by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
With bankruptcy plaguing the country, it is only necessary to know how one can stay clear of it. One of the biggest causes of bankruptcy in recent times is over spending, which leads to building up of loans and credit, eventually becoming a burden too heavy to carry. Listed below are smart ways in which you can avoid making a mess out of your finances.
Borrow Only What You Can Repay
For every dollar you borrow, make sure you have the capability of paying it back on time. Most of the times, creditors will make sure of that before lending funds to you; however, you as a borrower have the ultimate responsibility of making sure you honor your commitment. Draft out a plan so that you know what and how much you can repay.
Start Saving
Make it a habit to save money regularly. Set up a deposit account with little or no charges and transfer a certain sum of amount into the account each time you get paid. The money you save can pay for unexpected expenditures, or a vacation later.
Review and Pay Existing Bills on Time
Make an effort to pay all current credit card and utility bills on time. You can opt for the direct debit facility offered by your bank that makes regular payments against your account on your behalf. This way, at the end of the month, you will have only a nominal amount to pay or maybe none at all.
Take charge of your finances by reviewing your bills, bank accounts, and credit card activity statements on a monthly basis. This will not only help to investigate any erroneous or doubtful transactions, but will also bring to your notice any bills that you may have not paid.
Keep a Track on Your Credit Cards
These credit cards can prove to be fatal for your finances if not monitored properly. If you have more than one credit card, it is wise to only carry one with you. This not only saves you from unnecessary expenditure but also prevents credit card frauds in case your card or wallet is lost or stolen.
Close down any unused credit cards that you have in your possession – this will help you will smartly evade charges and fees on your dormant cards, not to mention curb the urge to overspend and use up additional credit.
Review Your Credit Report
At least once a year, make sure you review your credit report – always do it before you apply for further credit. The benefits of doing so are two-folds; firstly it will give you a clear picture of where you stand on your credit rating, and secondly, you can spot and fix any errors in the report that may affect your report adversely.
Still, if you are having trouble managing your finances, contact a credit counselor like GTA credit as soon as possible and allow them to help you.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
With an increasing number of people declaring bankruptcy in recent times, one lives in fear of the repercussions of even the slightest financial crunch that materializes in our everyday lives. Nobody wants it, nobody likes to go through it, but the truth is that reasons of bankruptcy vary from person to person and this crisis could hit even the most financially sound people.
Luckily, there are certain defensive measures you can take to avoid having to file for bankruptcy.
Settle Your Debts
Filing for bankruptcy may often lead to liquidation which means selling off all your assets and property; thus a smarter way to go about this would be to hold onto your wealth and still pay off your creditors by negotiating on your debts. You could opt for Debt Consolidation, Consumer Proposal , both of which allow you to make payments to lenders in easy affordable sums.
Paying of your debts will keep you in control of your finances and away from filing for bankruptcy.
Borrow from Family/Friends
Do not feel ashamed of asking your friends and family for financial help. Make a budget and estimate the amount you would need to avoid bankruptcy; you will know how much you need to borrow once you subtract the amount of money you can afford to pay yourself. Just make sure you have a comprehensive plan for paying back both your family and lenders on time.
Sell Your Property
Sell off the excess property to repay your lenders, or at least raise enough money to save you from filing bankruptcy altogether. This does not mean that you empty your house, but parting from a few valuable assets may prove a fruitful investment for your future. Besides, it’s always better than losing everything you own.
Make Sacrifices
Prioritize your expenditure – avoid unnecessary spending on things that could cost you everything you own. Start living your life fulfilling just the basic needs, restructure your spending pattern; save more and pay off your creditors.
Working on one or a combination of the above suggestions could save you from declaring bankruptcy. It will not be easy, but it sure isn’t impossible either. If you still feel it is too much for you to handle on your own, consult a credit counselor or personal finance consultant at GTA credit to get your finances back on track.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
Just as every action has an equal and opposite reaction, bankruptcy too has repercussions. Rebuilding your life after declaring bankruptcy may seem like a daunting task- starting anew on building your credit ratings, finances and emotional stability; but it can prove to be tremendously rewarding at the same time.
If you have recently filed for bankruptcy, it is essential for you to know that life after bankruptcy does not have to be about being a financial recluse. Rather, it is about a second chance at reforming your life and protecting yourself against future financial disasters. The following three steps will help you speed up your financial recovery.
No Shame No Guilt
Berating yourself in the aftermath of shame and guilt will only make matters worse. It will hinder your progress towards a new reformed life. People are forced into declaring bankruptcy often enough, be it due to unemployment, medical bills, or other personal setbacks.
A positive approach to the issue would be to make peace with your situation, making reforms, and moving on without self-pity or any negative thoughts.
Realistic Budgeting and Existing Bills
After bankruptcy, you need to be more watchful of your funds. Start off by listing down your cash inflows and outflows. Doesn’t matter if you have made one before or not; now is the time you need one more than ever. Plan your spending in a way that you do not end up stacking needless debt. Set aside an emergency fund which could come in handy if, God forbid, a calamity strikes out of the blue. Also prioritize paying your bills on time. You might want to consider setting up automatic bill payments, and of course, do not forget to pay your rent on time. Paying your current dues on time is the single most important step towards restoring your finances and credits.
Rebuild Your Credit with a Secured Credit Card
Improve your credit rating after bankruptcy by getting a secured credit card. This card will limit your credit to the amount you deposit in the account. Aim to progressively rebuild your credit by restricting your spending to minimal amounts as you work on paying off your existing debts as agreed. One thing to remember is that you stay away from secured cards that charge high fees.
It is particularly important to also keep yourself surrounded by the right kind of people. Friends, family, members of the church or others- people who encourage you, support you and guide you to a financially and emotionally stronger future.
You can always seek advice and counsel from professionals like the ones employed by GTA Credit Solutions to have a sound plan for rebuilding your finances and credit after bankruptcy.
by admin | Credit Counseling, Uncategorized
One of the main concerns of paying off creditors is the thought of compromising your financial future in settling debts in the present. In particular, people are worried that creditors will seize all or part of their pensions in order to settle debts.
The good news is that in most cases, creditors are not allowed to touch your retirement income. The bad news is that in some cases, mostly depending on where they live, the type of retirement fund they hold and the creditor making the claim, money set aside for retirement can be used in the settlement of your debts.
First among the variables is the province of residence. Although there is federal government protection of retirement savings under provisions in the Bankruptcy and Insolvency Act, it depends on the laws of the province or territory when it comes to shielding your investments from creditors. British Columbia, Alberta, Saskatchewan, Manitoba, Prince Edward Island, and Newfoundland and Labrador have laws mimicking the federal regulations.
In most cases, the funds are protected unless you file for bankruptcy, in which case a trustee gets to decide how to liquidate them in order to settle debt. In the cases mentioned above, the trustee can only look at savings acquired within 12 months leading up to the filing for bankruptcy. In some provinces, there are no time restrictions and in others, funds are locked in and sheltered regardless of the date of bankruptcy filing.
That’s where the type of retirement fund comes in. Some companies provide pension plans and put funds on behalf of the employee into either locked-in RRSPs (Registered Retirement Savings Plans) or RPPs (Registered Pension Plans). Those funds are generally protected from creditors either in a bankruptcy or outside of it. The rule of thumb is that if you don’t have access to locked-in funds, neither do your creditors.
However, you can lock in your self-directed RRSPs or GICs (Guaranteed Investment Certificates) for a set time and when the locked in period expires, they are accessible. The exception in terms of self-directed retirement income savings are RRIFs (Registered Retirement Income Funds) held in a life-insurance contract provided that money isn’t deposited in order to deliberately shelter it from creditors, proof of which must be determined in the courts.
In general, your government issued retirement earnings — Old Age Security (OAS) and CPP (Canada Pension Plan) or QPP (Quebec Pension Plan) — cannot be touched by creditors. There are, of course, a few exceptions.
The primary one is, naturally, the CRA (Canada Revenue Agency), whose broad sweeping powers allow it to tap into whatever means it deems necessary in order to settle tax debts. The CRA will simply send a letter of direction to Employment and Social Development Canada (ESDC) — the administrators of OAS and CPP programs — and/or your bank with instructions of how much to withhold to settle your debts. The amount can be negotiated with the CRA.
Your bank can also have access to those funds if you owe them money due to mortgage or credit card debt, and can tap into the accounts into which you deposit the pension or retirement funds. Again, locked-in funds aren’t touchable but if you release those funds into an account with the bank to which you owe money, they can be seized.
Your ex-spouse is another exception, in the case of money owed either as part of a separation or divorce settlement or because of not fulfilling your support obligations (spousal or child). Up to 50% of your pension can be tapped into to make up owed money, but you can petition the courts to reduce or eliminate the debt owing.
by admin | Consumer Proposal, Credit Counseling, Uncategorized
One of the things we constantly preach about in terms of savings is to start early in order to make it easier to budget and maximize your investment, and the same thinking applies to learning financial responsibility — start learning early.
Now, it may be a bit late for readers of this column, but you can “pay it forward” by teaching your children the importance of watching their finances, both in terms of budgeting their daily spending effectively and also saving for the things they want.
It’s still fine to hand over a couple bucks, but many homes have done away with the action of simply handing over a few bucks to children, simply “allowing” them to be children. The fact is that in today’s consumer market, money does not go far, so it’s important to teach children (a) the value of money, (b) how to budget, and (c) how to save.
Teaching the value of money is not as easy as saying “money doesn’t grow on trees.” I prefer “money is so hard to earn and so easy to spend.”
Keying in on the first part of that statement, give your child a chance to make more money. Say you give your child $5 per week as a “base salary.” He or she gets this just for being your kid. The idea is that some things are expected for this allowance — just as you cook meals for your family and run the vacuum around, they are expected to get themselves ready for school on time, brush their teeth and hair every day, bathe regularly and keep their rooms in some sort of order.
But then also give them the chance to earn more money — a commission, so to speak. Cleaning up their rooms once a week may be worth another dollar, putting their dirty clothes in the laundry room hamper may be worth a dime, putting away clean clothes in the dresser could be worth another dime, loading or emptying the dishwasher may be a 25-cent task, hauling the trash to the curb is worth a quarter, etc.
This shows them that working harder earns more money — a lesson that will resonate well with them when they get out into the working world — and that they can control their own earnings. At the same time, you can teach them the basics of handling money.
A good way to start is with the jar theory of budgeting, where you literally label jars or envelopes “groceries,” “gasoline” and “fun,” as examples, and then put actual money (the ubiquitous debit card is making the whole thing harder too!) in them to cover those costs as they arise, taking out the exact amount of money to pay.
For children, you can start off with something as simple as a jar labelled “spend” and another labelled “save” and have them break off their earnings into cash they want to spend right away and money they want to save up for something bigger. Depending on your values, you may want to add a third jar — give — to illustrate the importance of charity.
So at the end of the week, instead of handing over a $5 bill, for example, give them five loonies and they have to put at least one in each of the jars. This teaches them planning — you can choose to save just one dollar and spend the rest, but then reaching that goal of a new video game, for example, will take a considerable amount of time. Similarly, they may choose to bank $3 toward that video game more quickly, but then they will only have enough for one chocolate bar, for example. They can also move money between the jars, so if they find themselves short halfway through the week, they can take some out of their savings, or if they have surplus cash-on-hand, they could choose to add it to their savings. The “give” jar, if you have one, should be regarded as untouchable — what goes in there stays in there.
As kids get older, you may want to introduce more financial responsibility into their lives, such as giving teenagers a back-to-school lump-sum payment and allowing them to spend it on clothes, shoes and backpacks as they see fit, rather than dragging you to the store and expecting you to buy name-brand everything because “that’s what all my friends are getting.”
It’s fairly simple and kids get an idea of the gives and takes of money handling. In the process, you may also find that breaking down the handling of money into simple terms makes budgeting a lot less complex.
by admin | Consumer Proposal, Credit Counseling, Uncategorized
A lot is said about recognizing when you’re in financial trouble, with the idea being that you can fix your situation if you recognize early enough that you’re in trouble, but not much is written about how to know that you’re financially healthy or that your money woes are behind you.
Ironically, in order to know that you’ve put your financial problems behind you, you have to understand and recognize the signs when you were sailing into financial dire straits, so you can avoid them and “do the opposite.”
Overcoming financial difficulties is a bit like overcoming cancer — early detection gives you a better chance of a successful recovery. Having ignored, or not recognized, those signs, you found yourself trying to stay afloat in rough financial waters. Regardless of what you’ve done to reach safe harbour, you now want to enjoy the calm seas for a while, and preferably forever. So what are the signs that you’ve turned the corner?
The slush fund — that cash stash that will help you weather a financial storm is a must. Most analysts suggest having at least three-months’ worth of living expenses (rent, groceries, utilities, gas money … the essentials) in an emergency fund. Having this emergency fund means that even if a life-altering event were to happen (lose a job, have to take on heavy medical costs, relationship break-up, etc.), you could survive for three months during which you can enact a turnaround (find a new job, downsize your living arrangements, etc.). When you consistently start to see the balance in your savings account going up every month, instead of constantly being taken down to zero, you could be on your way to financial recovery. It may take some time to set aside that three-month slush fund, but every step forward means you’re on your way.
Credit card payments — once you start making more than the minimum monthly payment on your credit card, it means that you’re paying off your debt instead of just keeping your head above water. Many people don’t know that paying only the minimum on $1,000 costs you almost as much to finance that amount and takes you over a decade to pay off. It’s not cause to celebrate your financial independence just yet, but every journey of a thousand miles starts with a single step.
Sticking to a budget — it may seem like a simple thing, but a lot of people who get into financial difficulty don’t have a budget, and if they do, they don’t pay attention to it. They don’t always do it out of ignorance or apathy but in many cases they don’t even bother with a budget because they’re always in the red. Consciously drawing up a budget makes you realize you are in control of your spending, and then looking at your financial comings and goings on a regular basis will not only keep you on track but help you see how relatively easy it is to stay ahead of the game.
Finally, you’re answering the phone again — when things start going bad, creditors start calling; once they do, you find yourself ignoring phone calls or being selective about answering the phone. After all, creditors don’t usually leave messages and anybody from whom you want to receive calls will either leave a message or get hold of you some other way. And in this day of caller ID, it’s easy to see on the display if it’s a call you want to take or ignore. Once those bills are being paid regularly and you’re on the road to recovery, you’ll find yourself answering the phone a lot more often.
