The Community Resource Centre's Money Mangement project held a FREE Finance Workshop on July 31, 2008 titled Having Your First Child or Buying Your First Home? with Maria Mealia-Budd from Investors Group. The workshop covered the Home Buyers Grant, RESPs and Mortgage Insurance versus Life Insurance. Course participants felt that the workshop provided useful information for first home buyers and the information about RESPs was also informative. The Community Resource Centre will be hosting more finance workshops thoughout the Fall - watch this space for info.
The Centre also offers one to one confidential financial advice sessions by qualified financial advisors: Maria Mealia-Budd and Sandy McBride. Please call 604 885 4088 to book your FREE 45 minute session.
If anyone is interested in participating in a small support group to discuss money saving tips and challenges to saving money please contact us at 604 885 4088 or email: admin@communityresourcecentre.info
The Centre also have free information booklets on a variety of topics including: retirement, debt, money savings tips and RRSPs.
=============================== Top Money Saving Tips Teaching Your Kids About Money "After attending a local financial seminar about budgeting, we decided to include our teens with how we handle household money. Here is what we recommend. Give them a set amount of money ... but wait! With more money comes more responsibility! Give your teen enough money to cover food (nongrocery), entertainment, savings, charity and clothing. We started with $100 a month. They must be responsible for buying their own clothes, paying for any food they eat out and also cover their own entertainment expenses. Most important, they have to give 5 percent to savings and 10 percent to charity." --Holly and Dwayne Johnson
Save on airline luggage fees "Instead of paying the airline $15 or more to check a suitcase when you're going to visit friends or relatives, box up your clothes and either mail them or send them by a parcel company. Make sure you use a sturdy carton, and insure your belongings. I've even done this when I was going to a spa resort; I just sent them to myself in care of the manager. (Of course I made arrangements with her to do this beforehand). I carried my toiletries and one change of clothes in a carry-on, but the rest of my wardrobe was mailed. If you're going on a business trip, perhaps someone in your firm's destination office could receive your items and bring them to you when you arrive. Just ship your clothes several days before you leave home; then, stop off at the post office or package delivery place prior to going to the airport when your trip ends. Not only is it cheaper, but much easier: You don't have to lug your heavy luggage through the airport!" Lynn Buhlmann
Laptop vs. desktop Buy a lap top computer, instead of a desk top. We saved $10.00 a month in electric bills. --Louis Sedia Eden
Frugal Family Fun Nights Our family likes to have "Frugal Family Fun Nights" on Friday nights, instead of going out. Our favorite theme is "Power's Out," where we turn off all the lights, televisions, and computers, and play games by candle light, camp out in our living room, and tell stories. The kids always look forward to it, and it prepares us for real emergencies when the power goes out! --Jason White Warner Robins
If you have any money saving tips you'd like to share with us please send us your ideas for our next newsletter!
======================= ASK AN EXPERT Q: In order to claim a cottage/vacation property as one’s Principal residence (i.e. to avoid capital gains), what is the definition of a “principal residence”? A: There's no set definition for a principal residence – instead, the CRA has a set of conditions that need to be met for your property to be considered one. While you can check this CRA bulletin for all the gritty details, Scott Plaskett, CFP, CEO of Ironshield Financial Planning in Toronto says that determining whether your property qualifies all boils down to the following basic conditions:
1. The property must be owned by you; 2. The property must qualify as a house, cottage, apartment, mobile home, trailer or houseboat; 3. Only one property can be designated as a primary residence for the year for a family; 4. The property must also be "ordinarily inhabited" during the year of designation.
So, if you think you apply, you're in luck!
Q: My husband is considering filing for bankruptcy – if this happens, will he lose his RRSP? A: Sorry to hear you and your husband have hit tough financial times – but there is at least a small silver lining when it comes to this particular cloud. If your husband had declared bankruptcy just a few months ago, then his creditors could have gone after his Registered Retirement Savings Plan (RRSP). But as of July 7, 2008, this is no longer the case due to recent amendments to the Bankruptcy and Insolvency Act. But there is a small catch – I spoke to Terri Williams a certified financial planner (CFP) and director, Education Services for Dundee Wealth who notes that "any money put into registered plans in the 12 months before a bankruptcy (or longer) may not be subject to the new rule." Williams says this is to prevent people from intentionally trying to shield money from creditors.
For more information and details, you can check amendments to the legislation through the Office of the Superintendent of Bankruptcy Canada.
Q: Where is a safe haven in today's world? Stocks are incredibly dodgy. Real estate is shaky. Bonds are/or will get slaughtered by inflation as will cash in either savings accounts or the money market. Are real return bond funds the place to be? And if so, which ones would you recommend? A: The idea of a safe haven is pretty tempting, especially when the daily market reports show a lot more red than green. The question is a good one and I took it to Scott Plaskett, CFP, CEO of Ironshield Financial Planning in Toronto for a little insight. The problem with safe havens, says Plaskett, is that while they protect you from downturns they also don't tend to expose you to those crucial upswings in the market – and over time, that won't work in your favour. You might be safe, but historical performance says you'll probably be sorry. Consider this, says Plaskett: "Over the last 10 years, if you missed the best 10 days in the S&P, you would have missed 2/3 of the entire gain of the S&P. If you missed the 20 best days, you would have shown a loss."
His advice? Instead of trying to invest in response to the current market conditions, which he thinks might lead you to make the wrong call, "why not diversify your investment portfolio over the world equity markets and fixed income markets and spend your time finding the best managers for each piece of the portfolio pie." That way, he explains, when markets become unstable your managers will be able to do the work and make the calls, "cherry picking" the best investments for your portfolio so that you can take advantage of the good runs in the market.
Q: For a household where both partners are earning/contributing towards a guaranteed benefit pension, what is the recommendation between making RRSP contributions versus paying off a large mortgage faster? Which should we choose or weigh more heavily? A guaranteed benefit pension will put us into the highest marginal tax bracket upon retirement, so RRSP drawdowns will be taxed at the same marginal tax rate that we're being taxed at today. A: If you're lucky enough to have extra cash to save at the end of the year, it's tough to know where to put it – especially when you're up against a daunting mortgage balance! Cynthia Kett, CA, CFP with Stewart & Kett Financial Advisors in Toronto says she usually advises clients to pay off their mortgages as soon as possible because the interest isn't deductible. But she also recommends taking a balanced approach. Since the average mortgage contract lets you make an annual payment of up to 15 percent towards your principal, she recommends that you start by doing that – but be careful of making payments over that amount because your lender will probably impose a penalty.
If you have money leftover after doing this, then make an RRSP contribution, says Kett. As she explains, "While a taxpayer may have access to future registered pension plan benefits, they may not be enough to provide for the individual's desired retirement lifestyle. Withdrawals from RRSPs/RRIFs can be used to supplement the cash flows from the pension."
Keep in mind that as a taxpayer who is also a pension plan member you're limited in the amount you can contribute to RRSPs by the Pension Adjustment that is reported on your annual T4, notes Kett. But that doesn't mean you shouldn't contribute to your RRSP, though, she explains: "At a minimum, RRSP contributions provide a current tax deduction and a deferral of tax until the funds are withdrawn from the RRSP/RRIF. If the taxpayers are in a higher marginal tax bracket during their working years than they will be during their retirement years, actual tax savings will be realized."
====================== Community Resource Centre 604 885 4088 admin@communityresourcecentre.info www.communityresourcecentre.info 5520 Trail Ave, Sechelt
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