In this issue

Hi

Welcome to the January issue of my monthly newsletter!

This month’s edition looks at improving your financial future, credit score and tips on saving heating costs this winter!

I would love to hear back from you if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!

If you live paycheque to paycheque, the idea of somehow having enough money to invest and eventually have financial freedom seems about the furthest thing possible. But experts in financial education like to point out, no matter your income and place in life, a few changes to the way you’re living life can make all the difference. No matter where you are in life, it’s never too late to start learn and reverse course. If you’re still not convinced, there are a few simple ideas to get you started.

Pretend You Earn Less Than You Do

Give yourself a cut in pay. The goal is to put 10% in savings from each paycheque into your savings account. The easiest way is to do an automatic direct transfer from your chequing account to your savings.

Create a Budget

In order to stop living paycheque to paycheque, you need to know where that paycheque is going. Creating a budget is simple with Google docs, or look into other online tools and sites to get started.

Build an Emergency Fund

Once you have your budget in place, review it and break it down into non-discretionary expenses (rent, groceries, utilities, etc.) and discretionary expenses (eating out, entertainment, clothes, etc.).

See where you could cut down on eating out and put that money towards your fund. Even starting with just a little amount is great and helps you build the habit. 

Consider Downsizing

It may be time to consider a lifestyle change. Consider moving to a smaller place. Replace going to that expensive gym with a trip to the local park. Think about if you really need that brand new car or if a used one would work just as well.

Pay Down Debt

If you have a lot of credit card or unsecured debt, try paying the minimum on all but one of them and aggressively pay down that one card. Once it's paid off, attack the next one. If you're so deep in debt that you can't fight your way out, consider consulting with a company who specializes in debt consolidation. They will help you negotiate your debt into smaller amounts that you can begin to pay off.

Don’t Forget Your Future

Putting at least 3% of your paycheque into a retirement fund is a great idea, or maybe when you get your first raise instead of thinking of it as free money, simply put it into a fund and forget about it. You'll be glad it's there when you need it in the future.

If you’re credit challenged but want to get into the housing market, it can be a tough road. But improving your credit to a point where a lender will give you a chance, is very doable.

Basically, what you need to know is a score above 680 puts you in a good position to get financing, while below will make it tough and improvement is needed.

Your credit score tells lenders some basic stuff about your credit: How long you’ve had credit, your ability to pay back that credit and how much you owe. And so your credit score is affected by how much debt you’re carrying in regards to limit, how many cards or tradelines you have and your history of repayment. If you’re a young person and new to the world of credit, consider the 2-2-2 rule to help build up your credit. Lenders want to see two forms or revolving credit, like credit cards, with limits no less than $2,000 and a clean history of payment for two years. It’s also good to note, a great credit score will also include keeping a balance on all those cards at any given time below 30 per cent of the limit.

To ensure your score stays in playoff form, make sure to pay off any collections, like parking tickets, and correct any old or incorrect reporting on your credit score by contacting Equifax to have it removed.

Some people also forget their credit cards have an annual fee and fail to pay them off too. This cannot  

be stressed enough, if you want to keep or attain a good credit score, you have to pay your credit cards or tradelines on time regardless of whether you owe $1 or $1 million.

Debt and credit often go hand-in-hand. There is also such a thing as good debt and of course bad debt. Good debt consists of things like a mortgage, investment property, and college/university tuition. Bad debt includes, retail store credit cards, cars, and vacations. There is a tendency when things get really bad to consider declaring bankruptcy or a consumer proposal. A consumer proposal is a formal, legally binding process to pay creditors a percentage of what is owed to them. You really want to avoid these two options. Instead, there are companies out there that will perform the same function and negotiate your debts, but it won’t impact your credit or carry the stigma of bankruptcy or a consumer proposal.

Lastly, if you already own a home and have some equity, but you’re still drowning in credit debt, consider refinancing your mortgage. Sure, you might not get the great rate you have now or you might get dinged for breaking your mortgage early, but using the equity in your home to get rid of high interest credit payments could keep more money in your pocket at the end of the day. To change your debt-to-income ratio, consider stopping all credit card activity and don't rack up any additional borrowing.

Homeowner Tips

10 Easy Ways to Winter-Proof Your Home

1. Close all Curtains during the day and add a liner with cheap thick material for even more insulation. Open them periodically for the greenhouse effect to warm the house.
2. Close Doors when rooms are not in use. This prevents heat transfer in and out of vacant rooms especially if you have baseboard heaters or radiators. Close the vents if using central forced air. Lower the entire house heat and use a space heater if you are only using 1 room like a TV room or bedroom.
3. Stop the Draft! The bottom of doors are not air tight in order to allow them to open and close. Use draft excluders to plug the bottom or even roll up a blanket or towel.
4. Seal Gaps around frames. Doors and windows commonly have gaps that let cold in and heat out. Seal the gaps with cheap insulation strips or even blankets. Stop the draft and save money!
5. Floors are Guilty. Is your flooring insulated? Good chance they are not. Massive heat loss occurs through your floors. Area rugs adds insulation (or blankets) and look for any gaps in the flooring or floorboard and fill with silicone.
6. Reflect the Heat. baseboard heaters or radiators located on external walls will simply warm the wall. Line the wall around the heat source with foil to reflect the heat back into the home.
7. Cover your pipes! Add an insulator to your hot water tank and pipes to hold the heat in and keep the water warmer longer without fuel. Many inexpensive options are available for all tank and pipe sizes. Make use of blankets if you are on a budget.
8. Use thermostats with timers. Have them turn on earlier so the room heats up in time for use vs. cranking the heat when you need to get warm quickly. Have the heat turn off 30 mins before you are going to bed or leaving the home.
9. Insulate Walls and Attic. On a snowy day go outside and look at your roof. You should see snow on the roof. If you can see your roof that means the attic is not insulated well and heat is escaping and melting the snow. Invest in good insulation to save big money in the long run.
10. Oven is made for Heat! Winter time is full of yummy cozy meals made in the oven. When the meal is done why not leave the oven door open after you turn the over off. The heat from the oven will warm a room for a good hour after it’s shut off.