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Tag: financial planning

  • Holiday Financial Planning… Steps to Start 2020 on a Strong Financial Footing

    The holiday season is an expensive time for many! Between gifts, decorations, parties, and travel, the costs (and credit card charges) can quickly add up. To keep your budget and debt in check, holiday financial planning is a must.

    According to PwC Canada, the average Canadian consumer will spend $1,593 during the 2019 season — up 1.9% from 2018. That number increases with the type of shopping consumers choose to do. The average online-only shopper plans to spend $1,053 while the average multi-channel shopper (in-store and online) plans to spend $1,726.

    And that is just on shopping costs alone. This doesn’t factor in travel expenses, décor, food, and beyond.

    Overall, PwC reports, 17% of Canadian consumers are worried about credit card debt. Millennials and Gen Z are even more concerned: 22% and 24% respectively think too much debt might build up.

    Going into the new year with debt — especially high-interest credit card debt — is stressful. You need a plan to pay off your holiday purchases and leave 2019 on better financial footing than you started the year with!

    Holiday financial planning is the key to both preventing overspending during the holidays and making 2020 your most successful financial year yet. Here’s how to go about it.

    Assess Your Budget

    A budget is important for planning your holiday spending. Knowing how much you can afford to spend will help determine what you spend it on!

    • If you have a regular monthly budget, review how much you can realistically set aside for your holiday expenses.
    • If you don’t have a regular monthly budget, review your past month of spending. How much income have you brought in and what savings are left over?
    • Are there any areas in your budget or spending habits you could trim back on for your holiday spending?
    • Decide on the figure you are comfortable spending this season and that you are able to comfortably repay into 2020.

    Plan Your Holiday Spend

    • Make a list of everyone you are shopping for, food-related items, decorations, travel plans, and other expenses you will encounter this season.
    • Estimate how much you plan to spend per list item. Even just the act of doing this can be illuminating!
    • At this point you may see that you have planned for more than is in your budget estimate.

    If you’ve found that you plan to spend more than you can afford, you can try to either reduce what you plan to spend (looking for ways to save money) or you can go back to your budget and look for more wiggle room. To that end…

    Clean Up Your Debt

    One of the biggest hijackers of your budget is debt payments. If you owe money, you know just how much the interest payments alone can take out of your monthly budget. And even if it’s only a little bit, why not use that money for something else?

    Consolidating your debt can free up room in your budget for holiday spending and start you on the right financial footing for the new year. If “get out of debt” is your New Year’s resolution, you’ll already be a step ahead.

    Don’t Finance Your Holiday Spending 

    If you’ve found that you plan to spend more than you have, you might be tempted to make up the difference with financing — credit cards, lines of interest, a payday loan, and so on.

    Don’t do this! If you don’t have the income available now or won’t be able to pay off the expenses in full in the next month, it can create a stressful financial future. While you might profit in the short-term, you’ll have to make up the difference in the long-term. This can lead to lingering debt and credit score issues that you’ll still be trying to fix next holiday season.

    Instead, look for ways to make the holidays great on a budget. Your financial future will thank you!

    DebtCare Canada helps our clients with holiday financial planning, debt consolidation, budget planning, money saving, and more.

    Contact us for a free consultation to set yourself for success during the holidays and beyond. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Spring Financial Planning – Getting Your Books in Order in 1-2-3

    Spring cleaning doesn’t have to be only for your house. Nature’s rebirth can be a fresh start for many things — including your financial planning.

    Messy finances can affect your life in many ways. Stress, uncertainty, and anxiety around money have all been shown to have a direct connection to mental and physical health. It’s in your best interest to take the time to get your financial planning in order now.

    To get started on sprucing up your personal accounting, follow these steps:

    Step 1: Make a Budget

    Most people don’t know how they spend their money. Creating a personal budget is one of the best things you can do for your financial planning. It can help you see where you currently sit and forecast future expenses. When you have a budget, you can make room to set aside savings and better plan for emergencies. You’ll be able to see exactly where you can cut back or make a purchase if you so desire. A budget can give you peace of mind and help set you up for future financial success. In addition to a budget, tracking your expenses for a few months can really give you an idea of where your money is going and help you better manage your finances.

    Step 2: Look for Ways to Save

    Once you know how much you spend each month and have created a budget, you can see opportunities to save money. For example, a coffee-a-day habit may not seem like a big expense, but over the course of a year could end up costing $500. If you can afford that, great. But if that $500 is needed elsewhere, you might be better off taking a homemade brew in a travel mug. Or perhaps you’re eating lunch out every day and spending $15 on a meal. Over the course of the year, that could add up to nearly $4,000.

    In addition, if you don’t have one already, you may want to set up a specific savings account where you put money that you don’t intend on using for everyday expenses and set aside money for retirement in a RRSP.

    Step 3: Lock In Your Mortgage

    If you own a home with a variable-rate mortgage, locking in to a fixed-rate mortgage could save you stress and money. With Canadian interest rates increasing, variable-rate mortgages are also going up. A fixed-rate mortgage means you make standard, monthly payments so you’ll always know what you have to pay and won’t be subject to increasing mortgage interest rates.

    Step 4: Deal with Debt

    We can’t talk about financial planning without talking about debt. Even if you have the best budget and have found ways to save in your everyday spending, if you’re putting a large portion of your paycheque towards high-interest, unsecured debt, such as credit card payments, student loans, and lines of credit, it’s going to be that much harder to save. Making a plan to pay down debt and get as much of it as possible out of your budget will help your personal accounting grow by leaps and bounds.

    Financial planning doesn’t have to be done alone. At DebtCare Canada, we can help you make a budget, find savings, understand your mortgage options, and deal with debt.

    Contact DebtCare today for a free consultation: 1-888-890-0888.

  • When to Use Online Financial Calculators

    Technology has brought us so many online tools for financial planning; there are online financial calculators for literally everything. Mortgage financing/refinancing, debt reduction, car payments, interest, and budgeting are all things that online financial calculators can help manage.

    Online financial calculators are very useful when planning anything from a new mortgage to calculating the interest that you are paying on credit cards. Of all the online financial calculators, mortgage calculators can be used for the most diverse range of financial calculations.

    What’s really cool about mortgage calculators is that you can use them to not only calculate monthly payments on a mortgage but also on loans.

    If you have a lot of debt for example, here is how you can use a mortgage calculator to create different financial scenarios if you were to consolidate:

    1. Input your total debt into the mortgage calculator.
    2. Set the term and amortization to 5 years – this will give you an idea of what it would take to get you out of debt within 5 years.
    3. Calculate your payment based on an approx. interest rate that you believe best reflects the average interest rate that you would pay if the bank gave you a loan to consolidate your debt. A general rule of thumb would be to use 10%-15% if your calculation is based on a bank’s loan rate.
    4. Now do the same calculations with the interest rate set to zero.

    Completing the above steps will enable you to see how much you would have to pay monthly if you were to consolidate debt at zero percent interest vs. full interest.

    One risk though when it comes to using online financial calculators is that calculations may not be accurate once the time comes to seek out a credit product or debt solution that fits with the estimates that you have calculated. For example, what if you have made a calculation based on being out of debt in 5 years but then your bank offers you a line of credit? A line of credit may leave you with a low minimum monthly payment, but may take much longer than your estimate to pay off because it is like having one giant credit card.

    If you are using online financial calculators to try to come up with financial solutions because you are in debt, sometimes it makes sense to use them with the guidance of a financial professional/consultant.

    Hiring your own financial consultant can enable you to have a professional review your budget, credit and finances, and then work with you to use online financial calculators to build some viable debt consolidation scenarios. A financial consultant will likely have the resources to help you put your plan into motion.

    For more information about online financial calculators or if you need help dealing with your debt, please call DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • Getting Out of Debt in the New Year

    So the holidays are over and no doubt the holiday bills have started rolling in. It is easy to do serious financial damage during the holidays. Debt can take a mere couple of weeks to rack up, but can take months and even years to pay off. Getting out of debt in the New Year is on many families’ ‘to-do’ lists, but getting out of debt is easier said than done.

    Your ability to get out of debt in the New Year will greatly depend on your own personal circumstances. Let’s review some of your options.

    Getting out of debt the good old fashioned way. Getting out of debt the good old fashioned way will take resources because it will involve using your existing assets and cash flow to get out of debt. If you don’t have savings or investments that you can liquidate to pay down debt you will have to take a good hard look at your budget. Think of the time frame in which you would like to be debt free. If it is 24 months for example, then take your total debt, divide it by 24 months and then increase the monthly amount by 30% (to account for interest).  Do you have enough room in your budget to pay off the debt on a monthly basis?

    Getting out of debt through a debt consolidation. Getting out of debt through a debt consolidation is an option for homeowners who have home equity or for those with very good credit. Though traditional debt consolidation can be a good choice for getting out of debt – the debt consolidation interest rate, fees and terms will determine whether it is the best choice for getting out of debt.

    Getting out of debt through a financial program. If you don’t have assets or savings to pay off your debt and you don’t have room in your budget to get out of debt in a reasonable period of time, then an alternate financial program may be the best solution for you. Some financial programs involve freezing the interest on your debt and even reducing your debt. This can result in greatly reduced monthly payments, making the prospect of getting out of debt a reality for an individual who doesn’t have much to put towards getting out of debt.

    It’s a jungle out there and with so many companies promoting different things it can be hard to know what the best financial choice is. Making the wrong financial choices can cause you to pay more in the long run and can even harm your credit. So how do you know a financial friend from a financial foe? By trusting your instincts and doing lots of research. Do they have a website? Do they have a bricks and mortar location? Do they have people following them on social media? Have you heard of them before? If you are dealing with a debt company or mortgage brokerage, is the company’s management accessible to you?

    Doing your due diligence and then partnering with a financial service provider who can help you come up with a meaningful solution to deal with your debt will be your first step towards getting out of debt and enjoying financial freedom in 2013.

    For more information about getting out of debt in 2013 or if you need help with your 2013 financial planning please contact DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • Top 5 Tips for Financial Fitness in 2013

    The holidays are behind us and 2013 has officially arrived. The holidays were a time for family and cheer; the New Year is an opportunity for new beginnings. If your New Year’s resolution involves getting financially fit, then this is the article for you!

    Here Are DebtCare’s “Top 5 Tips for Financial Fitness in 2013”:

    Financial Fitness Tip #1 – Determine what you really spend. For one week, closely monitor your spending. No expense is too small to track this week. If you buy a coffee, track it! You can do so using ‘notepad’ on your smart phone or by keeping a small notebook with you.

    Financial Fitness Tip #2 – A good budget will be the roadmap to your success. Put together a strong budget that includes both your fixed costs, like rent/mortgage, utilities, car payments, etc., along with a realistic estimate of everyday soft costs. Try to find places in your budget where you can save.

    Financial Fitness Tip #3 – A family that plays together stays together. If you are planning on tightening your belt in the New Year in an effort to reach your financial goals and you have a spouse and/or children, you are going to have to make them aware of your plans. As a family you can work together to find savings in your household and curb unnecessary spending.

    Financial Fitness Tip #4 – Review your debt. Look at your unsecured debts, interest rates and minimum monthly payments. Do you have room in your budget to double or triple up on your minimum monthly payments? You will need to. Since the minimum monthly payments on credit cards are generally set so low and the interest on credit cards is generally high, you will find it nearly impossible to pay off your credit cards in a reasonable amount of time by making only minimum payments. If you want to work towards financial fitness you will need to create room in your budget to pay down your credit cards.

    Financial Fitness Tip #5 – Request your credit report from Equifax. Even if you think your credit is going to be bad, it is still a good idea to request your credit report. It is important to know where you stand so that you can consider the state of your credit in your financial decisions. On the flip side, you may think your credit is great but learn that there are issues that you were not aware of that are impacting your credit score.

    Once you have a plan to deal with your debt, a budget, and an understanding of your credit, you must follow through with your plan to deal with your debt: you must follow your budget and you must work towards improving your credit. Achieving financial fitness takes time and commitment!

    When you achieve financial fitness you will find that you have more cash flow, can begin to amass savings and investments, qualify for lower rates on credit products, and more.

    The New Year is a better time than ever to commit to becoming financially fit!

    For more information about getting financially fit for 2013 or if you need help with your 2013 financial planning please contact DebtCare at 416-907-2582 or visit www.debtcare.ca.