As more studies are done on the correlation between physical and financial health, one thing has become crystal clear: the more affluent you are, the better your physical health is likely to be. According to the Public Health Agency of Canada, social and economic status “seem to be the most important determinants of health”.
There are a number of reasons for this. The obvious is that people with higher incomes are likely to be better educated about their health, and have better access to nutrition and medical services.
There’s also the emotional toll that a debt load can bring to an individual and a family. No matter what your level of income, if you’re carrying significant debt, it will weigh on you. When that debt load gets out of hand, the collection calls from creditors and the “balancing act” of weighting credit card and loan payments against the necessities of life can produce high levels of stress, which will have an impact on your health. Credit card debt is the most significant detractor, because it’s the most available and carries the highest interest cost.
For Manitobans struggling with debt, the first steps to recovery are the most difficult. You must analyze your budget, and take a detailed look at your obligations and their accompanying interest rates. From there, you need to create a realistic payment schedule, one that allows you to take care of your family’s needs while reducing the amount you owe.
At Creditaid, we understand the physical and emotional toll that spiraling debt can have. When you contact us, we’ll do our best to help you by offering counselling regarding your debt situation, management of your debt, and look at a consolidation strategy when appropriate.
Contact us anytime online or by telephone at (204) 987-6890. We can help you take those important first steps toward a healthier, debt free life.
In times of financial restraint, we examine each and every one of our expenses, and decide which are necessities, and which are luxuries. One of the most confusing areas is that of insurance. It’s possible that a single individual can have upwards of half a dozen insurance polices, all of which are associated with an expense, at a given time. Premiums are expensive, and when you’re looking to cut costs, they all fall under scrutiny. Here is a list of common types of insurance and their pros and cons.
Automobile Insurance
In Manitoba, we’re lucky to have MPI insurance, which does a good job of regulating premiums for everyone. If you drive, you need insurance. Period. Purchase basic Autopac insurance, and consider extended coverage if you have the need for it.
Home Insurance
If you own a building with a mortgage on it, you must have enough insurance on it to satisfy your lienholder – the bank or mortgage company. Generally, you should insure a building not for the appraised value, but for enough to build a comparable replacement in today’s market.
If you rent, you should insure the contents of your home or apartment. Most insurance companies offer a tenant’s package to insure your possessions against fire, theft, or other perils. Make sure you take stock of all the items in your home, and the cost of replacing them.
Life Insurance
Life insurance is one of the trickiest purchases you can make. The goal is to insure yourself so that, in the event of your death, your family won’t face financial hardship. There are basically three ways to do this – through Term Insurance, Permanent Insurance, and Universal Life Insurance. Term insurance is cheapest, as it expires after a certain number of years. Permanent Insurance covers your whole life (although you can cancel it and withdraw some money), and Universal Life Insurance is most expensive, as it has a tax-sheltered investment component.
This is the 2nd annual Salsa Festival in Winnipeg and it’s sure to include something for everyone! Hosted by Cubanisimo, a Winnipeg dance company dedicated to the preservation of Cuban heritage and to the promotion of the joy of Latin Dance, Salsa Fest is a great way to learn about a dancing style that has become so popular in recent years.
Led by company directors Harold Rancano and Regan Hirose, Cubanisimo has performed and competed in dance events throughout North America, most notably the 2014 World Latin Dance Cup in Miami, Florida. Harold and Regan are placed 6th in the world in the Bachata Cabaret Division and amongst the top 10 in Salsa.
We often offer advice about taxes here on our blog, but we seldom talk about life’s other certainty. Planning for the funeral of a loved one can be very stressful if you have to do it all while you’re in the process of grieving. There are many things to consider – type of internment, the casket, the service, and the reception. Because of our desire to “just get it done”, and to properly memorialize someone very close to us, we can often overspend when planning a funeral.
At Creditaid, we see the impact that high funeral costs can have. We can offer the following advice to someone who’s planning a funeral:
Take someone with you. Having a trusted friend or family member who isn’t as stricken with grief as you are to help with making the arrangements can assist in keeping a perspective on matters. While the professionals in the funeral industry aren’t trying to take advantage of you, bear in mind that it is a business. Having a “voice of reason” with you could prove to be handy.
Shop around. Funeral services differ in price. While we don’t advocate driving all over town, visit at least two funeral homes to see what options they offer you.
Look at economical alternatives. Instead of a full-blown funeral, you could opt for a “direct disposition”, where the internment is handled in the background, and instead hold a memorial service for friends and family. Cremation is a more economical option than traditional burial in a plot, and has gained popularity in recent decades. It’s now a standard method of burial.
Consider the real wishes of your loved one. Chances are, they wouldn’t want you to put yourself in a position of financial hardship for their funeral. While it’s only natural to want to memorialize someone “properly”, financial realities should always be considered. There are lots of ways to make a fitting memorial without exposing yourself to crushing debt.
Canadians are taking on more and more debt. The latest statistics show that, excluding their mortgage, the average adult living in Canada has more than $20,000 of debt hanging over his or her head.
This huge figure is the result of a recently surging economy, which builds confidence among borrowers about their ability to pay back their debt, and record low interest rates, which means that the cost of borrowing those dollars might seem lower than the average.
At Creditaid, we see this as a huge problem. The Canadian economy has slowed, especially in Western Canada, where a recent softening of the market for petroleum products has impacted the oil industry and its core of support businesses.
There are a lot of reasons people wind up with debt, and not all of them are irresponsibility. An unforeseen job loss, a sudden expense, or a family member in need can start the slide, and the banks and credit card companies will let you spiral further and further into debt from there, as that helps them maximize their profits.
At Creditaid, we help people get a handle on their debt. We can tell you how to start to climb out of your debt situation, and offer services like debt consolidation when they’re appropriate. We’re credit professionals who are, for once, on your side in your battle against debt.
To have your questions about credit counselling, debt management, and debt consolidation answered, contact Creditaid online or by telephone at (204) 987-6890. We can help you no matter where you live in Manitoba. Our area of service includes but is not limited to Winnipeg, Brandon, Steinbach, Winkler, Stonewall, and Selkirk.
Manitoba summers are notoriously short, so it’s understandable that we celebrate our respite from frigid temperatures with zeal. Unfortunately, for those of us on a tight budget, seasonal celebrations can prove to be a strain on the budget, especially because we tend to throw caution to the winds once the sunny weather comes. Here are some strategies to limit the pressure your budget:
Resist the Temptation to Pay for it All
Chances are your friends will understand your need for budgetary restraint. Most of them probably feel the same way. There’s no need for you to take on a huge expense in the name of entertainment for your friends. If they don’t understand you need for restraint, then perhaps they aren’t really your friends. Ask them to share the cost by bringing their own alcoholic beverages if they choose to drink, and consider asking them to bring a dish to accompany your barbecue as a potluck. It’s a good idea to co-ordinate the things guests bring so you won’t have too many macaroni salads!
Spend Your Money in the Right Places If you’re going to splurge, do it in a way that people will notice. Shrimp skewers for appetizers, or a really nice cheese plate become a focal point of your party. Don’t spread your money too far.
As for barbecue, there’s really no need to grill expensive cuts of meat. Hotdogs and hamburgers are traditional summer fare, and they’re reasonably economical. Consider making your own burgers rather than buying pre-made patties. It’s cheaper, and nearly always better.
Make Do With What You Have
Resist the urge to make big purchases in the name of entertainment. Summers here are short – don’t spend a lot of money on expensive outdoor furniture you can’t use most of the year. There’s no shame in asking your guests to bring their own lawn chairs to your party, and your buffet table doesn’t need to be a new shiny glass-top from the big box store – your old one, or even a door on a couple of sawhorses will look just as good with a table cloth on it.
Plan Ahead
Make sure you have enough propane or charcoal for the barbecue, and that there’s no need to purchase condiments or anything else from the convenience store at exorbitant prices.
Above all, remember that summer entertaining is about the people, not the party. There’s no need to expose yourself to financial risk in the name of entertainment. Go ahead and have fun, but exercise restraint.
Creditaid Offers credit counselling and debt management solutions for individuals in Winnipeg and across Manitoba, including areas such as Portage la Prairie, Brandon, Winkler, The Pas, Flin Flon, Thompson, and many others.
Habitat for Humanity Winnipeg was incorporated in 1987 with the vision of helping to eliminate poverty housing in Winnipeg. Today, by mobilizing volunteers and community partners like Creditaid, Habitat for Humanity Manitoba works with people from all walks of life to build safe, decent, affordable housing for purchase by low-income working families.
At Creditaid, we have the expertise to support this wonderful charity by providing budget strategies to new Habitat homeowners that will help them prepare for home ownership. Our services are provided to approximately 25 Habitat families per year throughout the province of Manitoba. The financial education they receive helps to instill a sense of accountability and pride in their new home ownership status.
The meetings between Creditaid and the new home owners are private and confidential, and are also a mandatory requirement of all new Habitat families. The families use the advice and guidance provided by Creditaid in all aspects of their lives – not only those related to home ownership. The families are left with the skills necessary to budget effectively and manage their debt responsibly for a lifetime.
We are happy to be part of the Habitat for Humanity family and hope to continue helping Habitat families long into the future.
Republished from the Winnipeg Free Press print edition June 6, 2015 B13
Hoyt and Summer knew home ownership wouldn’t be easy. After all, the former Money Makeover participants were told as much by a financial counsellor their first time around.
Phil Hossack / Winnipeg Free Press
In 2012, they graduated from university and were interested in jumping into the condominium market. Both having landed full-time jobs with good pensions, they believed home ownership would help them get ahead.
“We had been renting about five years,” said Hoyt, a civil servant in his early 30s. “We had a lot of debt, so we thought we could buy a condo, live there a few years, and after selling it, we could hopefully find some way to alleviate the debt we had.”
“Boy, were we wrong,” said Summer, an administrative worker in her late 20s.
At the time, the couple had about $21,000 in debt, largely the result of earning university degrees.
They did have some savings — about $17,000, including $11,000 from their parents for a down payment. Moreover, they had steady income, earning a combined $75,000 before taxes a year. Eventually, they purchased a renovated two-bedroom condo for about $187,000.
It didn’t take long before they realized it was more than they could handle.
“The debt just kept ballooning because we couldn’t keep up with the mortgage payments, the condo fees and everything else that comes along with it,” Hoyt said.
The expenses that hurt the most were large, unanticipated repairs: a sewer backup, burst water pipes and a leaky roof — to name a few. Soon their reserve fund was empty and they were paying out of pocket.
“We had rose-coloured glasses on and seeing what friends were doing with their lives, we thought ‘this is something we should be doing, too’ not realizing we were not financially in a place to do it,” Summer said.
So late last year, they sold at a $20,000 loss and were relieved to be renting again. Now Summer and Hoyt owe about $42,000, including a $6,000 no-interest loan from their parents, and they have almost no savings.
Still, they have hope.
They earn more than before: more than $90,000 combined a year. And they are determined to get out of debt as soon as possible, particularly since they want to return to school so they can upgrade their career options and earn more money so they can become homeowners again.
“We are really a cautionary tale for others like us thinking of doing the same thing,” she said.
He said many first-time buyers find themselves in financial trouble because — like Summer and Hoyt — they underestimate or even overlook the costs of ownership, particularly with respect to condominiums.
“The repairs and the (loss of the) reserve fund frightened them so understandably they decided to cut their losses.”
Now, Hoyt and Summer must become debt-free to move forward. Yet while they have been trying to track expenses and make regular debt payments far above the minimum requirements, Denysuik said they will have to bear down on the budgeting process to make meaningful progress.
“I asked them if they are working from a spending plan and tracking their expenses and the answer was ‘we have a hard time keeping up after a week or so.’ ”
But if they were tracking costs, they would realize they have more free cash flow than they think.
“Three years ago, they had a combined gross income of $75,000, but today they have a combined gross income of $94,446, an increase of 26 per cent,” he said, adding their take-home pay has increased to $4,640 from $4,088 a month.
While their debt has doubled, they do have the cash flow to pay it down faster than their current pace.
In 2012, their discretionary spending was $850 a month when they were advised to cut costs if they decided to buy a home.
Today, they’re spending more than $950 a month on entertainment, coffee, clothing and dining out even though they are focused more on debt reduction than they were before.
“At this point, even if they earned an extra $20,000 a year without changing their habits, they will just keep spending more.”
The upside here is they make enough money to become debt-free in less than five years without taking more drastic measures such as a consumer proposal or bankruptcy. But they must become dedicated budgeters to make it happen.
Hoyt and Summer have to closely track their expenses to understand their true cost of living. This is the only way to find where they can cut spending to increase cash available for debt payments while building up emergency savings so they’re not forced to go back into debt when things go sideways.
Already, they’ve done some good work, paying more than $1,000 a month on debt while saving $165 a month for emergencies. Still, they could do better because about $466 a month of income is unaccounted for in the budget.
Moreover, they could increase the effectiveness of their efforts using the ‘avalanche method’ of debt repayment — something Summer is already doing. This involves paying the minimum amount on the lowest interest debts while making the largest payments against the highest interest debts.
“In this respect, Hoyt should look at reducing his line-of-credit payments — at seven per cent — from $300 a month to $100 and increase payments on his credit card payment — at 20 per cent — to $400 a month from $200,” Denysuik said.
“This way they can have their unsecured debt paid off in 40 months with another five months to repay parents.”
Yet with a few more tweaks, they could be out of debt even faster.
“If they reduced their discretionary spending by $400 a month, increasing emergency savings from $160 to $200 and pushing $300 more to debt repayment, they can be out of debt in 30 months,” he said.
Another benefit of this strategy is their cash flow would increase to more than $500 a month from $466 a month simply because their money is being managed more efficiently. This extra cash could be used to save for a home, tuition or pay debt faster.
“All of this is dependent on monthly tracking of expenses and making adjustments,” he said.”That means keeping all receipts and once a month sitting down together and sorting the bills and adding up each category.”
And it need not be a grim task either, he said.
“Make it a date night at home where you cook supper, have a little wine and summarize the tracking and compare it to plan.”
— — — Summer and Hoyt’s finances:
INCOME:
Summer: $49,500 ($2,340 net a month)
Hoyt: $43,900 ($2,300 net a month)
MONTHLY EXPENSES: $4,173 DEBTS:
Summer line of credit: $15,000 at 3.5 per cent
Hoyt line of credit: $10,500 at 7 per cent
Summer credit card: $7,070 at 19.99 per cent
Hoyt credit card: $4,300 at 19.99 per cent
Loan from parents: $6,000 ASSETS:
Summer TFSA: $90
Hoyt RRSP: $1,300
Savings: $800 NET WORTH: – 40,680
Vacations are a highly anticipated part of everyone’s life, so working to minimize setbacks and disappointments now can help to ensure that you have the carefree and relaxing vacation that you so deserve.
Planning ahead will allow you to take full advantage of a year’s worth of opportunities to save and – if required – earn more money to fund all of the activities you wish to do while on vacation.
Good question. Certainly, not everyone has, but spiraling levels of consumer debt have risen to record levels, indicating that Canadians are spending more money that they don’t have at an alarming rate.
Statistics Canada has released figures for the third quarter of 2014 indicating that Canadian household total credit-market debt, which consists of mortgages, consumer credit (mostly credit cards) and non-mortgage loans rose to 162.6 percent of disposable income. The Bank of Canada has stated that “high consumer debt loads and imbalances in the housing market” are a concern.
In short, people are using credit more today than ever before.
Two generations ago, very few people used credit. Society was based on a “cash on the barrelhead” philosophy that encouraged living within one’s means. This standpoint has been slowly eroded by rising home ownership costs (it is virtually impossible to purchase a home without a mortgage, and the length of time that the average family spends paying for their home gets steadily longer), the availability of consumer credit, and the replacement of “hard” currency with cheques, credit cards, and digital wallets.
It’s easier to access credit today than ever before, and advertising inundates us with constant messages promoting consumption of high-value items, usually on payments. It’s no wonder that people wind up in trouble with credit cards, loans, and lines of credit.
There are a number of reasons for this. The obvious is that people with higher incomes are likely to be better educated about their health, and have better access to nutrition and medical services.
