Industry News….

Pay Down The Mortgage or Top Up RRSP’s?

It’s a question many people ask themselves as tax season approaches: Pay down the mortgage or top up the RRSP?

Both are investments in the future – with mortgage pay-downs slashing future interest costs and registered retirement savings plans compounding your stash of cash.

Yes, you can do both, but that’s not necessarily the right solution for everyone.

The answer, experts say, depends on how much debt you’re carrying – not just in a mortgage, but on a car, credit cards and any other payments.

Click here for the full article in The Star.

Recovering From Debt

Working through multiple debts can seem like slogging through quicksand. 

We’re told to line up our debts from highest interest rate to lowest. Tackle from the top and work our way down. But what if the card at the top also happens to have the biggest balance? 

A typical example may look like this: You’ve got your maxed-out HBC card, because of the holidays, sitting at 29.9%. Summer travel costs linger around at 19.9% on your Visa. And there’s that growing balance from meals out and mindless shopping on the card you use most often, your MasterCard, at 11.9%. 

I was looking at multiple debts similar to this, and I became quickly discouraged by the lack of progress, and overwhelmed by the string of debts still waiting in line. So, I tried the opposite approach. Instead of interest rates, I focused on balance – reordering debts from lowest balance to highest. I still paid the minimum payments on all outstanding loans, but the one with the smallest balance got everything else I could spare. When it was eliminated, I moved on to the second-lowest balance. I worked up the ladder instead of down – and was debt-free in slightly more than a year. 

Click here for more in the Globe and Mail.

Using RRSP’s For Your Down Payment

For couples like Jodi and Julian Echakowitz in Toronto, getting the down payment to purchase their first home was a matter of using their RRSP funds to their best advantage.

In their case, it was withdrawing funds from their registered retirement savings plan to take part in the federal government’s Home Buyers’ Plan. Ten years later, Jodi says it was definitely the right decision. “We took money out of both our RRSP accounts so we could put a larger deposit down and avoid the mortgage insurance requirement,” she says.

This not only saved them the premium fees for insuring a high-ratio mortgage, but it also gave them the breathing room needed to get into a comfortable mortgage and reinstate their RRSP contributions over time.

The Home Buyers’ Plan is a popular investment vehicle because it allows eligible individuals to remove funds from their RRSP on a tax-free basis to purchase a first-time home, up to a limit of $25,000 per person. That means a couple could withdraw as much as $50,000 to put toward a home purchase.

Click here for more from the Times Colonist.

Industry News…..

It’s not just personal debt that has climbed to record levels. The companies offering to help you with massive debt are also proliferating.

Call them debt-settlement agencies, debt-solution providers or whatever you want. Their names are plastered on bus shelters and newspapers, and call out over the airwaves and the Internet. Unregulated, it’s almost impossible to get a true sense of how big the industry has become but, based on the amount of advertising dollars being spent, it’s growing.

“This was a nonexistent category and companies have sprung up. Companies and services spring up because there is a consumer need and you have to tell consumers you are offering the service,” says Sunni Boot, chief executive of Zenithoptimedia, adding the top advertiser in the category is estimated to have had a 10-fold increase in spending over the past year.The debt-to-income ratio has reached a record high of 148% in the third quarter in Canada, Statistics Canada says, putting Canada ahead of the US. Consumers are looking for answers to get out of their credit mess.

Click here for the full Financial Post story.

Everyone says we should be saving more money. But what’s the point? 

You don’t need a calculator to figure out that, with inflation in Ontario at 3.4% and  banks at best offering 2% interest, your nest egg could actually be shrinking.

So what’s a saver to do? Is there a way to rebalance the scale so you can build wealth rather watch it bleed away?

It’s doable, experts say. But it takes a strategy, discipline and a determination to make your money work for you.

Click here for the full article in The Star.

Making changes in a New Year is an old topic that is reborn every January. While some tips still hold water, there are many inspiring and positive strategies toward seeing your finances in a new way. 

These habits are not only possible to implement at any income bracket, but they also make sense. (For more, see Financial New Year’s Resolutions You Can Keep.) 

Click here to read the Globe and Mail article.

Some things really do come for free, including your credit report. 

I swear, I’m not making this up. I’ve done it myself and all it cost me was a stamp. 

I have written twice recently about the importance of regularly checking your credit report for signs of fraud. Credit reports are available free of charge from two major Canadian credit bureaus, TransUnion and Equifax. 

Each time I’ve put “free” and “credit report” in the same sentence, I’ve been flooded with calls and e-mails from frustrated readers who’ve been unable to navigate past the ads for the paid reports that the credit bureau websites offer. These more detailed reports will show you your credit score, but they are not free. (TransUnion charges $9.99.) Likewise, if you want to see your report instantly, you can order it online, but even without the score, there’s a price for the convenience. (At Equifax, it’s $15.50, or $23.95 with your score included.) 

Click here for more from the Globe and Mail.