10 things you need to know about buying a home

21 May

By Sheryl Smolkin

Buying a home is probably the most significant purchase most people make in their lifetime.  Whether you are buying your first house or you are a seasoned homeowner, it is important to understand your legal rights and obligations.

Buying and Selling a Home by The Public Legal Education Association of Saskatchewan (PLEA) and Buying or Selling Real Estate in Saskatchewan written by lawyer Kevin Rogers for The Lawyers Weekly are both excellent resources.

PLEA suggests that you keep the following 10 things in mind before you go house hunting.

  1. What can you afford? Generally mortgage lenders suggest that the cost of your mortgage payments, property taxes, heating and condo fees (if applicable), make up no more than 32% of your household’s monthly income before taxes. Lending institutions generally look at keeping total debt payments below 40% of a household’s gross income.
  2. Mortgage costs: It’s usually a good idea to shop for financing before you start house hunting to determine the maximum amount of money you can borrow and discuss payment schedules. Your lending institution may commit to a certain size of mortgage at a set interest rate. This is called a pre-approved mortgage and it will help you determine your price range.
  3. Down payment: Generally speaking, you will have to come up with a down payment of at least 20% of the purchase price to qualify for a mortgage. However, if you can obtain mortgage loan insurance through government programs such as Canada Mortgage and Housing Corporation (CMHC), or private mortgage insurers you may be able to obtain a mortgage with as little as a 5% down payment. Some restrictions apply.
  4. Ongoing Costs: In addition to mortgage payments you should budget for annual property taxes plus heating water and electricity bills. Therefore, the energy efficiency of the home may be one thing to keep in mind when you are considering properties. You may also have to buy furniture, appliances, window coverings and tools to do repairs and maintenance work.
  5. Closing costs: Closing costs are additional expenses that must be paid before the purchase is complete. Generally, buyers should budget 1.5% to 4.5% of the purchase price for these costs. Some of the closing costs include legal fees, including disbursements; pro-rated property taxes for the portion of the year the vendor paid for when you will be the owner; the GST for new homes or homes that have been substantially renovated or re-located; property insurance; mortgage life insurance; and, utility deposits and hook up charges.
  6. Real estate agent vs private sale: Generally speaking real estate commission is paid by the seller and free to the buyer. The advantage of using an agent is he/she can show you all of the suitable listed properties in your price range and preferred area. However, you can buy property directly from a seller and the price may reflect the fact that the seller does not have to pay a commission. But if you do purchase a home privately, have a lawyer review or draft the offer or any other documents to ensure that they are legally sound and contain only the terms you have agreed to.
  7. Caveat emptor: Generally when buying a home, the rule is “buyer beware.” Check out the home carefully and make the offer conditional on a home inspection. However, the seller must tell you about any defects he is aware of that could not be discovered by a reasonable inspection of the property. Things like past problems with water in the basement, windows that leak when it rains or faulty plumbing would likely be included in this category if the seller knows about the problem.
  8. Farmland or other non-residential property: Each type of purchase involves its own unique considerations. If you are considering the purchase of farmland, acreages, commercial, recreational or rental property, there may be additional things to find out about the property before making an offer to purchase. You should seek advice from a real estate agent or a lawyer to ensure that all the relevant factors are adequately considered.
  9. Building /renovating: If you are planning to purchase land where you can build a home, have the land inspected to ensure that it is suitable for the type of construction planned. Whether considering new construction or major renovations, it is important to find out if there are any municipal bylaws that may limit building plans. Whether you will be doing all or part of the work or using contractors, it is important to seek legal advice before signing contracts for materials or services.
  10. Condominiums: Condominiums are typically made up of individually owned units and common areas used by all the owners, as well as common areas that are set aside for the exclusive use of particular units (such as dedicated parking spaces). The cost of maintaining these common areas comes out of the condo fees all owners pay. The fund for major repairs is called the Reserve Fund. Satisfy yourself as to the state of repairs of common areas and the health of the Reserve Fund. Otherwise you may be in for a nasty surprise when you have to pay an unexpected levy of thousands of dollars.

Also read: Owning a home in Saskatchewan became more affordable in Q4 2014, RBC Economics

May 18: Best from the blogosphere

18 May

By Sheryl Smolkin

Over the last few weeks, the Globe & Mail has featured an interesting series on debt, and how it is affecting both individuals and the economy. If you haven’t been following it, take a look at some of the stories below:

A taste for risk: Looking into Canada’s household debt

In deep: The high risks of Canada’s growing addiction to debt

Are you drowning in debt? See how you compare to other Canadians

Laurie Campbell: Credit Canada CEO shatters debt myths

I particularly like Rob Carrick’s article There’s no such thing as good debt. Mortgages, investment loans and student loans have traditionally been characterized as “good” debt. Carrick agrees borrowing for each of these purposes can be a rational thing to do and you may end up wealthier as a result. But he concludes there are too many pitfalls today for any one of them to qualify as a no-brainer financial decision.

Big Cajun Man (Alan Whitton) on the Canadian Personal Finance lists several articles about the evils of debt among his personal favourites. In 2008, he wrote Debt is like Fat. He says that just like his weight gain occurred a little at a time over 14 years, if you are not careful, debt build up can occur slowly without your noticing it.

If you are facing a mountain of debt and don’t know where to start, take a look at How I Paid Off $30,000 of Debt in Two Years, The Blog Post I’ve Been Waiting to Write  and What a Year of Being Debt-Free Has Taught Me  by Cait Flanders, who blogs at Blonde on a Budget.

In 2013, Krystal Yee at Give me back my five bucks wrote  How do you fight debt fatigue?. Debt fatigue is a mental state that can happen when you’ve been in debt for so long that you think you’ll never dig yourself out of the hole you’ve created for yourself. She quotes financial expert Gail Vaz-Oxlade who often tells people on her television shows to try and make a plan to get out of debt in 36 months or less – because anything more than three years, and you’ll likely suffer from some form of debt fatigue.

And finally, in a guest post on the Canadian Finance blog, Jim Yih from Retire Happy wrote that Debt Can Be A Problem For The Baby Boomers’ Retirement Plans. He says baby boomers who are getting ready for retirement need to get serious about planning for the best years of their lives.  Part of getting serious is addressing debt head on and taking the necessary steps to develop good habits around debt. His five tips on how boomers can deal with the debt epidemic are: stop overspending; increase your income; get support; focus on you before your kids; and, take one step at a time.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

10 things you need to know about selling your home

14 May

By Sheryl Smolkin

One sure sign of spring is the “For Sale” signs sprouting on lawns across the country along with the dandelions and tulips. Whether you are downsizing or upsizing, you want to get the best possible price for your home.

If you live in a house long enough it is easy to overlook the watermark on the ceiling where the shower leaked or the wear and tear on the kitchen cabinets. But prospective buyers will notice everything. Unless you spruce the place up a bit, your house may take a long time to sell and the proceeds of sale might be much lower than the listing price.

Here are 10 things you can you can do to increase the odds that you will get top dollar for your house:[i]

  1. Internet ready: Most prospective buyers let their fingers do the walking first on the Internet and they want to see pictures. That means you have to make ensure your home is photo-ready and even hire a professional photographer.
  2. When to list: Spring and fall are typically the best times to list. Families with children often prefer to move at the end of the school year. The curb appeal of homes can be higher in these seasons and buyers may be more in the mood to house hunt when they don’t have climb through snow. However, in prime time there also may be more competing listings in your area.
  3. Improve curb appeal: Take down the Christmas lights. Put away snow shovels. Make sure the grass is cut and either plant flowers or buy flowers in pots. If the paint on the outside trim or the garage door is worn, arrange for touch-ups. House hunters will very quickly form a first impression of your home when they drive up.
  4. Clean it up: Wash carpets, walls, dust the chandeliers, clean bathroom grout. A 2010 Home Sale Maximizer Survey by the blog HomeGain estimated the cost of scouring and organizing a house at about $200 and the resulting expected home price increase at $1,700. That’s an 870% return on your investment!
  5. Declutter: The larger and more open your home appears, the easier it will be for buyers to imagine living there. Get rid of piles of magazines or newspapers. Thin out the books on your bookshelves. Put away or store kitchen appliances that take up scarce space on your counters.
  6. Paint: If your paint job is in poor condition or you currently have distinctive or dark colours, consider a paint job in a neutral colour or white. It will make your home look larger, cleaner and brighter.
  7. Stage right: You may have either too much or too little furniture and other stuff on display. Take the advice of your real estate agent or a staging professional. Put items in storage if necessary and change the layout of the rooms. Get rid of small items on coffee tables and side tables. If you have moved out, rent furniture so prospective buyers can envisage where their things will fit.
  8. Upgrade the hardware: Are your light fixtures outdated with burned out bulbs? How about the handles on your kitchen and bathroom cabinets or the mirrors? Upgrading small things at a small cost can often enhance the look of your home.
  9. Relocate the pets: Fleecy and Fido may be much-loved members of your family, but that doesn’t mean somebody else’s family will feel the same way. During the period your house is for sale, give your pets a vacation. And make sure all sign of them like balls of fur growing in corners and the kitty litter are removed.
  10. Fresh smells: If your house smells musty, of cigarette smoke, pet odours or last night’s dinner, buyers will be turned off. Air out the house. Get rid of old smelly carpets. Avoid air fresheners because many people are allergic to scents or find them offensive. A real estate agent once told me to boil cinnamon or bake cookies (and leave them on a plate) before an open house.

[i] See Get top dollar for your home

 

May 11: Best from the blogosphere

11 May

By Sheryl Smolkin

Turning over the calendar from April to May brings out the latent gardener in all of us. Beautiful shrubs, flowers and home grown vegetables are highpoints of summer even in parts of Canada when the season is short.

How to Start a Home Vegetable Garden – Benefits & Saving Money by Heather Levin on Money Crashers discusses the benefits of a home garden including relieving stress and saving money. Gardening can also be a family activity.

The Irish Food Board extols The Economic Benefits of a Well-Kept Garden. They include enhanced curbside appeal of your property and increased productivity of workers in offices and industrial buildings with landscaped areas.

Twenty expert tips to make you a better gardener by Canadian Gardening has all kinds of useful hints. For example, never plant trees that will become large with age too close to your house and set your lawn mower blades at 7.5 centimeters or higher to allow your lawn to go dormant during periods of drought.

Sheridan Nurseries offers great suggestions for growing roses. Roses should be watered regularly through the summer, every few days if there is no rain at ground level and not by overhead sprinklers. Avoid wetting the leaves as this promotes disease. Early morning is the best time to water as late evening watering also promotes disease.

And finally, if you have a small planting space, check out Rodale’s Organic Life’s 7 Secrets for a High-Yield Vegetable Garden. Did you know that you can get maximum yields from each bed if you avoid planting in square patterns or rows? Instead, stagger the plants by planting in triangles. By doing so you can fit 10 to 14& more plants in each bed.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Also read: How to plant an inexpensive, maintenance free garden

Will you be working at 66?

7 May

By Sheryl Smolkin

Findings from Sun Life’s 2015 Canadian Unretirement Index released earlier this year received extensive media coverage. The seventh report in an annual series tracks how workers’ attitudes and expectations about retirement are evolving in response to economic, health and personal factors affecting their lives.

The question central to the ongoing study is “Will you be working at age 66?” This year for the first time, more Canadians expect to be working full time at age 66 (32%) than expect to be fully retired (27%).

As indicated in past years, those who plan to work past 65 fall into two camps. Forty-one percent say they’ll do so because they want to while 59% feel they will need to. The gap between the two has been gradually widening since 2011 but closed significantly this year. In addition, another 27% say they will be working part-time, while 12% aren’t sure.

Nevertheless, on average, Canadians say they expect to retire at 64. That’s the lowest figure reported since 2009. Canadians anticipate working past 65 – either by choice or necessity – but that trend is offset somewhat by a significant number who expect an early retirement.

Compared to current retirees, working Canadians are two and a half times more likely to believe they are at “serious risk” of outliving their retirement savings. The actual average retirement age among current retirees was 61 and a whopping 88% retired before age 66. They intended to retire early (at 62 on average) and for the most part, they did so.

But their experiences differ markedly from today’s workers. Three-quarters (76%) benefited from a workplace retirement plan (68% had their own and another 8% were married to a plan member). By comparison, just 68% of working Canadians have a workplace plan (55% have one of their own, 13% will benefit from a spousal plan).

Retirees are significantly more confident about their government pensions (94% vs. 72% among working Canadians); their government-funded prescription drug benefits (82% vs. 68%respectively); and their employer pensions (71% vs. 65% respectively).

Indeed, working Canadians are more likely to be “not at all confident” than retirees about:

  • Having enough money to enjoy the lifestyle they want: 36% working Canadians vs. 20% retirees.
  • Having enough money to pursue their hobbies and interests: 33% working Canadians vs. 17% retirees.
  • Being able to take care of medical expenses: 28% working Canadians vs. 11% retirees.
  • Being able to take care of basic living expenses: 19% working Canadians vs. 5% retirees.

Nearly two-thirds (63%) of retirees are very/somewhat satisfied with their retirement savings. Only 44% of today’s workers say the same. When it comes to outliving their retirement savings, 55% of today’s retirees are unworried, 31% are unsure and 14% are worried. Contrast this with 30% of workers who say they are unworried. One-third (35%) are unsure and 36% are worried.

It makes sense that current retirees would answer more positively about retirement planning. Many of those who did not achieve their financial goals have adjusted accordingly. But clearly, there is more to this story.

Today’s workers have experienced a prolonged period in which low interest rates, volatile capital markets and a drop in employer-funded retiree benefits have combined to make retirement planning more challenging.

More than ever, working Canadians have to plan, save and take full advantage of whatever plans their employer provides. The onus is on the individual to an extent current retirees did not experience. It is also on the financial services industry to support consumers with investor education and innovative product design.

All Canadians over age 18 are eligible to participate in the Saskatchewan Pension Plan which is a defined contribution plan with a fund return history of 8.2 % since inception (29 years) and 9.1% in 2014.

You can calculate your own personal Unretirement Index score, which measures your outlook on retirement, at www.sunlife.ca/unretirementindextool. My score is that I am “Clear and sunny, fully confident in my retirement and the countdown is on.” Since I was born in 1950, that’s not surprising. But I will probably be one of those people still working at least part time at age 66, not because I need to, but because I love my job. 

Also read: More people planning to work beyond age 65

May 4: Best from the blogosphere: Federal Budget Edition

4 May

By Sheryl Smolkin

FEDERAL BUDGET

Prime Minister Harper’s 2015 pre-election budget included several goodies for both people who are saving for retirement and seniors in the deccumulation phase. As you probably know by now, annual TFSA contributions have been increased from from $5,500 to $10,000/year and seniors will be permitted to withdraw money more slowly from their RRIFs so their savings will last longer.

If you are already a senior, you will be happy to know that Rob Carrick at the Globe and Mail characterized seniors as the runaway winners in the Budget. You got more elbow room to manage withdrawals from your RRIFs and a new tax credit to make your homes more accessible. Older Canadians are also major beneficiaries of the new $10,000 annual contribution limit for tax-free savings accounts and there is some financial help for people who look after gravely ill relatives

One of the sources of controversy after the budget was passed is whether it is safe to go ahead and top up your TFSA for 2016 before the budget is actually passed by Parliament. My take was that this is a majority government and there is no way the budget provisions will not become law. Jonathan Chevreau quoted me in Experts: go ahead and make that extra $4,500 TFSA contribution now: I just did.

And  since then Canada Revenue Agency has clarified the timeline of new TFSA limit. In a statement, they said:

“This proposed measure is subject to parliamentary approval. Consistent with its standard practice, the CRA is administering this measure on the basis of the budget announcement. Financial institutions may immediately allow existing and new account holders to contribute up to the proposed maximum.”

In a Maclean’s article, Stop pretending the TFSA expansion won’t be felt until 2080 Kevin Milligan notes that the most important feature of TFSAs is that room accumulates through time, starting at age 18. The annual limit started at $5,000 in 2009, moved to $5,500 in 2013, and the budget has now moved the limit to $10,000 from 2015 forward.

This means that 10 years from now in 2025, every Canadian who is age 34 or older will have full possible contribution room of $141,000. For a couple, that would be $282,000. The net result he believes is that very few people in the future will have any need to pay much tax on investment income as TFSAs will provide almost total coverage of assets.

Finally, Gordon Pape says in his Toronto Star column: RRIF withdrawal changes – it’s about time. His preference would have been for Ottawa to eliminate the minimum withdrawals entirely. After all, everything in an RRIF will eventually be taxed when the plan holder or the surviving spouse dies. The feds will get their share sooner or later — they always do. But he will take what he can get!

We will discuss the RRIF changes in more detail in a future blog on savewithspp.com.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

 

Jonathan Chevreau Financial Independence Hub

30 Apr

By Sheryl Smolkin

Click here to listen

Click here to listen

This month’s interview is with author and financial journalist Jonathan Chevreau. Jon was the Financial Post’s personal finance columnists for nineteen years, and subsequently the Editor in Chief of MoneySense Magazine for two years until he declared his personal “financial independence day” on May 20th, 2014.

He has relinquished the leadership role at MoneySense, but as editor-at-large, his work is still frequently featured. He also writes for many other online venues and in November of last year he launched his ambitious North American portal, The Financial Independence Hub.

I last interviewed Jon for savewithspp.com in the summer of 2012 about his financial novel Findependence Day. Today I’d like to explore what he describes as “the profound difference between the traditional concept of retirement and the paradigm shift he calls financial independence.”

Q. To start off Jon, what is the difference between financial independence or “findependence” and retirement?
A: Well Sheryl, I always say that when you’re findependent you’re working because you want to not because you have to, financially speaking. But of course the lines blur. For the media and the financial service industry, it’s retirement, retirement, retirement. They don’t really distinguish between the two concepts.

For super frugal people, financial independence can often occur decades before traditional retirement. When you talk about the “early retirement extreme” movement, what these people are really talking about is being financially independent.

Q: So in fact you have coined the term findependence to apply to people at various ages, not just older workers?
A: Yes. The Financial Independence Hub is relevant for people at all stages of life.

Q: You’ve left the corporate world. But you seem to be busier than ever, with all of your freelance writing, your blog, and spin-offs from your book Findependence Day. How would you describe your current status?
A: Busier than I want to be, really. I think you can relate to that one as well. On the Hub I reviewed books like Encore and I talk about this new phase of life. If you believe in extended longevity and a lot of people leave corporations, either voluntarily or involuntarily, in their late fifties, early sixties, I say there’s a fifteen to twenty year sweet spot.

You’re no longer an employee, but I don’t think you are ready to take year-long cruises and do nothing but watch TV, play golf, read and play internet bridge. I think that fifteen year period, is the new “encore stage.” You could also call it part-time or phased retirement.

Q: How many hours a week do you estimate you’re currently working for compensation and on your own projects?
A: I got into this in December (2014). I read a bunch of internet books. I was keen on “Multiple Streams of Internet Income” by Robert Allen, and a book by Tim Ferriss called “The Four-hour Work Week.” I decided by having more passive income and less renting my time out, I could go to a four-hour week. Unfortunately, it hasn’t really worked out.

It turns out that the path to a four-hour workweek for me is a nine-hour day. I would say that I probably still spend 40% of my time on the MoneySense blogging contract. Another 40% is spent on the Hub which is not billable time. About 20% of my time is taken up with other things like one-off speeches, book sales, blogs and articles.

Q: What are the pros and cons in your view of your current working arrangement, as compared to working as a full-time salaried journalist?
A: As a freelance contractor there are no employee benefits, sick days or paid vacations. I had a “man cold” last week and I had to barrel through it. Luckily, of course, I don’t have to commute.

It’s hard to match my previous gross income but it can be a little bit better on an after- tax basis depending on the legitimate employment expenses I can write off. When I balance it with the lack of commuting, I think it’s a better life-work balance. But like anything else, there are trade-offs.

Q: Do you think that Canadians across the board are working longer and contemplating encore careers, or is this really restricted to knowledge workers and entrepreneurs?
A: Well I think that’s an apt observation. When you’re a knowledge worker there’s a real blurry line between working and playing, because I think we actually find it quite fun to absorb lots of information on subjects that fascinate us. Whereas, as you point out if you are a labourer, the body is not as apt to keep on going past sixty-four or sixty-six.

Q: Youth unemployment is running around 14 %. Are older workers, who continue working, clogging up the pipeline for young people and mid-career workers who are trying to get a leg up on the employment ladder?
A: Well that is one perception I’m not sure is true. I suppose if we’re talking about a big corporation with your traditional pyramid, where basically there are only a couple of people at the top, then yes, older workers might be clogging up that traditional pipeline.

But I think when you’re talking about all the people leaving companies and then contracting back their services, at that point they just become a valuable asset. Younger people can still move up the ladder, and they can still access the expertise and skills of the older codgers, like me if they are retained as freelance suppliers to the company.

Q: Some people opt to work longer for their current employers or continue on a contractual basis. Then there are others who want more flexibility or to try something new. How can older workers go about finding an encore career?
A: They can go to findependencehub.com and check out the book reviews. Encore, the Big Shift, there are tons of these books out there. For some it might be going back to school, getting an MBA. A lot of people make complete changes. For example, Eleanor Clitheroe left Ontario Hydro and went to divinity school.

I have a friend who is actually downsizing and moving to the country, so that he can go from being a set designer to doing true art. Every second journalist I know wants to write the great Canadian or American novel. I compromised by writing Findependence Day which is a financial novel.

Q: Money won’t buy happiness but it helps. What are some of the factors that you think contribute to a happy retirement, other than having enough money?
A: There are obvious things.  Health, happiness, relationships, family, networks. There’s a book by Wes Moss called “You can retire sooner than you think.” One of the things he talks about is a retiree should have at least three or four passionate interests. This is why I decided to put internet bridge back on my list. Reading, volunteering and exercising would be others.

I think the biggest single thing is of course your partner. I’ve talked to people in the financial service industry, who’ve been divorced. They say the biggest mistake they ever made financially-speaking was to get a divorce, because their net worth was cut in two right off the bat. But obviously you don’t stay together for financial reasons if you don’t have a harmonious relationship. 

Q: Well the relationship issue is interesting and I think one of the things that I think about all the time, is you don’t know how much time you’re going to have. You’re worried about financing thirty years of retirement but who knows if you’ll have it. So if you put it off and you put it off you just might miss those golden years.

A: Various people have joked that financial planning would be the easiest thing to do on Earth if you just knew when you were going to die. Unfortunately, most people don’t.

Q: How long do you think you will continue to work?  Do you see full retirement any time in your future?
A: I have a vision, that eventually I will have a website that brings in lots of passive streams of income. My idea of a nice retirement or findependence is every three years, to leisurely write a book working four six-hour days a week. Then I would go on tour to promote it and bring in another stream of income. Instead of grinding out words for multiple clients I’d like to be financially independent enough to work on one big project.

Q: Thanks very much for talking to me, Jon. It’s always fascinating to talk to you.
A: Well thank you for allowing me to share some of my thoughts, Sheryl. I think you’re doing a great job, too, on Retirement Redux.

—-

This is an edited transcript of a podcast interview of Jonathan Chevreau conducted by telephone in March 2015.

Apr 27: Best from the blogosphere

27 Apr

By Sheryl Smolkin

If you haven’t filed your income tax return yet it’s really getting down to the wire. Whether you take advantage of them this year or next, here are some tax tips that could put more money in your pocket,

Are you entitled to a tax refund for your medical expenses? by Brenda Spiering on Brighter Life draws on her experience following her son’s accident when she learned that the part of his dental bills not covered by her health insurance at work could be claimed as a tax credit along with a portion of her health insurance premiums.

Tax accountant Evelyn Jacks addresses The Mad Dash to April 30th in Your Money. Your Life. She says once you have filed your taxes, the most important question is how you will spend your tax return. Some options are: pay down debt; save in a TFSA; use RRSP room; invest in an RESP; or invest in a Registered Disability Savings Plan.

Hey last-minute tax filers: Don’t make these common, costly mistakes says Stephen Karmazyn in the Financial Post. For example, only eight percent of taxpayers are planning to claim the Canada Employment Amount (which is a credit for work-related expenses such as home computers, uniforms, supplies) even though anyone with a T4 income can make a claim.

In a timeless blog on Retire Happy, Jim Yih offers RRSP and Tax Planning Tips. He recommends that only one spouse claim charitable deductions. That’s because the credit for charitable donations is a two-tiered federal credit of 16% on the first $200 and 29% on the balance (plus provincial credits). Spouses are allowed to claim the other’s donations and to carry forward donations for up to five years. By carrying forward donations and then having them all claimed by one spouse, the first $200 threshold with the lower credit is only applied once.

And in a Global news video Smart Cookies: Last Minute Tax Tips, Kate Dunsworth shares last minute reminders for people who have been procrastinating with their taxes. She says if you are expecting a refund and you are not planning to file on time because you don’t owe anything, you are basically giving the government a tax free loan. And if you owe money, you will be penalized for every single day you file late. Also, repeat late offenders will be penalized up to double.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

 

Getting married? Check your insurance

23 Apr

By Sheryl Smolkin

According to the 2014 Bridal Survey conducted by weddingbells.ca, in 2014 an estimated 162,056 weddings took place in Canada and 65% of them took place between June and September.

That means dozens of your friends and neighbours are probably trying to balance their wedding budgets, booking venues and “saying yes to the dress” as you read this blog. But how many of them are factoring in the impact their upcoming nuptials could have on their insurance or any previous estate planning?

The folks at the web site insureeye.com recently asked licensed life insurance broker Tamara Humphries for her opinion on what you need to know about life and health insurance if you are getting married. Here are a couple of interesting issues she raised:

  1. Amount of coverage: Once you get married, and especially if you have or will be having children, you should consider increasing in your life insurance coverage. There are various life insurance calculators online including this one from Sun Life that will help you calculate how much you need. Your financial advisor can also assist you.
  2. Group Benefits: Understand the life and health insurance plans both you and your partner have at work, and how benefits are coordinated. If one supplementary health plan is particularly good, you may wish to opt out of the other.
  3. Changing your beneficiary: If your previous life insurance policy named, for example, your parents as beneficiaries, you may want to make your spouse the beneficiary instead. You can change this beneficiary designation at any time upon notice to your insurance company unless you have made the beneficiary designation irrevocable.
  4. Family life insurance: As an alternative to two life insurance policies for each spouse, you can get one policy for both of you, which often results in lower premiums overall. This policy is often called family or joint-first-to-die (JFTD) policy. JFTD policies pay only at the first death. It is important to know if one spouse dies, the surviving spouse will not have life insurance. If you prefer to keep separate policies after the marriage and get the policies from the same provider, you might benefit from a multi-life discount.
  5. Look for bundles: Bundles still work. If you or your spouse already have a home and/or auto insurance provider, there may be an option to get a bundle discount when adding a life insurance policy from the same company. Some insurers, called universal insurers, offer all insurance products – life, property and health insurance.

Also keep in mind that when you get married, (see Public Legal Education Association of Saskatchewan) unless you indicate in your Will that you are making the Will in contemplation of the marriage or a spousal relationship, your entire Will is cancelled. This general rule does not apply where an individual makes a Will while living in a spousal relationship and later marries that spouse.

Ending a spousal relationship can also revoke or cancel your Will or parts of it. For example, if you name your spouse as your Executor or leave part of your estate to your spouse, those parts of your Will are revoked or cancelled after you divorce, or after 24 months of separation in the case of other spousal relationships, unless you expressly say otherwise in your Will.

In Alberta and British Columbia, however, new laws state that marriage, or the entrance into an adult interdependent partnership (common-law relationship) does not automatically revoke a Will.

Since the laws across the country are no longer consistent, deciding which laws apply if the person married in one province and died in another, can be unclear. Further, if a person marries or dies outside of Canada, the decision as to which law applies becomes even more complicated. To avoid such difficulties, it is best to enter into a Will and revoke the old one upon marriage, or when entering into a common-law relationship.

Apr 20: Best from the blogosphere

20 Apr

By Sheryl Smolkin

Spring has definitely sprung in our neck of the woods and yesterday I woke up to a neighbourhood of happy smiling people wbiking, jogging and cleaning garages.

This week we feature a blog from Blonde on a Budget Cait Flanders who is nine months into her shopping ban. Of course, as she notes in Nine Months Without Shopping and Takeout Coffee, she gets to make up the rules as she goes along. So she discarded a ripped pair of jeans and replaced them. She also broke her “no take out coffee” ban a few times when she was out with friends. Nevertheless, she has upped her savings goal from $100/month at the beginning of the period to $250/month and she has a nice little nest egg to show for it.

On Boomer & Echo, Robb Engen writes about how we can always find joy in the smallest things like using a cash back credit card for his everyday purchases. I know what he means. I prefer my travel rewards credit cards, but it feels great when I accumulate enough points at Shoppers Drug Mart or Longo’s and the cashier asks me if I want to take $20 or $30 off my bill.

Sean Cooper writes on Retire Happy about three More Costly Pension Mistakes and How to Avoid Them. They are: not updating your spouse and beneficiary designations; not joining your company pension plan right away; and, not starting your pension as soon as you are entitled to a unreduced pension.

The question that every person who is saving for retirement struggles with is Will they run short in Retirement? As part of the Masters of Money series on GetSmarterAboutMoney.ca, Allison Griffiths acknowledges that few working people have any idea how much money they will need and she offers an approach to budgeting that can help them nail down these elusive numbers.

Spring is the time when new university and college graduates hit the street looking for their first career position. On stupidcents.com blogger Tom Drake discusses best careers for the future. With baby boomers aging in the next 20 years, he says those who are involved in health care such as dental hygienists, registered nurses and physical therapy assistants will be in demand. But software developers and construction equipment operators are also growth areas.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

 

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