Tuesday, January 31, 2012

Where Should You Put Your Emergency Fund?

I've written a previous post on the importance of having an emergency fund. With so many people loosing their jobs and all the other unexpected things that can happen. I definitely recommend having some money set aside, outside of retirement savings. I currently have one year worth of expenses in case the unexpected happens. I eventually plan to bring this up to two years worth of expenses, just to provide that extra security.

I like to keep my emergency fund in a liquid account,(this means it's easily accessible) so I can have access to it at anytime. I've thought of putting it in a GIC, but GIC terms are usually for 1 year or longer. If I decide to take it out before the term is up, I will be forced to pay a penalty for breaking my term. No thanks!

I currently have my emergency fund in a TFSA savings accounts at ING Direct. It only pays 2%, which is very low, but I don't really look at this money as an investment, just a place to park it in case of an emergency. I would love to earn more on this money, but when doing my research on different saving accounts, most of them were paying less than 2%, unless I lock it in. If you're earning more than 2% on your emergency fund, please let me know where it is. I would love to check it out and share it with others.


Monday, January 30, 2012

My Ipad Weekend!

So I got an ipad 3G for Christmas, which was a great gift considering I was in desperate need of a new computer. After getting the ipad, the next question was which internet service provider I would go with.

I began my search with Rogers, simply because my cell phone and cable are both with Rogers and I thought I would get a deal considering I was an existing customer. No luck! They have their set prices and told me they don't offer discounts on the iPad plans. That's Rogers loss, not mine.

So I tried Bell and found out their plans are much more flexible. They have a flex plan where you pay $5/m if you use up to 10MB within 30 days. If you go over 10MB you get bumped up to the next plan which is $15/m for 250MB. If you use more than 250MB, you get bumped to the 5GB plan for $35. This is their highest data plan, so anything over 5GB is $0.15/MB. I really like the flexibility of this plan because I can keep track of how much data I am using by checking my usage on my ipad. I also have the option of saving my data usage by switching to wireless if I am in a hot spot or at a friends house that has wireless.

I got a free Bell sim card with my iPad, so all I had to do was contact Bell to set up the Internet. To my surprise, I had the wrong sim card for the flex plan. I had a sim card for Bell's pay as you go plan, not for their flex plan. Which meant I had to go into a Bell store to get a new sim card and have the representatives in the store set me up.

I noticed on Bell's website they were offering a free sim card and free activation if I set up the Internet before January 31. So I went into a Bell store over the weekend and met two really nice young ladies who helped me get set up. I don't know how, but we ended up talking about money and budgeting. The next thing I new the rep was asking me if she should buy a house or not. I gave her my honest opinion on what I would do if I were in her shoes. I ended up recommending three of my favorite books on money. The Total Money Makeover by Dave Ramsey, Thomas Stanley's The Millionaire Next Door and Stop Acting Rich. Of course I had to promote my blog as well. I recommended they check it out for some money tips.

Thursday, January 26, 2012

Visa Debit Cards, I am thinking about getting one!

Visa debit cards are becoming more and more popular in the United States as people are trying to transition away from credit cards. The problem that some people have is they want to make purchases online, rent vehicles, book hotels, book vacations etc. But don’t know how to do these things without using a credit card. Enter Visa Debit Cards. They are a combination of a debit card and a visa card.

A Visa credit card is when your purchases are billed at the end of the billing cycle, and you pay interest charges on the balance if it’s not paid in full. Visa debit card purchases are withdrawn directly from your account, by accessing your available funds. It also acts as a credit card with an expiry date and a security code at the back of the card, just like your credit card. This allows you to make purchases online, book hotels, rent vehicles and so on, the same way you would with your credit card.

Here in Canada, most banks haven't adopted this new card yet. CIBC is the only bank I could find that offers the visa debit cards. I am considering getting one of these visa debit cards, but they are pretty limited. I currently bank with PC and ING, because their banking is free. If I switch to CIBC I am going to have to pay a monthly plan fee, which I do not want to do.

Does anyone have one of these cards, I would love to know what you think?

Wednesday, January 25, 2012

Do You Have Title Insurance?

Title Insurance, should you get it or not? Title Insurance is a type of insurance that most home owners get when they purchase their home. It's quite different from homeowner insurance or life insurance. Title Insurance protects the ownership of your home for as long as you own your home.

Why is Title Insurance important?

There have been many situations where individuals have lost their title due to theft. Here's how it works. Let's say you own your home and your identity was stolen. Identity theft is when one person pretends to be someone else by assuming that person's identity. This is most often done to obtain credit in that person's name. Your identity can be stolen a number of different ways. Some of the ways are a lost wallet with all your identification and your credit cards, unshredded mail, and inputting personal information on a fraudulent website.

Check out Susan's story. What happened to Susan is very unfortunate. Her identity was stolen and her title for her home was stolen without her knowledge. This can happen to anyone. Here are some tips on how to protect yourself:
  • Check your title annually to make sure no changes have been made - a real estate lawyer can check this for you
  • Check your credit bureau annually, you can obtain one free credit report at Equifax or Transunion. Look for any inaccuracies. If you discover you are a victim of identity theft, report it to the authorities immediately and to the credit bureaus to add a fraud alert on your file. Also contact your banks and credit card companies
  • Get Title Insurance with identity theft protection
First Canadian Title is one of the more popular title insurance companies in Canada. The price varies depending on the province, value and type of home. This could cost you anywhere between $350 - $1000.

First Canadian Title's price includes the following:
  • Fraud and forgery – protection against fraudulently registered mortgages against your title
  • Duty to defend – the legal fees associated with resolving insured title issues will be covered
  • Building permit coverage – coverage for renovations completed without a permit that result in a loss
  • Zoning coverage – protection should a property not meet municipal zoning requirements
  • Competing interests – protection in the case of someone claiming an interest in your land; for example, an easement for a driveway or a builder’s lien
  • Problem solving/facilitates closings – First Canadian Title will frequently provide coverage for known defects such as encroachments, delays in registration and zoning violations (these are directly from FCT's website)
Title fraud can be a nightmare to deal with if you're not protected. It really is a shame that we have to think of protecting the title to our home. Whatever happen to just buying a home legally and assuming that the home is yours. I guess those days are over.

Tuesday, January 24, 2012

How I Got Ripped Off TWICE!!

I just absolutely LOVE getting a great deal, which is why I ALWAYS shop around when purchasing anything, especially plane tickets. I am usually pretty good at getting the lowest airfare on trips, but these last two purchases that I made, I have no idea what happened.

I had been planning a trip to Jamaica since last summer because I hadn't been there for years, so I thought why not enjoy some sun over the Christmas holidays. I shopped around for months before booking, I even asked many of my friends who frequently travel to Jamaica which airline I should take. Westjet was the most common and cheapest airline my friends have used. It was also the cheapest when I did my research. After checking from time to time, the price would go up and down. I knew it would be more expensive because I was travelling over the Christmas holiday which is high season, but I still wanted a deal. After seeing the price go from $641 to $700+, I decided to book it at $641. I was feeling really good until a few days later when I went back to check if the price had changed. Why was the price less than $600! I was not happy at all.  I just wasted over $40 dollars. I could have done a lot with that money. Have you ever been on a plane and sat beside someone who paid less than you did for the same flight? If you haven't, the feeling sucks. You feel like you've been ripped off. Actually the feeling is accurate, you have been ripped off!

But wait, it gets worst!

I am planning a trip to Atlanta, GA in February. I did the same thing, shopped around on many sites to see what would be cheaper. It's usually more expensive to fly out of Toronto to Atlanta, the price is $687 as of right now. Flying from Buffalo to Atlanta is $201. I'll say what you're thinking, "wow that's a lot cheaper!" It is a lot cheaper, but I didn't pay $201, I paid $264. The price went down a few days after I purchased my ticket. I'll say it for you! I was ripped off again by $63. The money that I was ripped off could have paid for my car rental in Atlanta.

I obviously need a better strategy for booking flights. I am planning a cruise in the summer and really don't want to pay more than I have to. I will SCREAM if this happens again.

Does anyone have any tips to help me so I don't get ripped off again? PLEASE HELP ME!

Monday, January 23, 2012

My Concerns With RRSP's

Every financial planner that I have ever come across has told me that RRSP's are the place to invest your money. I am not 100% convinced this is where I want to put most of my money, if any.

Robert Kyosaki said "401k is for people who are planning on being poor when they retire." 401k is the U.S version to RRSP's. I have thought about that statement from the moment I started investing in RRSP's. Here's why:

  • With RRSP's you get a tax deduction and possibly a refund when you make a deductible RRSP contribution. Is that really beneficial? I don't expect my tax rate upon withdrawal to be lower than it is right now, which means the refund I receive because of my contribution doesn't mean much if my tax rate stays the same or increases, which it definitely will. An increase in my tax rate would actually cost me more to withdraw in retirement.

  • More and more TFSA's are sounding more attractive. With a TFSA I can contribute $5000 a year tax free. After marriage we can contribute $10,000. Also, if I withdraw any money I don't have to pay taxes on it and I could add my withdrawn amount to my contribution the following year. That's a bonus! With TFSA's however, I can only contribute $5000 a year, and we all know that won't make you rich. I will have to save way more than that using another vehicle.

  • I've thought about real estate and investing heavily in rental properties. Investing in real estate over the long term could bring great rewards. For one, it will provide consistent cash flow, secondly there are many write offs, and lastly the appreciation over time.

So what are your thoughts about RRSP's?

Friday, January 20, 2012

102 Ways To Generate Extra Cash!

Have you ever thought of starting a side business, but had no idea where to start? Try doing something you're already good at and enjoy doing. There are a lot of things you can do. Check out these links with some great ideas to get you thinking.

Thursday, January 19, 2012

How I saved almost $150 on my Rogers bill.

I have been a loyal customer of Rogers for 18 years. That’s when I got my first cell phone. I really haven’t had many complaints over the years. Sometimes the service could be better, but overall I am satisfied, especially now that I saved almost $150.

I currently have the VIP cable package where I pay $67.98 before taxes plus a $1.00 fee they charge.(I really don’t understand the $1.00 fee) I am on a 12 month promotion they’re offering where I get $5.00 off for 12 months, so my total monthly bill is $72.29. My promotion is up on February 1, and Rogers is increasing their rates on March 1. What does this mean for me!

Well my VIP Package is going from $67.98 to $72.04, plus I will no longer get the $5.00 discount that I have been getting.  So my new bill would be $82.53. That’s over a $10 increase! So I decided to call Rogers to see what they could do for me. The first customer service rep that I got over the phone was extremely nice, I was also very polite. Being polite when speaking to customer service reps can really help your situation. No one wants to help a rude person. She offered me 15% off for the next 12 months. My new bill will be $72.04 plus a $1.00 fee plus taxes, totaling $70.15. This is less than what I was paying before. Whoo hoo! This will end up saving me $148.56 over the next year, simply by making one phone call.

Wednesday, January 18, 2012

Million Dollar Club!

So I recently discovered this great group of bloggers who are members of the Million Dollar Club. It's a club that helps you achieve your goal of becoming a millionaire. I have had this goal for many many years and am taking necessary steps to becoming a millionaire. Paying off my line of credit, car loan and mortgage were some of the steps that I have taken. But there's more!

1. I've decided to save my old bi-weekly mortgage payment of $809, actually I'll just round it up to $1000/bi-weekly
2. Max out my TFSA contribution of $5000/per year
3. Start and grow my side business
4. Always spend less than I make
5. Continue to contribute to my companies pension plan

I have much more income coming in this year, which will all go to savings. I will update this as life changes.

How are you planning on becoming a millionaire. Or are you already? Please share your tips!

Tuesday, January 17, 2012

How I Paid Off My Mortgage........How To Stay Motivated - Part 9

Staying motivated to get out of debt is not easy, especially if you have more than 5 years to go. I did a few things to keep me motivated.
Volunteered to help others get out of debt
Since I was on the debt free journey, I knew there had to be others that wanted the same thing. I began teaching young adults at my church about what I was doing to get out of debt. I am sure I learned more from them than they did from me. This really helped me to stay on track.

Set short-term goals
If you have a large amount of money to pay off, setting short-term goals will help. For example, if you have $100,000 to pay off. Set $25,000 goals, this will help to keep you motivated by achieving smaller milestones.

Celebrate your successes
Celebrate when you hit your milestone of $25,000. (previous example) Celebrating will remind you of all the hard work you’ve put in to reach that milestone. Of course you want to have a small celebration until you’ve hit the ultimate goal.

Tell people that will motivate you
Don’t be afraid to tell others of your plan to get out of debt. You will have many who will make fun of you, but try to surround yourself with people who will motivate you. Blogging is a great way to find supporters.

Create a group of debt free fanatics
If you have a group of friends that are on the same path as you, try creating a money group. This will help you all to be accountable with your money. You’ll also have a support group when obstacles come your way or when you feel discouraged.

Listen to the Dave Ramsey show
Dave Ramsey is the host of a popular debt free radio show called the Dave Ramsey show. It’s a great show to help keep you motivated. I listen to this show every day. I never get tired of hearing people’s lives change and hearing people yell “I AM DEBT FREE”!

This will be my last post on the “How I Paid Off My Mortgage” series. I hope you found some tips that will help you achieve your financial goals and help you pay off your mortgage. If you have any questions for me, feel free to send me an email at callmewhatyouwantevencheap@gmail.com

Monday, January 16, 2012

How I Paid Off My Mortgage........Rental Property - Part 8

In 2006 I decided to purchase my first rental property. After 6 years of having a mortgage, I thought buying a second property wouldn't be a bad idea, besides if I could get someone to pay my mortgage, that would be a bonus.

I had already done a lot of research on properties from my first property, so now I had to do research on rental properties and determine how much I could afford. I began by taking a hard look at my finances to see how much of a mortgage I could afford, because I knew that I would be making this purchase by myself. I wanted to make sure that I could afford two mortgages on my paycheck and live at the same time. Although, I would be receiving rent from my tenant, I ran a few worst case scenarios in my head, such as what if the tenant gets sick and is unable to work and not pay his rent, or what if hours get reduced at his job or what if he looses his job. I would still have to pay the mortgage regardless of my tenants situation. I knew my bank would not care if my tenant lost his job.

Something else that crossed my mind at the time was maintenance fees or condo fees. These are fees to maintain the building, these fees typically go up every year. My thought was I could increase the tenants rent every year to make up the difference. Taxes also need to be paid, so this was factored in as well.

Once I ran my numbers through a mortgage calculator, I did a pre-approval with my bank to get an accurate number of how much I could afford. Once I was approved I began my search online. I was quite comfortable with condos by this point, so that is what I decided to search for. I also read that it's easier to rent out a condo than a house.

I hired a realtor shortly after my online search. My realtor was a referral from a trusted friend. Friends and family are often the best referral sources. I searched for new condos versus an older one. My owner occupied condo was 10 years old when I purchased it and I had to replace several items in my condo a few years after I purchased, such as my dishwasher, fridge, stove and toilet. I didn't want to run into any of those problems again, so I purchased brand new.

After I found a condo that I liked I got in contact with my lawyer and purchased it with no regrets. My next hurdle was finding a tenant. I had a friend who recently purchased a condo and hired a rental management company to manage her property for her. I contacted Del Rental Management company. They found a tenant a few months later and my tenant moved in. Del Rental Management charged me one month's rent and 6% of the monthly rent as their fee. They are an excellent company to work with and I would highly recommend them if you are looking for a rental management company.

In 2010 I decided to sell my rental property because I wanted to get out of debt. Although, I didn't make a lot of money on my sale, it was worth getting out of debt. The money I made on the sale of my rental condo, I put towards my owner occupied condo. This didn't pay it off completely but it helped to pay it down.

A few rental property tips
  • Some condos have rental restrictions, do research to make sure there aren't any
  • Check vacancy rates if buying a resale, this will give you an idea of how successful you will be at attracting tenants
  • Know the average rent in the area. You need to charge enough rent to at least cover all your expenses

Thursday, January 12, 2012

How I Paid Off My Mortgage........ So You've Moved In, Now What! - Part 7

When I first moved into my condo I was really excited. The first thing I wanted to do was paint, I wanted to customize everything to my liking. Be careful of the "I want everything right now" syndrome. It is extremely tempting to buy everything all at once, especially with all of the commercials advertising new mattresses, sofa's, dining tables, and bedroom sets. Consider buying what you need now, versus what you want. Do you really need a new sofa or bedroom set. Maybe the one you have can last another couple of years. If you do need new furniture, please be very careful with those don't pay for one year deals. Usually these companies allow you to pay for the item within one year of the purchase date without charging any interest. However, if you don't pay for the item within one year and decide to pay for it a day late, you will pay all that interest that you incurred within the year. So please read the fine print.

Don't forget to change your address with the following:

Utilities & Services

Financial & Personal Products
Credit Card Companies
Department Store Credit Cards
Insurance Companies (health, home/life, auto)
Professional Memberships

Government Services
Driver's License
Post Office
Income Tax/CRA
Unemployment Insurance


After you've updated your address, check your finances. You may need to open new accounts, transfer funds and order new cheques.

Wednesday, January 11, 2012

How I Paid Off My Mortgage........Payment Frequencies & Pre-Payment Options - Part 6

Payment Frequencies
Most banks will offer you several payment frequency options such as weekly, bi-weekly, semi-monthly and monthly.
· Weekly - 52 payments per/yr
· Bi-weekly - 26 payments per/yr
· Semi-monthly - 24 payments per/yr
· Monthly - 12 payments per/yr
When we had a mortgage we opted for the bi-weekly option, simply because I thought it would be easier to make my mortgage payment on the same day I got paid every two weeks. It also helped to keep me organized with my finances. Making bi-weekly payments means that you’ll make an additional two payments per year. This will cut down on the amount of interest that you will pay and shave down some years on your amortization.
Pre-Payment Options
I really took advantage of pre-payment options when I had a mortgage, in fact I looked for which banks at the time offered the highest pre-payment options. Pre-payment options are when a bank allows you to increase your payments and make additional payments on your mortgage through out the life of your mortgage. You may have seen or heard of 20+20 or 25/25. The first 20 or 25 means that you can increase your mortgage payment up to 20 or 25% per year. The second 20 or 25 means that you can make an additional mortgage payment up to 20 or 25% per year.  These numbers vary depending on the bank. There are also restrictions with pre-payment options with some banks, so please do your research beforehand.
Here’s how I took advantage of pre-payment options. The bank that I was with offered 20 + 20, so every time I would get a promotion or a raise that was high enough, I would increase my mortgage payment that year or the following year. I then made it a top priority to make additional mortgage payments every few months. Once I got rid of all my credit card, line of credit and loan debt, it freed up a lot of extra cash for me to make additional payments on my mortgage. Those payments that I use to make on my credit card and loan debt, I put towards making additional payments on my mortgage.  Any bonuses I would get at work, my income tax returns and cash gifts would all go towards my mortgage. I became really intense about getting rid of my mortgage. I cut all unnecessary spending to find that extra money.
When you make an additional payment on your mortgage, it’s a bit different from making a regular mortgage payment. A regular mortgage payment is split in several ways. A portion of your payment goes towards interest. This may be a huge portion if you’ve just started your mortgage and if your interest rate is high. The next portion goes towards your principal. If your bank is paying your property tax for you, then another portion of your payment will go towards your property taxes. To find out exactly how much of your payment is interest and principal, you can order an Amortization Schedule from your bank. Keep in mind that the higher your mortgage is, the more of your payment will go towards interest versus principal. This decreases over time as you pay down your principal balance.
An additional mortgage payment only gets applied to your principal balance and not interest. Making additional mortgage payments can reduce your mortgage significantly over time, causing you to pay it off much sooner.
Blend & Extend
This is another option I used to pay my mortgage off sooner. Not every bank offers blend and extend, so check out which banks do. I had my mortgage with BMO and they have this option. Blend and Extend allows you to blend your current rate and term with an existing rate and term. I did this when interest rates went down, so I could take advantage of the lower interest rate. The bank would blend my rate with their current rate, which would give me a lower rate than I was paying. When doing a blend and extend, your mortgage payment will often be reduced because your new interest rate will be lower. I recommend keeping your payment as is, so more of your payment will go towards your principal and less to interest, which will pay down your mortgage much faster.

Monday, January 9, 2012

How I Paid Off My Mortgage........House Or Condo - Part 5

Once you know how much of a mortgage you qualify for, the fun begins!

Determining if a house or a condo is right for you really depends on what you are looking for in a home and how much you could afford. If you travel a lot and don't have time for the day to day maintenance that a house requires, such as snow removal, lawn care, leaks, roof repairs, furnace replacements, etc. Then a condo might be best for you. You may be single and don't need or want a lot of space, consider a condo. Here are some pros and cons of condo life.

  • Wide price range
  • Generally cheaper than a house (depending on location)
  • Some condos have 24 hour security
  • Less maintenance than a house
  • Built-in amenities, such as gyms, pools, party rooms, bowling alley's, tennis and squash courts
  • Free parking and locker rooms for storage
  • Monthly condo fees
  • You may be paying for what you don't use
  • Pet restrictions
  • Many rules and regulations
  • Less control
  • Less privacy
Another piece of advice about condos. Check out the financial situation of the condo you plan to buy. You don't want any surprises after you move in that could cost you. Also, find out how many units are being rented in the condo versus owner occupied. This can cause problems because tenants generally don't treat a property they are renting as well as if they owned it.

Buying a house has it's fair share of pros and cons as well. If you have a large family, require a lot of space or maybe you have several animals that need a big yard to run around in. Then a house may be best for you. Location also comes into play when determining what you are looking for. Do you want to live in the city or in the country.

I have attached a few links that should make your search a little easier.

Condominium Buyers Guide Home
Hunting Comparison Worksheet

Friday, January 6, 2012

How I Paid Off My Mortgage........How Much Can You Afford - Part 4

Trying to determine how much we could afford was quite hard for me. When we were renting we lived in a town house, it wasn't big by any means, but it had enough room. So when we started our home search, we started looking at houses. I was so excited that I would have much more space then we did in our town house. To my surprise, we soon realized that a house was over our budget for where we wanted to live, so we began our search for a condo. We looked at many condos before we made our decision. I am religious, so I did a lot of praying as well, to double check that I was making the right decision. When we walked into this condo that we live in now, it just felt right, it felt like home. So we took that leap of faith and purchased.

There are many calculators available online, where you can key in your numbers to determine how much of a mortgage you can afford. You can check out the "How much can I afford calculator" on BMO's website. I would also recommend doing a pre-approval with your local bank to determine exactly how much you qualify for. The calculator will give you a rough estimate, where as a pre-approval with a bank will help you determine exactly how much you qualify for, based on your credit, income, assets and liabilities. If your down payment is less than 20%, you will require further approval from one of the mortgage loan insurance companies in Canada. CMHC, Genworth, or Canada Guaranty. These mortgage insurance companies protect mortgage lenders against defaults. Keep in mind that their qualification criteria may be different from your banks. Your mortgage lender can advise you on their qualifications.

Thursday, January 5, 2012

How I Paid Off My Mortgage........Interest Rates, Terms and Amortizations - Part 3

When it comes to interest rates and terms it's important to know that you can negotiate interest rates. When you see a rate on a banks website, that is called their posted rate. This rate is often set high, so they have room to negotiate. Shop around with different banks, credit unions and other companies that offer mortgages, to see what's best for you. Never get pressured into buying a home or obtaining a mortgage. This is one of the largest purchases you will ever make, so take your time and do your homework.

After you've determined wheather you will qualify for a conventional mortgage, a high ratio, or a HOLC/HELOC, you will need to decide what term is best for you. When I purchased my first home, I put 5% down,(high ratio mortgage) amortized my mortgage over 25 years and took a 5 year fixed rate term.

Mortgage Term
A mortgage term is the length of time your mortgage contract is in effect. It is also how long you are guaranteed a particular interest rate. At the end of your mortgage term you can renegotiate your interest rate.

This is the life of the mortgage. Amortizations are usually 25 years or 30 years, meaning this is the amount of time it will take to pay off the mortgage.

Open Mortgages
An open mortgage can be paid off anytime without a penalty. Most times you can also make additional payments on your mortgage throughout the term without a penalty. Open mortgages usually have higher rates than closed mortgages. The rates are higher because there are more flexibilities when it comes to paying off your mortgage early, or leaving one bank for another.

Closed Mortgages
Closed mortgages have lower interests rates than open mortgages, but are not as flexible. You cannot pay off your mortgage early without incurring a penalty with a closed mortgage. You can however, take advantage of any pre-payment options your bank offers in a closed mortgage.

Convertible Mortgages
This mortgage is similar to the closed mortgage with the added benefit of changing terms without paying a penalty. (This mortgage varies amoung banks)