New Couples and Money

As published in the January/February 2017 issue of Balance, a Manitoba Teachers’ Society publication.

Balance Jan Feb 2017 - New Couples and Money

You’ve just moved in with your current love or maybe you’ve just got engaged. This is a happy, exciting time in your life. The two of you may have discussed where to go on a honeymoon, whether or not to have children, how many or where your dream house will be. But have you had a conversation with each other with regard to your finances? Everything listed above costs money and both of you need to be honest with each other regarding your finances in order to have those things.

As you begin a new, permanent relationship, it is time to set your financial goals as a couple and to be honest about your money values.

Continue reading “New Couples and Money”

Financial Literacy and Education Key to Good Credit

Canadians are highly-educated in areas like academics and trades. But one of the most important areas that is often lacking is their degree of financial literacy.

Learning how to manage debt and build a solid credit rating requires education. Creditaid has developed a financial literacy program to help Canadians Build or rebuild their credit, Learn valuable budgeting skills that will guide them into a future of financial health, and Save money to spend on life’s most important things.

BuildLearnSave-LogoBuild Learn Save is an 18 month credit building program designed to educate participants about budgeting, credit, and debt while their credit is being re-established in order that they can be in a position of financial health upon program completion.

Building a healthy credit rating is not something that we commonly learn in school. Many people do not understand the repercussions of a poor credit rating and how it can affect many aspects of their lives. For instance, a $20,000 car financed over 7 years will result in approximately $350 in payments for a person with a good credit rating but $850 with a poor one.

This difference in cost is only one example of the kind of problems faced by those with poor credit. Renting an apartment, buying a car or house, using credit cards to buy online or guarantee a hotel room, car rental, or airplane seat—all are affected by a poor credit rating.

Financial literacy is a way for Canadians to find their way out of debt and build a solid credit rating that will stand them in good stead for their future.

Call Creditaid to find out more about the Build Learn Save program. Our friendly and understanding staff will let you know if your situation fits the bill and if we can help you to get started on the road to a healthy financial future.

Creditaid Hosted the Jewel 100.5 FM Office Tour This Week!

Jewel 100.5 and Creditaid

All of us at Creditaid were very happy to welcome Dan and Leslie Michaels from local radio station Jewel 100.5 FM to our office this past Wednesday. We always love to have visitors, and even more so when they come bearing coffee and doughnuts!

Our staff was very happy to be this week’s winner of Jewel 100.5 FM’s “The Office Tour Contest“. With coffee, doughnuts, good conversation, and lots of laughter, we think Dan & Leslie might have wanted to stay all day! They described their experience in the following day’s broadcast, click below to listen:

Thanks to Jewel 100.5 FM for sending over such great company and tasty treats, it made our week! If you’re looking to brighten up your work week, enter their contest, because you never know when it will happen to you.

And if you’re looking for help to manage your debt, rebuild your credit, or just find some financial clarity in your life, call Creditaid today – we can help.

Online Survey Finds Half of Respondents are within $200 of Being Unable to Pay Bills

If you are struggling to make all of your payments or are already unable to make your required monthly payments, Creditaid can help. Whether you need to rebuild your credit, undergo credit counselling, tackle your credit card debt, reassess your finances following a divorce or a move, or any other challenge that life brings – we’ve seen it all and we have a program that will suit your needs.

Reposted from the Winnipeg Free Press online edition February 16, 2016.

CALGARY – A new poll suggests nearly half of Canadians surveyed last month are within $200 per month of being unable to pay for their bills and make their debt payments.

The Ipsos Reid survey also found about one-quarter of the 1,582 people who responded to the poll were already unable to cover their bills and debt payments.

The online poll was done between Jan. 27 and Jan. 29 for MNP Debt, which provides licensed trustee services in six provinces, from Quebec to British Columbia.

MNP says the poll found that 31 per cent of respondents said any increase in interest rates could move them towards bankruptcy.

Ipsos Reid conducted the poll about a week after the Parliamentary Budget Office issued a report on Jan. 19 that said Canada has seen the largest increase in household debt relative to income of any G7 country since 2000.

The survey also followed Bank of Canada’s decision to keep a key lending rate at a historically low level of 0.5 per cent on Jan. 20, as the central bank lowered economic growth estimates for 2015 and 2016.

The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error as they are not a random sample and therefore are not necessarily representative of the whole population.

1 in 5 Manitobans Feel Little Control Over Their Financial Situation: Manitoba Financial Literacy Forum Survey

Creditaid is a proud participating member of the Manitoba Financial Literacy Forum, currently comprised of more than 40 active members. The following news release and Executive Summary of the survey can also be found on their website.

Winnipeg, Manitoba (November 19, 2015) – One in five Manitobans say that there is little they can do to control their financial situation, according to a new survey from the Manitoba Financial Literacy Forum.

The survey, conducted by Prairie Research Associates, also revealed:

• 15 per cent of Manitobans believe that they would put off dealing with their money problems
• 11 per cent say they do not know who or where to turn to solve a financial problem
• 8 per cent feel that they do not know how to make good financial decisions

The results indicated that half of Manitobans do not consider themselves to be fully confident in their financial behavior, with many people desiring access to information and tools that can help them understand their finances, track their spending, create household budgets and improve their ability to work with a financial professional.

These findings are being used by the Manitoba Financial Literacy Forum to create a benchmark for the current state of financial literacy in the province. This is the first survey of its kind to focus exclusively on Manitoba, and its results will inform the Forum’s future programming and projects.

“Learning how Manitobans understand their own financial situation and behavior is an important first step for the Forum,” says Cynthia Duncan, co-chair of the Manitoba Financial Literacy Forum. “We’re finding that many people want to improve their financial skills, and we’re committed to connecting them to the resources that can set them up for lifelong success.”

Manitobans can learn more about money management by visiting ManitobaFinancialLiteracy.com. The website, operated by the Manitoba Financial Literacy Forum, maintains a large collection of free tools and information to help guide people toward making responsible financial decisions at every stage of their lives.

The Manitoba Financial Literacy Forum is one of the province’s largest not-for-profit coalitions of organizations and individuals working to promote financial education and skills to Manitobans, represented by stakeholders from the public, private, financial services, credit counselling, and voluntary sectors, as well as individuals, and families and labour organizations.

The survey results cited are compiled from a random sample of 600 Manitobans 18 years of age and over between April 9 to 29, 2015. The results were weighted to better reflect the population. A probability sample of this size would yield results accurate to ± 4.1%, 19 times out of 20.

Media Contact Information:
Cynthia Duncan
Co-chair, Manitoba Financial Literacy Forum
204-925-7420, ext 7405
info@manitobafinancialliteracy.com

Help Your Debt, Help Your Health

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”.

Help-your-debt-and-healthThere 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.

Hosting a BBQ on a Budget – How to Survive Summer Parties Without Breaking the Bank

party-table

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
barbeque-skewers-party-on-a-budgetIf 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.

Second Time Around

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.

Brian Denysuik is a local credit counsellor and a registered insolvency counsellor at the for-profit debt-management agency Creditaid in Winnipeg.

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

Do I Need Credit Counselling?

Do-I-Need-Credit-Counselling-Apr-1

Isn’t everyone in debt?

Well, in 21st Century Canada, it might seem that way. Canadians owe a greater portion of their earnings to creditors today than ever before, and even with low interest rates are making steep payments every month just to maintain their debts. When seemingly everyone owes money, how do you know it’s time to see a credit counsellor?

First and foremost, if you don’t know your financial situation, you need to see a counsellor. It’s often easier to hide your head in the sand when it comes to debt problems, but it’s certainly not a long-term solution. If you’re ignoring a debt problem, it’s getting worse.

If one or more of your debts has progressed to collections, and you aren’t able to make the payment, you have a debt problem.

If you are borrowing from one source of credit to pay another, you need to see a counsellor.

If your credit payments (not including your mortgage) exceed 20% of your net income, you are in danger.

If you’re not able to save for emergencies, or put money away for retirement, you could benefit from credit counselling.

If you aren’t able to sleep comfortably at night, secure in the knowledge that your household spending is under control and you have a plan to pay your overall debt load, then you need to contact Creditaid.

Creditaid is a licensed and bonded credit counselling agency that has been proudly serving Winnipeg since 1992. If any of the above scenarios apply to your life, contact us today for a free appointment with a credit counsellor, to help you take stock of your situation and access some of the many tools at our disposal to help you on your journey to financial security.