Friday, September 30, 2011

Do You Think It’s Too Late To Start Saving For Retirement?

It’s actually never too late to start saving. The sooner you begin to save the better off you’ll be in the long run. Here are a few things to keep in mind when it comes to savings:

1. Know where you currently stand. How much savings do you currently have, how much savings do you want. Try to determine how much money you think you will need to retire. Keep in mind; you will no longer be working, so think about the type of lifestyle you want to have when you retire so you don't end up like the couple in the picture above. Lol!

2. Do research on different types of saving options. You may want to consider RRSP’s, GIC’s, Mutual funds, TFSA's etc. Consider speaking with a financial planner.
3. Set up an automatic savings program. This is where you have a set amount coming out of your bank account weekly, bi-weekly or monthly. You can choose a day in the month that is convenient for you.

      4. Check out your company’s benefits. Some companies have stock options, or RRSP matching options. Take advantage of any matching options that your company provides.
      5. Take advantage of compound interest. Compound interest is when you earn money on your interest. For example….
Let’s say you invested $1000 at 10% compound interest, after your first month you would make $100. (10% of $1000 = $100)
If you leave the money in the investment and don’t withdraw it you will have $1100 ($1000+$100)
After the second month, you will earn 10% on $1100 bringing your balance to $1210, (10% of $1100 = $110) so now your principal is $1210. As you can see, you can continue to earn money on your interest as long as you don’t withdraw from the investment.

Tuesday, September 20, 2011

4 Things That Are Ruining Your Credit!

1.   Making late payments
      Making your payments on time is key to having good credit. The more late payments you have the lower your credit score will be.  If the due date doesn’t work for you, contact your bank and ask to have the due date changed to a more convenient date. Every month you make a late payment, the creditor reports this to Equifax and Transunion. Once they report this to the credit bureau, any creditor that you apply for credit with can see that you made late payments.

2.   Maxing out your credit cards
      Once you use more than 30 - 35% of your available credit, your credit score will start to go down. For example, if you have a credit card with a $10,000 limit, you want to keep the balance owing on that card under $3500. Maxed out credit means that you are a high utilizer of credit, which is not a good thing to a bank.

3.   Lots of inquiries
      An inquiry is when you apply for credit. Every time you apply for a credit card, a loan, a line of credit or a mortgage, the bank reports this to the credit bureau as an inquiry, meaning that you inquired at a particular bank. To the lender, if you have many inquiries, you are considered a credit seeker. Too many inquiries will lower your score. Try not to apply for too many credit cards and loans within a year.

4.   Skipping a payment
      Never skip payments. Let me repeat that again. Never skip a payment. The objective should be to pay it off!  If you are unable to make a payment one month, contact your lender and try to work out some sort of payment arrangement. Skipping payments will eventually cause your account to go to collections. This will hurt your credit score over the long run. Collection items remain on the credit bureau for 7 years.

Wednesday, September 14, 2011

Have You Checked Your Credit Report Lately?

Did you know that identity theft is one of the fastest growing crimes in the country? Well it is! The Better Business Bureau of Canada reported that it costs consumers, banks, retailers and other businesses $2.5 billion a year and this number is continuing to grow.

It’s vital that you check your credit report. It’s recommended by Equifax that you check your credit report at least twice a year or every few months if you’ve ever been a victim of identity theft. This will allow you to catch any inaccuracies sooner than later. You can obtain one free credit report per year.

When you check your credit report, look for the following things:

  • Check to make sure your name and address are correct 
  • Check that your S.I.N is correct if it’s provided 
  • Check to make sure all credit cards, loans, and mortgages are yours
  • Check the open and closed dates of each item to ensure it's correct
  • Look for any credit that may be on your report that does not belong to you
  • Check the inquires against your own records
Inquiries are when a bank or a business checks your credit report to see if you are credit worthy. Often this happens if you go into a bank and apply for credit, or a landlord may check your credit if you are trying to rent an apartment.

There are hard inquiries and soft inquiries. A hard inquiry is when you have applied for some form of credit or you have applied to rent an apartment. A hard inquiry affects your beacon score. A soft inquiry on the other hand does not affect your beacon score. It’s when a bank or an insurance company checks your credit report to see if you qualify for a pre-approved credit card or line of credit. You may also see a soft inquiry from Canada Mortgage & Housing Corporation, Genworth or Canada Guranty. These are mortgage insurance companies that check your credit report if you’ve ever applied for a mortgage and put less than 20% down payment.

If you notice something on your credit report that should not be there, contact either Equifax or Transunion immediately, depending on which report you noticed the inaccuracy.  

Monday, September 12, 2011

Did You Know That Millionaire Men Shop At Wal-Mart?

I once heard a saying that said you can act rich or actually become rich. I think it’s so interesting that many who look rich are actually poor and many who look poor are actually rich. Thomas Stanley did a study on millionaires in his book “Stop Acting Rich.” Some interesting statistics came from his research. Below are the top 10 stores millionaire men shop at.
  1. Nordstrom (38.6%)
  2. Macy’s (27.3%)
  3. Kohl’s (21.7%)
  4. Target (21.76%)
  5. Costco (21.3)
  6. Dillard’s (20.9%)
  7. Brooks Brother’s (19.3%)
  8. Gap (15.9%)
  9. Wal-Mart (15.5%)
  10. T.J. Maxx (14.7%)
Are you surprised?

Saturday, September 10, 2011

Do You Have A Rainy Day Fund?

I've heard several financial experts say you should have between 3-6 months or 6-8 months of expenses in a liquid account in case of an emergency. After seeing several friends loose their jobs for a longer time than that. I now think 12 months is a solid rainy day fund, especially if you're single or the only breadwinner in your house. The more of a rainy day fund you have the better, because once your income is gone, there is no money coming in at all until you find another way to bring in some cash.

I know it may take a long time to save 12 months worth of expenses, but you could start small and aim to have 12 months. The key is to have some money saved for a rainy day versus having none at all. We never know when that rainy day is going to hit us, and it will eliminate a lot of stress if you have extra money versus having to rack up those credit cards to pay your bills.