My Improved Financial Life

Expert Insight on Personal Finance

Personal Household Debt In Canada

Feb 26

Posted by Gena D in Debt Management | No Comments

Personal household debt in Canada is out of control – again! We seemed to be on track last year, pushing our debt-to-income ratio back below 150%. But by the end of 2011, we had reached our all-time highest level of household debt, reporting a ratio of debt to income of 153%.

What does this mean?

First of all, do you know how much debt you have and are you aware of your cash flow situation? If not, you should know and you should regularly review the ratio of your personal debt to income. You should also know the direction in which that ratio is moving. If, for example, you are 10 years from retirement and your ratio is getting higher every year, debt may eventually threaten your wealth. That will hurt you…

So, national statistics may provide perspective but the only stats that really matter are your own. In order to know your stats, you need to ask the right questions in the right way. Read the rest of this entry »

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The Cost of Convenience vs. Eliminating Debt

Dec 17

Posted by Gena D in Debt Management | No Comments

 

How much do we pay for convenience?  Well, we are drowning in it!

When we put big ticket items on our credit cards, we may think it’s the easiest, most convenient way to pay but the interest that we could end up owing on that credit card could be a lot more than we originally thought if that purchase isn’t paid in full by the next billing cycle.

We end up paying our hard-earned money just for the convenience of saying “charge it.” That’s why it’s so important to build up SAVINGS or CASH for purchases and avoid The Cost of Convenience.

The most dangerous threat to our financial security is DEBT. If there is a crisis point and debt payments are consuming our disposable income, considering debt consolidation is a good option. This will pay off all creditors and combine all the balances into one loan with one fixed payment. This usually lowers monthly payments and that extra money can go towards becoming debt free or towards retirement savings.

The trick is to maintain a good habit of paying things in cash and close those credit accounts. If there is  a consolidation in place and the discipline of paying items in cash is avoided, then the cycle will not end and one can end up back where they started.

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How to set realistic goals

Dec 13

Posted by Niki Germanis in Productivity | No Comments

Setting Realistic Goals

One of the biggest mistakes people make when they are bettering themselves is set goals that are too hard to achieve. Goals are very important because they will allow you to be all that you can be, but when you set goals that are too lofty, you can be setting yourself up for failure. This
is why it is so important that when you set goals, you set goals that you can achieve not too easily, but not too difficulty either.

An example of this is to say that you want to develop yourself personally by losing 100 pounds in a month. Well, you cannot do this without getting surgery and surgery is often the easy way out and will not allow you to keep the weight off. This is an unrealistic goal. However, if you set a goal of losing 100 pounds in a year and a half, then you are creating a goal that is achievable, but not too easy. If you set a goal of losing 100 pounds in 10 years, you are not challenging yourself enough.

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What Is the Purpose of a Bank Reconciliation?

Dec 11

Posted by Niki Germanis in Asset Management | No Comments

What is Bank Reconciliation?

Reconciling your bank account transactions with your monthly bank statement is known as a bank reconciliation. The process requires comparing your bank statement with your record of withdrawals, check payments, deposits and financial transfers. Reconciliations help ensure that your balance total is correct, determine what outstanding payments have not cleared and establish any discrepancies.

Bank reconciliations can be processed for small businesses and personal checking accounts and savings accounts, or for corporate accounting requirements.

Determining Account Balance

  • Reconciling your bank account to your checks, withdrawals and deposit records helps establish your true account balance.
  • Your balance statement may not reflect payments that you have made but that have not been deducted from your posted balance.
  • Knowing your true balance is essential for avoiding overdrawing your account and ensuring you have sufficient funds to cover needed withdrawals for bill payments or spending money.

Uncovering Problems

  • Routine review of your bank account statement allows you to uncover problems.
  • Bank automation and human error can cause transposed numbers, incorrect deposit allocations and other errors that can affect your checking account total.
  • A monthly bank reconciliation ensures that problems are discovered quickly, and routine reviews decrease the time it take to analyze your account.
  • Monthly bank reconciliations can also keep you from missing any deadlines for reporting discrepancies to your bank.

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Guaranteed Investment Certificates (GICs)

Dec 6

Posted by Gena D in Investing | No Comments

Let’s say you have $10,000 invested in a GIC. So you have $10,000.

What are GIC’s giving you at your bank, 1, 2, 3%? Let’s say the banks are generous and give you 3%. A year later your GIC would have $300 worth of growth which equals $10,300.

Wow you made $300, but doesn’t the CRA want some of this money? Of course they do, so you are going to spend at LEAST 25% of that money on taxes which equals $75 of that growth going to the CRA.

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