not affect your basic living expenses since then you would be forced to take even more loans effectively exacerbating the vicious cycle) while the minimum dues on your other loans are paid irrespective of the fact that their interest rates are steadily increasing and you may in essence have to end up paying ‘interest on interest.’
However, if you have two or more credit card loans whose payables are roughly equal, then many credit counselling agencies advise paying off the one whose interest rates are higher.
There are some key factors to take into ‘account’ (pun intended) while attempting to create the proverbial ‘Debt Snowball’
1. Stop spending beyond your means!
This is the most basic step of all. You can’t really expect to live a debt free life if you continue to use your credit cards to spend money that you don’t have, while being well aware of the fact that this is the single most important factor that is responsible for putting you in debt in the first place!
2. Be Myopic
Most credit counselling companies that use the debt snowball approach also advise you to acquire ‘tunnel vision’ instead of trying to pay off all your bills simultaneously. When it comes to credit card bills, focus on only one bill at a time and start on another one only after the first one has been completely paid off.
3. Don’t stop at the very first pay off
Once a bill has been paid off successfully, rather than using the money freed to buy non essentials, it is advisable to continue to utilise that sum to pay off the next bill. This process has to continue without a break till ‘all’ your debts have been paid off and you can now enjoy a completely debt free life.
