by admin | Bankruptcy, Credit Counseling, Uncategorized
Credit is useful. Without it, few of us would be able to live in homes or drive cars we actually own. It can let us bridge financing in the short-term, let us book a hotel room or car rental, shop online, provide emergency peace of mind, consolidate other debts, track spending, keep our money safe when travelling, and earn rewards, to name just a few ways in which credit can make life more pleasant.
But every coin has two sides. The downside to credit can exact a considerable toll — on your sleep, your family life, your health, your future.
To make sure you get the benefits of credit without the potentially devastating downside, develop some good credit-handling habits that will serve you well all your life. Obviously, the most important of these are to not outspend your income and never carry a balance on your cards, but there are some other ways you can stay in control of your credit.
– Should you find yourself in financial trouble, don’t hide. Be honest with your creditors and ask for their advice. Most creditors would rather offer some guidance and help you pay what you owe than risk not being paid at all. The best time to negotiate a solution is before you get too far off track.
– Keep an eye on your credit report. To make sure it’s accurate and current, periodically check your credit report online through a site such as Equifax.ca. You are legally entitled to see your credit report periodically for free, although you can pay for monthly monitoring services or instant online access. If you do spot mistakes, contact the credit bureau with details of the transaction in question, and find out how to rectify the situation.
– Prepare a workable spending plan and keep track of where your money goes. Trim areas you don’t need, such as daily trips to the coffee shop drive-through, and be aware of those things that are easily overlooked but that can add up to a lot of money, such as debt interest and bank charges. Writing down everything you spend is a great way to discover some hard truths.
– Stay away from high-interest payday loans and store credit cards.
– Start saving for emergencies. Experts recommend having three to six months’ worth of expenses banked, starting with putting away 10% of your net. If you happen on extra money, from an inheritance or a raise for example, add it to your savings. You won’t miss it if you don’t get in the habit of having it.
– Pay more than the minimum monthly payment on lines of credit and credit cards. It’s the only way to get ahead — paying just the minimum can add years (yes, years) to your repayment schedule and add thousands in interest.
– Never make late payments. Not only will late payments be reflected negatively on your credit report, but you risk losing low promotional interest rates or incurring extra charges.
With some care and common sense, credit can be a good friend. Without them, it can be your worst enemy.
by admin | Bankruptcy, Credit Counseling, Uncategorized
If you’ve ever been late or defaulted on a payment, you may have found yourself at the mercy of a collection agency — and you know how awful it feels.
Basically, if you fail to pay a lender, that lender may sell your debt to a third-party collection agency. They then use whatever tactics are at their disposal to get you to pay them.
A collection agency’s first move, by law, is to send you written notice through the mail (not by email) advising you of the name of the creditor to whom you supposedly owe money, the amount they say you owe, and the name of the agency and its authority to demand payment.
Just six days after sending the notice, you may find yourself on the receiving end of harassing calls or additional letters, and just trying to avoid them can make you dread opening the mail or answering the phone. The law allows collection agencies to send letters without restriction, and to contact you up to three times in seven days. (Contact means that they speak to you, leave a message, or send an email.)
If you think the agency is in error, advise them by registered letter of the mistake or have your lawyer do so. They must then stop trying to contact you until the matter is resolved.
While they can be intimidating, there are some restrictions placed on them by government regulations. Collection agencies are prohibited from calling on Sundays, except between 1 p.m. and 5 p.m., or any other day between 9 p.m. and 7 a.m. They can’t contact you on stat holidays. The law also prohibits the use of threatening or profane language, as well as undue, excessive or unreasonable pressure.
While the agency can contact your employer once to find out your employment status, they cannot contact your employer again unless your employer has guaranteed the debt, they are making contact with regard to a court order or wage assignment given to a credit union, or you have provided them written consent to make such contact. They can’t contact your spouse or a member of your family or household, relatives, or neighbours except to get your address or phone number unless the person has guaranteed the debt or you have given your permission. They cannot give out false information about you, nor can they recommend to a creditor that they pursue legal action without notifying you first.
They are also prohibited from levying additional charges — they are allowed to attempt to collect only the amount of the original debt (although it may continue to accrue interest).
As unpleasant as those calls and letters can be, avoidance isn’t the answer. Once the debt goes to collections, it no longer belongs to the original lender, and you have little choice but to deal with the collections agency. Of course, the simplest solution is to pay the debt. Once the debt is paid, the harassment stops. If you can’t pay the entire debt, try to make arrangements to pay it off over time.
Failure to make arrangements could result in a negative report to the credit bureau or even legal action that could end up in court, in the seizure of your property, or a claim on your pay cheque.
If you think you’ve been mistreated by a collections agency, send them a letter telling them why and that you expect them to comply with the law. If the behaviour persists, file a complaint with Consumer Protection Ontario.
If you’re feeling the pressure of debt collection, contact a credit counsellor to find out your options.
by admin | Credit Counseling, Credit Repair, Uncategorized
Store credit cards can be useful — and they can also be a trap.
On the downside, they generally charge greater interest (sometimes far greater) than a non-store-specific card such Visa or American Express. They’re relatively easy to get, and a store will often entice prospective borrowers with promises of discounts — “Apply for credit today and take 15% off your purchase right now!” People who don’t handle credit well can end up with a card that doesn’t allow them to shop around for the best prices (because it can be used only at one store, or at a couple of stores owned by the same company) and if they can’t pay it off right away, they’re stuck with exorbitant interest charges.
If you’re good with credit, you may think it’s harmless to apply for every card that’s offered to you, just to get the discount on that day’s shopping. But not only will open accounts you don’t really use take a potential toll on your future credit (if you’re spread too thin with too much available credit — even if you don’t use it — you may have trouble obtaining credit you really want, like for a house or a car), but also every time you apply for credit, an inquiry appears on your credit history; too many inquiries in too short a period of time can also make it hard to get the credit you really want.
And let’s face it — there’s irony in forcing you to shop at their store while repaying your loyalty with higher interest. Doesn’t sound like a fair way to treat a good customer!
The upside is that because they are relatively easy to get, store cards can play a useful role in re-establishing credit for those who have declared bankruptcy or made a consumer proposal.
If you can stick to them, a few guidelines can help you get the most out of store cards without paying too high a price.
If you do decide to take advantage of discounts for applying, wait until you’re buying something substantial, like appliances or furniture, to make the potential impact on your credit worthwhile. If the store has special card-holder appreciation nights or similar promotions, take advantage of them too, but don’t let the card become an excuse to buy things you don’t need.
If you can’t pay off the balance before you start to accrue interest, consider transferring your balance to a card with a lower interest rate, or paying it off with a line of credit.
Remember that once the interest starts piling up, the cost can far outweigh the discount you wanted in the first place.
by admin | Consumer Proposal, Credit Counseling, Uncategorized
You know all those times you fumed at the nickel-and-diming that takes place this time of year as your children head off to elementary or high school? Well, it’s nothing compared to the hundreds and sometimes thousands college kids have to spend before their school year is even past its first month.
And though you have to tell your 15-year-old that you can’t get that locker organizer just yet because you don’t get paid until next Friday, you can’t very well tell your university freshman you can’t afford that $100 course book until next week because next week may be too late for him to have it read.
There are ways to lessen the impact of those necessary purchases, though, and as with most financial matters, the answer is budgeting.
The base expenses of a college education (tuition, room and board) are natural bank-account killers because there’s no way around them. They have to be paid. The $1,500-$2,000 you paid 15 years ago on tuition has more than quadrupled since, with the average cost in Canada pegged at about $7,000 per semester. Multiply that by two for the full school year. Multiply by the number of years your child will be studying and factor in inflation and you can expect to pay anywhere from $30,000 to over $60,000— that’s possible your annual salary, and then there’s the cost of living away from home (which really is one of the important aspects of continuing education some parents have a hard time accepting), which can often eclipse the cost of tuition.
The ideal is for parents to start thinking about how to come up with that $120,000 as early in a child’s life as possible, and a Registered Education Savings Plan (RESP) is a great way to save while receiving some benefits from the federal government. New plans have no annual contribution limit but have a lifetime limit of $50,000 (plans opened prior to 2006 have a $4,000 annual cap and $42,000 lifetime cap). The government can contribute up to 20 percent on the first $2,500 annual contribution. More information is available athttp://www.canlearn.ca/eng/savings/know_your_resp.shtml and many financial institutions have online RESP calculators to help you maximize your contributions.
And of course, don’t neglect the cost of transportation. Many institutions include transit passes as part of the school ID cost but some don’t, so be prepared to pay for monthly passes if your student lives off campus or needs to commute to a part-time job to supplement his education costs. A car may be a cheaper alternative over the course of obtaining a degree, but there’s the initial outlay and gasoline and maintenance costs along the way.
The cost of course books is outlandish, but many courses use the same reading list year after year. As such, it may be beneficial to foresake new books and buy used. Further cost savings can be realized by reselling them after they are no longer needed. Institutions have used book stores and as with much buying and selling, Kijiji and Craigslist offer a chance to buy and sell course books, but the big chains such as Amazon and Chapters also have used textbook categories at substantial discounts over new.
Getting an education may be expensive for both the child and the parents, but some financial planning can take the anxiety out of the experience.
by admin | Credit Counseling, Credit Repair, Debt Management, Uncategorized
People gotta eat, right? And many probably don’t realize how much they spend on groceries because you don’t always think about your spending when it comes to the staples of life. There are things that you can do to lower your monthly grocery bill, though, so it doesn’t break your budget.
First of all, make a list and withdraw the cash with which to buy the groceries. You are more likely to spend less when you’re paying with the cash you have in hand than when you whip out a card and pay “whatever it costs.” Take along a calculator (every new Smartphone has a calculator app, so you always have one with you) and tally up as you go to make sure you stay on budget.
And don’t shop when you’re hungry. Those items you don’t really need look awfully good when your stomach is rumbling for them.
One of the best strategies is to buy what you need when you intend to use it, not doing a big shop when you have lots of money (on payday, for example) and then hoping what you bought lasts for the next two weeks, because there’s bound to be wastage.
Think about this: food is one of the few things on which you spend money, that you are prepared to throw away — not all of it, but some of it — and we don’t really think much about it. For example, we cook up gallons of pasta and load up plates and quite often we don’t eat everything that’s served, with the scraps going into the garbage or the bigger portions set aside as leftovers that don’t often get consumed before their fridge life expires.
Meats are often sold by weight, so you’re not saving by buying in bulk unless you find a drastically reduced price. But if you don’t have the means to freeze meats (preferably individually wrapped, so you can defrost what you need later, rather than defrosting the entire package), don’t buy in bulk.
When it comes to fresh items such as produce, buy what you want to consume right away (or within a couple days). There isn’t a lot of discount on produce for buying in bulk, and it doesn’t store exceptionally well, so you’re best to buy it as you use it.
If you want the convenience of having your vegetable of choice to complement a meal, buy frozen vegetables and cook what you need when you need it. Also, look at options in portion sizes. Broccoli crowns, for example, usually allow you to consume everything you buy, whereas broccoli stalks likely result in considerable wastage if you only consume the crowns. Also, mini-cucumbers allow you to use what you want as you go along, rather than cut up half an English Cuke and hoping you can finish the rest before it goes off.
And since many of today’s stores match prices, don’t drive around to save a couple pennies on a product you want. And use coupons. Coupons are big savers on items you’re going to buy anyway and if you find a deal on something and the coupon applies to all quantities, you could save a bundle on bulk buys. You may also be able to combine price matching with in-store coupons for extra savings.
Finally, be aware that you’re going to pay extra for convenience. Think about those single serving coffee makers. You can spend $6 for a box of cups that will allow you to make 12 cups. However, you can buy a reusable cup for $3 and fill it up with your favourite ground coffee for about the same price, and enjoy exponentially more cups of coffee for your expenditure.
Finally, remember that nutritious eating is better controlled by you than somebody at a big corporation, which may put in ingredients in their food you may not want in yours. Stay in control of the food you prepare and that will likely also keep you in control of your food budget.
by admin | Credit Counseling, Credit Repair, Debt Management, Uncategorized
Clothing is one of those items that many people don’t include in their monthly budgets but should consider including it in their yearly budgets, and that involves saving during the year for a once (or twice) yearly event.
Winter clothing is a particularly important item for which to budget because we seem to wear out our winter-wear so much more quickly. Maybe it’s the harsh environment or maybe it’s because we feel so uncomfortable one year with an item or article of clothing that we resolve to replace it before the onset of the following winter.
Summer clothing doesn’t seem to be replaced as often, and when it does, it’s usually for style reasons, rather than functionality. Besides, we don’t wear as much clothing in the summer as we do in the winter, so there’s less to spend on.
By the time you get boots to replace the salt-ravaged ones from last winter, a set of replacement gloves for the ones you stored away somewhere and now can’t find, and maybe a heavier coat than the one the wind blew through last year, you’re easily several hundred bucks down.
When it comes to winter clothing, most style-conscious advisors will tell you to spend your money on being stylish underneath your utilitarian exterior shell. Besides, it’s better to dress in layers because layers trap air between them, and air is one of the best insulators.
So, you may thing you need to spend a couple hundred dollars on a winter coat, when spending a hundred on a wind-proof shell with a bit of insulation may do you just as well for braving the cold between the door and the car, and then is set aside when you’re in the climate controlled indoors (at the restaurant, at the mall, at the office, etc.) and people can see your fabulous taste in the clothes you wear beneath the utility of your outerwear.
Sweaters provide an added layer of insulation underneath the winter-proof outer shell, and a slightly heavier shirt or long-sleeved T-shirt will add the layer beneath that, next to the skin.
As an added benefit, lighter winter outerwear will allow you to prolong the use of your fall fashions through the cold weather months, and then switch over to your spring clothes as winter nears its end. It also allows you to deal with the fluctuation in temperature on those inconsistent days where you leave the house in below-zero temperatures and then go out for lunch after temperatures have climbed into the fives — you can leave the sweater behind and just go with the winter shell over your Tee, or you can leave the wind-protection behind and just go with your fall sweater.
In short, spend the bulk of your fashion budget on the clothes in which people are going to see you most often, and when you really think about it, they usually only see you in your winter coat for several minutes a day.
And as with any large expenditure, it makes it easier to pay for it when you’ve worked it into a budget. The best way to budget for necessities —clothing, shelter, food, etc. — is based on past experience. Thus, keeping track of past expenditures will allow you to set a budget for future purchases (whether you choose to pay less for it or work in an allowance for inflation).
Set a yearly budget point, divide it by 12 or 26 or 52 (depending on whether you want to put money away on a monthly basis, bi-weekly or weekly) and put that money away to spend when the chill starts blowing in from the north.
