By Sheryl Smolkin

A recent CBC article reports that the average Canadian’s consumer debt load hit $27,485 at the end of 2012, a six per cent increase over the previous year’s level and the first time the figure has been above $27,000.

According to credit monitoring firm TransUnion, at the end of 2012 consumer debt had increased at the fastest pace seen since 2009, with average debt loads increasing by more than $1,500.

If erasing debts was as easy as spending money, there would not be so many Canadians struggling to take from Peter to pay Paul every month. It takes courage, commitment and perseverance to make a bare bones budget and stick to it.

If you didn’t catch Gail Vaz-Oxlade’s signature television series ‘Til Debt Do Us Part” when it originally aired, I encourage you to watch a few episodes online to get you started.

The Financial Consumer Agency of Canada also has the following tips to help you get your finances under control:

1. Stop using credit:  If you continue to spend beyond your means, it will be difficult to realize your goal of being debt-free.
2. Find ways to cut spending: Review your budget and list ways you can cut down on your spending. Make coffee at home instead of buying it. Consider selling some of your assets or taking on additional work to bring in extra money.
3. Pay at least the minimum by the due date: If you do not, you will harm your credit history and score. Paying off the debts with the highest interest rate first will reduce the amounts you pay in interest and reduce your debt more quickly.
4. Contact your creditors: You may be able to negotiate a lower interest rate or a payment plan that works better for you.
5. Set a reasonable repayment time: If your time frame is too long, debt fatigue will set in and you will lose focus. If your time frame is too short or unrealistic, your chance of success decreases and so does your motivation.
6. Once a debt is paid, close that account: You do not need the temptation of that available credit to pull you back into debt. You will need to keep some credit and loan products in order to rebuild your credit, but only keep what you need and can manage responsibly.
7. Commit to a payment schedule: Write post-dated cheques in order to keep to the payment plan and to show your creditors you are committed to repaying them.
8. If your debt has gone to collection:  See Tips for dealing with a debt collector.

If you are stressed because of your debts, struggling to make your minimum payments, and need a plan to get your finances back on track and get out of debt, the Credit Counselling Society in Saskatchewan can help.  Other provinces have similar services.

The free and completely confidential service is available to all residents of the province. Connect them by phone, email or online  live chat.

Are you working hard to pay down debt? Send us an email to so*********@sa*********.com and tell us about your successes and your set-backs. Your name will be entered in a quarterly draw for a gift card. And don’t forget that the Saskatchewan Pension Plan offers a flexible way to save affordable amounts for retirement.

If you would like to send us other money saving ideas, here are the themes for the next three weeks:

7-Mar	Airline points	Which kind of airline points are better?
14-Mar	Insurance	Getting a better deal on car, house insurance
21-Mar	Books	Comparing eReaders

SPP posted a return of 2.20% to the balanced fund (BF) and 0.045% to the short-term fund (STF). The year to date return in the BF is 2.20% and in the STF is 0.045%.

Market index returns for January 2013 were:

Index	Jan 2013 return (%)
S&P/TSX Composite (Canadian equities)	2.25
S&P 500 (C$) (US equities)	5.51
MSCI EAFE (C$) (Non-north American equities)	5.61
DEX Universe Bond (Canadian bonds)	-0.74
DEX 91 day T-bill	0.09

Click here for a complete list of returns.

A comprehensive investment update to the end of the fourth quarter is available on our website at saskpension.com.

By Sheryl Smolkin

If there was a money tree growing in every back yard, we wouldn’t have to worry about saving or investing for retirement. Our annual harvest of $100 bills would pay for everything.

But money doesn’t grow on trees, so once you allocate hard-earned money to retirement savings, you must decide on an investment strategy that will grow your account into the nest egg you need to retire.

Before deciding how to invest your money, you have to identify how much risk you can stomach. Your retirement goals, the number of years left to retirement and the amount of money you can tolerate losing are all factors that will influence the percentage of your portfolio allocated to various asset classes.

The Investor’s Education Fund has a simple quiz that will help you identify your risk tolerance. When I took the quiz, I found out I have a “medium” tolerance for risk which means I am most comfortable with a mix of bonds, stocks and fixed income investments.

In a Masters of Money blog on the same website, Globe and Mail financial writer Rob Carrick says one thing everyone agrees on is that you must get more conservative in your asset mix as you get older.

Carrick suggests that every five years or so you should think about ratcheting down the risk level of your portfolio. In practical terms, that would mean moving some of your stock market exposure into bonds and cash. Your evolving mix of assets in a registered retirement savings plan account might look something like this:

AGE	% IN STOCKS	% IN BONDS & CASH
25	85	15
30	80	20
35	75	25
40	70	30
45	65	35
50	60	40
55	55	45
60	45	55
65	30	70

However, financial experts do not advocate that older Canadians get out of the stock market completely. You still need some portfolio growth in the period when you are drawing down funds to pay for retirement, particularly if you live to age 90 or beyond.

Members of the Saskatchewan Pension Plan benefit from the investment expertise of independent money managers. Funds of members who have not yet retired are pooled in the Contribution Fund.

The Contribution Fund allows members to invest in a balanced portfolio or a short-term fund. The balanced fund investment strategy is to maximize earnings for members and minimize the risk, while the purpose of the short-term fund is capital preservation.

The balanced fund portfolio composition is shown below.

The average earnings of the balanced fund since inception in 1986 have been 7.86 per cent with returns of 8.45 per cent in 2012.

Accounts of members who have retired are pooled in the Annuity Fund.The Annuity Fund is invested in bonds and short-term investments. The strategy for this fund is to produce income to pay members’ pensions.

Have you checked recently to see if your investments are consistent with your risk tolerance? If so, send us an email to so*********@sa*********.com. Your name will be entered in a quarterly draw for a gift card.

And don’t forget March 1, 2013 is the deadline for contributing to the Saskatchewan Pension Plan and your RRSP for the 2012 tax year.

If you would like to send us other money saving ideas, here are the themes for the next three weeks:

28-Feb	Debt Reduction	How to eliminate debt
7-Mar	Airline points	Which kind of airline points are better?
14-Mar	Insurance	Getting a better deal on car, house insurance

By Sheryl Smolkin

As we contemplate retirement somewhere down the road, most of us are probably focused on how to save enough money. However, deciding how we are going to spend our time is equally important.

Dave Dineen on Brighter Life says if you have debt you are not ready to retire and provides a check-list for a debt-free retirement.

$he Thinks I’m Cheap blogger Andrew suggests that in addition to investing in stocks and bonds, planning how you will use your time, skills and health are three critical areas that should not be ignored when creating a retirement budget.

On Retire Happy, Donna McCaw discusses how planning retirement is a little like planning a honeymoon. You have to think about what happens after the first few months.

Guest blogger Robert writes on Canadian Dream: Free at 45 that since he retired he is busier than ever, volunteering, training for a triathlon and taking courses towards a Masters degree in Education at the University of Calgary.

And finally, readers of all ages will be interested Boomer & Echo’s 20 tips to save money on gas. But be wary of companies that try to sell you mileage-improving devices and fuel additives.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?”  Send us an email with the information to so*********@sa*********.com and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

SPP, RRSP, Group RRSP, TFSA. This alphabet soup of acronyms represents only a few of the most common retirement savings options available to Canadians.

Other important retirement savings vehicles beyond the scope of this blog include employer-sponsored defined benefit pension plans, defined contribution pension plans and hybrid registered pension plan designs.

Where you chose to save your money and how much you save each year is an individual decision based on your disposable income and your longer-term financial goals. Because each type of plan has different contribution levels, tax consequences and withdrawal rules, it often makes sense to contribute to more than one kind of savings vehicle.

For example, you might decide to:

• Contribute to the Saskatchewan Pension Plan to ensure you have a stream of income at retirement.
• Participate in the Group Registered Retirement Savings Plan sponsored by your employer to get the benefit of employer matching of your contributions.
• Save your “emergency” or “rainy day” fund in a TFSA.

To help you understand and prioritize your retirement savings, here are some key features of each of these program. SPP and RRSP contributions for 2012 must be made by March 1, 2013 to be eligible for a tax deduction.

In all cases, you should consult your financial advisor and obtain more detailed information about each type of program before making savings and investment decisions.

Saskatchewan Pension Plan 

SPP is the only pension plan of its kind in Canada. It is a voluntary defined contribution plan open to anyone between the ages of 18 and 71. Employers who wish to make SPP available as an employee benefit can set up a group plan. Often employers with group plans match employee contributions up to a specified amount selected by the company.

SPP Key Features

Savings objectives:	Retirement savings.
Contributions:	Maximum contributions of up to $2,500/year if RRSP contribution room is available. Up to $10,000/year can be transferred in from another RRSP. No minimum payment. Contribution schedule and payment method at the member’s option.
Tax treatment:	Contributions are tax deductible. Tax is paid on benefit payments after retirement.
Investments:	Active members can invest in a professionally-managed balanced portfolio intended to maximize earnings and minimize risk or a short-term fund geared to capital preservation. Investment returns in the balanced fund have averaged 8% over the last 26 years and annual fees have been around 1%.
Withdrawals:	SPP contributions are locked-in within 6 months of joining and earn interest until the member retires.
Portability:	Membership in SPP can continue regardless of where the member resides or works throughout his career.
Retirement:	SPP members can elect to retire (start receiving benefits) as early as age 55 and no later than the end of the year they reach age 71. Members can elect to receive a pension from the fund, transfer the lump sum in their account to another locked-in account with a financial institution or a combination of both.

Registered Retirement Savings Plan 

Any person currently working in Canada is eligible to open and contribute to an RRSP until the year he/she turns 71 providing the individual has contribution room and files Canadian taxes. An RRSP account can be opened at any financial institution such as a bank, credit union and most investment houses.

RRSP Key Features

Savings objectives:	Retirement savings. Home purchase, education (see “withdrawals” below)
Contributions:	Until the year the taxpayer turns 71, contributions of up to 18% of earned income from the previous year can be made up to $22,970 in 2012 ($23,820 in 2013.) RRSP contribution room can be found on line (A) of the RRSP Deduction Limit Statement, on taxpayer’s latest income tax notice of assessment or notice of reassessment.
Tax treatment:	Contributions are tax deductible. Tax is paid on the full amount of withdrawals before or after retirement.
Investments:	RRSPs can be self-directed, or administered by a bank or financial institution. Generally, the types of investments permitted in a in a RRSP include: Cash Mutual funds Securities listed on a designated stock exchange Guaranteed investment certificates (GICs); Bonds; and Certain shares of small business corporations. The earnings record and investment fees charged will vary and investors must do their own due diligence.
Withdrawals:	RRSP contributions are not locked in. However, when funds are withdrawn from an RRSP, the contribution room is lost. The Homebuyer’s Plan and Lifelong Learning Plan allow RRSP withdrawals and repayment in specified circumstances.
Portability:	Membership in an RRSP can continue regardless of where the member resides or works throughout his career.
Retirement:	Funds in an RRSP can be withdrawn at any time and tax is payable on the full lump sum. Funds that are not withdrawn by the end of the member’s 71st year can be used to purchase an annuity or transferred into a registered retirement income fund. There are provincial pension and federal income tax rules about the maximum/minimum amounts that must be withdrawn each year.

Group RRSPs

Some employers establish Group RRSPs as an employee benefit. Often employers with Group RRSPs match employee contributions up to a specified amount selected by the company. They also may be able to negotiate lower fees for similar investments than fees charged to individuals by retail financial institutions.

Employers may restrict withdrawal of RRSP contributions by active employees except in extenuating circumstances, by withholding employer contributions for some period of time after a withdrawal is made.

An employee who changes jobs will not be able to continue in the group plan but the funds can be transferred to an individual RRSP with no tax consequences. However, the available investment options and the investment fees may not be as attractive as in the Group RRSP.

Tax-Free Savings Account

TFSA stands for Tax-Free Savings Account. Like an RRSP, a TFSA can be set up at a financial institution such as a bank, credit union, trust or insurance company. 

TFSA Key Features

Savings objectives:	Saving for any short or long term objective including retirement.
Contributions:	Up to $5,500/year beginning in 2013. Previously, $5000/yr
Tax treatment:	Contributions are not tax deductible but investment earnings accumulate tax free. Any funds withdrawn are also tax free.
Investments:	Generally, the types of investments that will be permitted in a TFSA are the same as those permitted in a RRSP. This would include: Cash Mutual funds Securities listed on a designated stock exchange Guaranteed investment certificates (GICs); Bonds; and Certain shares of small business corporations. The earnings record and investment fees charged will vary and investors must do their own due diligence.
Withdrawals:	Funds can be withdrawn at any time. Withdrawals will be added to the member’s TFSA contribution room at the beginning of the following year.
Portability:	Membership in a TFSA can continue regardless of where the member resides or works throughout his career.
Retirement:	Federal income-tested benefits and credits such as: Old Age Security (OAS) benefits, Guaranteed Income Supplement (GIS), or Employment Insurance (EI) benefits will not be reduced as a result of the income earned in a TFSA or amounts withdrawn from a TFSA.

Have you made your 2012 SPP contribution yet? Are you also contributing to an RRSP or a TFSA? Send us an email to so*********@sa*********.com and tell us about how you are saving for retirement and your name will be entered in a quarterly draw for a gift card.

If you would like to send us other money saving ideas, here are the themes for the next three weeks:

21-Feb	RRSP/SPP deadline	How should you invest your retirement savings?
28-Feb	Debt Reduction	How to eliminate debt
7-Mar	Airline points	Which kind of airline points are better?

Also see:
SPP vs. TFSA
Understanding SPP annuities
The Wealthy Barber explains: TFSA or RRSP?
RRSP vs. TFSA: Tim Cestnick on where to put spare dollars
To TFSA or to RRSP?
TFSA vs. RRSP – Clawbacks & income tax on seniors
TFSA vs. RRSP – Best Retirement Vehicle?

By Sheryl Smolkin

When I blogged for moneyville, one of the mantras that appeared over and over in the best-read stories were “if you don’t ask, you don’t get.” This week on Give me back my five bucks, moneyville alumni Krystal Yee makes a great case for negotiating salary in a new job instead of simply accepting the first amount you are offered.

If you are counting the days until spring when you plan to buy a new car, take a look at Robb Engen’s blog on Boomer& Echo where he tells you what you need to know before purchasing a new vehicle.

Alan Schram recently made a good case for saving money by using house brands of over-the-counter drugs instead of name brands on Canadian Finance Blog.

And I’m REALLY glad I didn’t read Mark Goodfield’s blog on the The Blunt Bean counter about how much it costs to own a dog before we got our darling cockapoo Rufus – even if he does wake us up at 5 AM.

Finally, don’t miss the latest rant from perennial favourite Kerry K. Taylor’s (aka Squawkfox) about credit cards that charge a $10 “inactive fee” for not shopping enough.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?”  Send us an email with the information to so*********@sa*********.com and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

St. Valentine’s Day began as a liturgical celebration of one or more early Christian saints named Valentinus. However, the celebration of Saint Valentine did not have any romantic connotations until Chaucer’s poetry about “Valentines” in the 14th century.

Today Valentine’s Day is a huge marketing opportunity for florists, jewellers and the candy industry. As soon as the Christmas decorations come down, malls are decorated with hearts and flowers.

It’s actually rather nice to have something to celebrate when spring is till several months away in most of the country. But if you want to give your loved one roses, chocolates or dinner out at the local hot spot, you may have to pay premium prices in mid-February.

When I was researching romantic, inexpensive Valentine’s Day gifts, I found Sheryl Kurland’s list of 50 Valentine’s Day Gifts for Your Sweetheart (without looking cheap). I’m not much of a “do-it-yourself” person so many of her ideas exceed the time and skills I possess. But here is an edited list of the 10 suggestions I like best:

1. Make a framed group of photos (or photo collage) of memorable occasions you have celebrated together, in chronological order.
2. Burn a CD with meaningful music like the first dance at your wedding, songs from musical you saw on your honeymoon and the lullabies that were the only thing that put your baby to sleep.
3. Leave a love note on your partner’s pillow along with a chocolate truffle or two and a single rose.
4. Create an in-home spa day for your mate. Put together a basket filled with inexpensive candles, bubble bath, rose petals, facial mask and scrub. Hand her towels warmed in the drier when she is done.
5. Make a marvellous dinner for two. A home-made steak or lobster dinner is much less expensive than a pricey restaurant meal. And you can never go wrong with traditional cherry cheesecake for desert.
6. Give your lover Valentine’s Day IOU coupons: I will make dinner. I will do the laundry. I will walk the dog for a week.
7. Write new “updated” wedding vows, both serious and humorous and share them with each other over a glass of wine in a candlelit room.
8. Make homemade chocolate-covered strawberries: 1) Melt a package of chocolate chips in a double boiler and add a small amount of oil; 2) Remove from heat and quickly dip the strawberries into the chocolate; 3) Place on wax paper and refrigerate for several hours until chocolate is firm.
9. Get the kids involved. Help them make cards or print them off the internet. Make a special breakfast including pancakes, waffles or even buttery croissants from the local bakery.
10. If you don’t have a special sweetheart, focus on bringing a smile or laughter to everyone you come in contact with on Valentine’s Day.

Can you suggest other inexpensive romantic ways to celebrate Valentine’s Day? Send us an email to so*********@sa*********.com. If your idea is posted, your name will be entered in a quarterly draw for a gift card. And remember to put a dollar in the retirement savings jar every time you use one of our money-saving ideas.

If you would like to send us other money saving ideas, here are the themes for the next three weeks:

14-Feb	Retirement savings	Pros & cons of available savings vehicles
21-Feb	RRSP/SPP deadline	How should you invest your retirement savings?
28-Feb	Debt reduction	How to eliminate debt

Also see:
Great ideas for Valentine’s Day. Creative. Thoughtful. AND CHEAP!!
100+ great Valentine’s Day ideas

By Sheryl Smolkin

With RRSP season in full swing, you may be reviewing your budget projections to ensure you are saving enough for retirement. But are you factoring in the future cost of health care?

In Planning for health care in retirement, a guest post on Retire Happy, Sun Life Financial AVP Kevin Press suggests that some combination of disability insurance, critical illness insurance and long-term care insurance can help fill the post-retirement health care gap.

Understanding your family’s life insurance needs is another important element of financial planning. The blog Riscario Insider links to a LIMRA Quizz which you can take to test your life insurance literacy.

And if maxing your Sask Pension Plan and RRSP contributions are top of mind this month, tax season can’t be far behind. In Canadian Finance, blogger Tom Drake explores the mysteries of pension income-splitting, while in Boomer and Echo, Robb Engen discusses tax considerations for single income households.

Finally, if you’ve decided that this is the year you will finally buy a smartphone or trade your old one in for a newer model, on Engadget, Tom Stevens explains and evaluates the new features found in the BB10 which was released with great hoopla this week.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?”  Send us an email with the information to so*********@sa*********.com and your name will be entered in a quarterly draw for a gift card.

SPP posted a return of 1.22% to the balanced fund (BF) and 0.057% to the short-term fund (STF). The year to date return in the BF is 8.45% and in the STF is 0.52%.

Market index returns for December 2012 were:

Index	Dec 2012 return (%)
S&P/TSX Composite (Canadian equities)	1.95
S&P 500 (C$) (US equities)	1.15
MSCI EAFE (C$) (Non-north American equities)	3.44
DEX Universe Bond (Canadian bonds)	-0.13
DEX 91 day T-bill	0.10

Click here for a complete list of returns.