Are You Still Lending The Government Money?

I have been lending the government money for years. I don't mean through bonds either, I am talking about getting a tax refund every year. I've always liked the idea of knowing that I would be getting some extra cash every year from the government. It was a nice feeling! Knowledge is truly powerful if it's used.

I was listening to Dave Ramsey one afternoon and he was taking to a caller that was getting a few thousand dollars in a tax refund. He then explained how he was actually lending the government money without earning any interest. That hit me like a ton of bricks! I thought how crazy is that to lend the government money and then get excited when they give you back your money without any interest. Who does that! Obviously people who are clueless, which I was. This is why I just had to share this!

If you're employed with a company and you're getting a refund. It means they are taking too much money out of your paycheck in taxes, and the government is just giving you back your money because you gave them too much. You may be thinking you contribute to RRSP's and you donate money to charitable foundations, so that's why you're getting a refund. I do both of those things and I still get back more than I should.

There's a form called T1213 which is a form to request to reduce tax deductions at source. Once you fill out this form, CRA will let you know if your taxes can be reduced at source or not. In my case, I was paying too much in taxes and CRA told me exactly how much I can reduce my taxes. I then sent the letter that CRA sent to me to my HR department and my taxes were reduced immediately.

This form has to be completed every year. I sent my T1213 form to CRA last October to give them enough time to send it back to me. I received the letter from CRA in November and passed it on to my HR department. They were able to process my form in time for January. I am now paying less in taxes! Whoo hoo!

Why Is The Milk Always At The Back Of The Store?

I remember years ago when I use to ask why the milk, eggs and butter always seem to be at the back of the grocery store. It all became clear my first year in College when I was in my marketing class and the professor explained product placement.

The milk, eggs, and butter are strategically placed at the back of the store because those are items that most people purchase. Usually on your way to the back of the store, you'll throw some items in your cart, then on your way back you'll probably throw more items in your cart. If the milk, eggs, and butter were at the front of the store, you probably wouldn't pick up those other items.

I did a little experiment a few years ago. I was trying to test the theory of how many more items I would purchase if I went to the grocery store while I was hungry and without a list. Versus if I went grocery shopping on a full stomach and with a list. It was very interesting. When I went hungry and without a list, I spent at least $10 more on snacks and purchased items I wouldn't normally purchase. When I went with a full stomach and a list, I was not driven by my stomach and I had direction because I had my list. What a money saver to go on a full stomach and with a list.

Check out this great video on Grocery Store secrets.

I never thought about the music that is played in grocery stores and the impact it has on my purchases. They have actually figured out what songs to play to keep us in the grocery store as long as possible so we buy more food. Wow!

They also use this strategy in retail stores. The stores I shop at don't do such a great job. I have actually left stores because the music was either too loud or just awful.

6 Gifts For $20!

You read right, I purchased 6 gifts for $20 yesterday. I am going to Atlanta in a couple of weeks to visit some family friends, and have been thinking of some gift ideas. I asked a couple of friends for ideas and they were no help at all.

So I went shopping yesterday to look for some gifts. I had no idea what I was looking for, I just wanted to get out there to see what I could find. This type of shopping is so not like me. I am a list girl. I always bring a list to avoid impulse buying. The only thing on this list was the names of the people I wanted to buy gifts for. I really didn't want to spend more than $30, so I knew I had to find some serious bargains to make this happen.

I found these cute beach bags that were 3 for $10. I was shocked to find these cute bags for such a cheap price. It just so happened that I needed three gifts for three girls, so the deal was just perfect. I know they'll love it!

I then found four different sweaters that I liked. I only needed three, but I couldn't make up my mind. I brought all four sweaters to the cashier. By the time it was my turn to cash out I decided on two. One was originally priced at $20 and was marked down to $3.50, the other sweater was priced at $19 and marked down to $2.50. I asked the cashier for her opinion on which of the two other sweaters I should buy. One was priced at $2.50 and the other was $5.00. The cashier told me if I purchase both sweaters she would give me 50% off of the $5.00 sweater. I decided to only purchase one sweater which was $5.00. I still received the 50% discount, paying only $2.50. So my grand total was $20.90 including taxes.

That's what I call a deal!

3 Tips To Get Rid Of Your Debt!

Are you still paying for those Christmas gifts? If so here are a few tips to pay off all of your debt.

1. First things first, stop using your credit cards. Cut them up, throw them away, flush them down the toilet. Do whatever you have to do to stop using them. You won't be able to pay off your credit card if you keep spending on it.

2. Call all your creditors to try to reduce your interest rates. This is much easier to do with banks versus department store cards. Do a little research to find out what promotions other banks are offering and then call your bank and ask them to match or beat what you've seen. Also find out about any extras that are on your card that may be causing your interest rate to be higher. If you have any annual fees get rid of them.

3. List all of your debt except your mortgage from smallest to largest balance. Make minimum payments on all your debt and put any extra money you can find onto the smallest balance. Once you've paid off the smallest balance, take the minimum payment and the extra money from the first debt, and apply that to the second smallest balance until that's paid off. Now take the money you were putting towards the second smallest balance and apply that to the third smallest balance and so on. Notice that every time you finish paying off one debt, you are applying more money to the next smallest balance because you are taking the previous minimum payments, plus the extra money and applying that plus the minimum payment you were already making to the next smallest balance. This will help you pay off your debt faster than you think. I've done it and it works.

The reason why I suggest paying off the smallest balance first, rather than the highest interest rate is because when you pay off the smaller balance, you will feel great that you paid off a credit card or a loan in full. This will motivate you to keep on going. It's much easier to pay off a $2000 credit card, than it is to pay off a $10,000 card. Besides you'll get to that $10,000 in no time with this approach.

If you are having a difficult time finding extra money to throw onto your loan and credit cards, try this exercise. Make a list of everything that you spend for one whole month. I mean everything, if you spend five cents write it down. Don't cheat or the exercise won't work. After the month is over review your list. Look for items on the list that you didn't need to buy. You'll probably notice some impulse buying, or if you're like some people that do this exercise, they catch themselves buying things they don't need because they remember they have to write it down, and don't even bother with the purchase. The extra money comes from not buying some of the items you find on the list.

Cashing in on the American Dream: How To Retire at 35 by Paul Terhorst (Book Review)

I never quite thought of retiring at the age of 35, I am 32 now, so that would only give me 3 more years to beef up my savings. I've heard of people retiring on a minimal income and moving to a place where cost of living is much cheaper than Toronto, where the average house price is almost $500k. Moving to a cheaper city is definitely a must if I plan to retire early.

I found this great review over at my money blog on how to retire at 35. People are actually doing this, they're retiring at a very early age rather than waiting until they're 65. Or even later depending on their financial situation. They are reducing their expenses and living way below their means. Imagine the freedom of retiring in your 30's. Most people are just getting comfortable in their career and not even thinking about retirement. This review has completely changed my mindset. I am so use to the word retirement being associated with the age 65. My mind has been conditioned to think that you can only retire when you're much older. But the truth is you can retire whenever you want.

Being in the banking industry I hear about people working well into their 70's. Usually because they've mismanaged their money and need to work to pay off debt.

At what age could you comfortably retire at?

Cashing in on the American Dream: How To Retire at 35 by Paul Terhorst (Book Review)

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.

Thanks

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.