Gail Vaz-Oxlade's Blog, page 72

The Do's and Don'ts of Home Shopping

You've been diligently planning to buy a home of your own. You've figured out what kind of home you'd like, saved some money for a downpayment, and talked to friends and family about what to expect as a homeowner. Now it's time to go shopping. Yeah, the fun part! Here are some do's and don'ts to keep in mind.

Do Shop with a Friend. If you shop alone you run the risk of not seeing all sides of the equation. Another set of eyes can be priceless when it comes to noticing the small details that can affect your decision.

Don't Arrive Late for a viewing. The last thing you want to do is rush through your home tour. And you don't want to run into other home-buyers because that might push you to do something stupid like getting involved in a bidding war. No house is worth going into more debt than you can afford to carry comfortably.

Do Take Photos and Notes. If you're relying on your memory you'll soon find that all the properties you've viewed start running together. Take a notebook, note the address and some of the details of the property, and take lots of pictures. Later, if you have questions about a particular property, you can note them on that property's page in your notebook.

Don't Focus on the Clutter. Most sellers now know to clean up and clear out. But there are still families that have to live in the homes they are selling, particularly ones with kids. Don't focus on the stuff. Imagine the rooms empty. And remember that paint is cheap!

Do Go Bank and Look Again. Once you've short-listed the properties you like, go back for a second round of note- and picture-taking. Now you're weighing characteristics of one home against another to find the perfect fit. Try to go at another time of day from your initial viewing so that you can see the property (and the surrounding areas) in a different light, literally.

Don't Ignore Details. Transportation, parking, neighbours, shopping, schools, churches, where the sun rises and sets, traffic patterns, they'll all have an impact on your life in your new home. Don't brush them aside in favour of a fabulous kitchen or a spa-like bathroom. Yes, the features of the home are important, but so is the area in which you live and the amenities available.

Do Have a List of Questions. In the excitement of the moment, it can be easy to forget important questions you want to ask about a property: What does it cost a month to heat? What's the traffic like in the area? Where is the closest grocery store? Have there been mould, termite or foundation leakage problems? Write down a list of whatever you want to know so you can make a sound decision. Then ask those questions and note the answers consistently at each viewing.

Share this on Facebook


Share this on del.icio.us


Digg this!


Share this on LinkedIn


Stumble upon something good? Share it on StumbleUpon


Tweet This!


Subscribe to the comments for this post?


Email this to a friend?

Happiness is a Purpose

Years ago someone asked me if I had a life purpose. (Yes, it was a very deep discussion, the kind of thing that happens after several glasses of wine, except there was no wine.) I said I believed that the purpose of life is to be happy and to make as many other people as you can happy. Seems The Dalai Lama and I are on the same page. He says, "Our purpose in life is to be happy. From the very core of our being, we simply desire contentment." Hey, great minds think alike… (don't finish it if you know the other half of the saying or Imma smack ya!)

I smile a lot. I laugh out loud. I hug at the drop of a hat. I am happy.

I'm not always happy. I have my days. But most of the time I find a way to kick my ass back into the happy zone.  That's because I know my happiness is my responsibility.

It's good to feel happy. It's good for my productivity. It's good for my health. It's good for my relationships. When I start to fall out of the zone, I don't so much rush to get back in as try to figure out what happened and what I can do to alleviate the not-happy. Everyone gets angry. Everyone feels sad. Life can be a bitch. But if you stay in the nasty zone, you're doing yourself more harm.

Research shows that our fear – in which almost all negative emotion is rooted – has been designed to make us heal past wounds and strengthen our capacity to cope. The fear response (whether it's anger, sadness, or scared-silly-ness) is supposed to make us THINK. It's designed to help us integrate our experiences to create understanding so we grow.

Handling fear – dealing with the crap life throws at you – is a learned experience. (Yes there are some people who have higher and lower fear thresholds, but that's another story.) So when you find yourself panicking, boiling, cowering, crying, don't duck and hide from the experience. Embrace it. If your life sucks, go ahead and get mad. Or cry. But then stop and figure out what you're going to do to get back to happy.

Martin Seligman, in Authentic Happiness, describes a formula for Enduring Happiness. He says it's equal to your happiness set point (which is different for all of us) plus your life circumstances, plus your individual habit patterns, which include happy thoughts and happy activities. While you may have been born with a low set point, and your circumstances may suck, if you establish the right habits, you can raise your level of happiness.

As Gandhi said, "As human beings, our greatness lies not so much in being able to remake the world…as in being able to remake ourselves." If you're not happy, get to work!

Share this on Facebook


Share this on del.icio.us


Digg this!


Share this on LinkedIn


Stumble upon something good? Share it on StumbleUpon


Tweet This!


Subscribe to the comments for this post?


Email this to a friend?

This & That: Figuring It Out Edition

A Wrote:  I am 23 years old and am done with my schooling. Unfortunately we were not advised to take all the extra out while we could. I am now in the process of trying to figure out what to do with that money that is just sitting there. I believe there is approximately $10,000 left of 'my share' as it is part of a family plan. I was advised to take the money out through my sister and pay her the difference in her tax return. However it would affect her government childcare rebates and she is not willing to do so.  I would like to transfer my $10,000 into RRSPs, or some other sort of savings plan.  Do you have any advice as to how to proceed?  Thank you.  P.S. I am not sure what portion of the $10K is grant money.

Gail says:  The first thing you have to find out is how much is grant money, how much is investment income and how much is original contribution money. Your RESP provider should have paid the income and grants out to you first, before touching the principal invested. Assuming there is just principal left, you can take that out at any time without tax consequence since there was no tax benefit when the money went into the plan.

S Wrote:  We have $35,000 in consumer debt mostly at interest rates of 5.99%. We have paid off over $11,000 in our first year using your 3 year debt repayment plan. My husbands work gives stock out to his level employees every year for the last 3 years and some has just begun to divest. We now have around $20,000 in this stock but only have access to $4,000 or so right now. He will continue to get stock each year in the future. Should we sell this stock or keep it as an emergency fund. We used up our e-fund during my maternity leave last year. My uncle told me we could use the stock as collateral for a low interest loan but our credit union acted like I was crazy when I suggest it. Right now our debt repayment is $1465 a month/25.87% which it very hard for us to stick to our budget with diapers and formula etc… We were hoping for a big bonus for my husband this year to help with the debt but that hasn't happened. What do you think Gail?

Gail says:  Your stock option cannot be your emergency fund because it's in a less than 100% secure investment. If you want to free up your cash flow then selling the stock and paying down the debt makes sense as long as it doesn't screw with your taxes. You need to check with a tax specialist to determine the tax implications of cashing out the employee stock options. Because I don't know where your hubby works, I don't know if this is stock that qualifies as an RRSP or TFSA contribution, so ask a specialist and see if you could make a "specie or in-kind contribution" to deal with the tax issue. Then you could use the stock as your "retirement savings" and use your cash to pay down your debt.

J Wrote:  Love your no BS approach. We have been living on a strict cash budget for the past few years and besides the car and mortgage we are debt free. We want to start a family however I keep putting it off as I am obsessed with having 6 months of my husband's income saved in an emergency fund before having a baby. My husband is self employed in the housing industry and I worry a lot about him losing work. Do you suggest waiting until we have saved the 6 months or am I being too strict?

Gail Says:  A healthy emergency fund is six months' worth of essential expenses. If you're planning on having a baby, you may need more depending on how long you plan to stay home with baby. You're in a good position because you are consumer-debt free. Why not figure out what your "mat leave" budget will be and practice living on that for a few months, socking away what you're not spending into a) your emergency fund, and then once that's solid b) your baby fund.

L Wrote:  I'm 23 years old, and I am hope you can answer a few basic questions so that I can plan my finances well. I have just officially paid off my student debt (both a student loan and credit card debt racked up during that time). I work freelance, which puts me in a position where I have to be a little extra careful with my finances because I have less job security than others. So far, I am consistently able to save 20 to 30% of my monthly paycheck after expenses (both the essentials and the extras). I have two questions:

1) The obvious savings goal that comes up often is retirement, but at my age there are other expenses, particularly home ownership, that will pop up first. Also, since I am self-employed, I need to be more careful to have an accessible "emergency" fund, or some savings that are fluid. So, what should I be doing with my savings? TFSA? RSP? Mutual funds, GICS… I don't understand what options are right for me.

2) As of right now, the only credit I have is in the form of cards. Is there anything beyond just paying my bills on time to improve my credit score? Is getting a line of credit through my banking any different than a credit card?

Gail says:  Well done on being so sensible and so conscientious. Your second question first: there's no diff… just keep doing what you're doing.

Now on to your first question: Yes, you have many goals and how you divide your savings is totally dependent on what you're trying to achieve. You're right when you say you need a healthy emergency fund: six months' worth of essential expenses. The division of the rest of your savings between home ownership and the long-term future is a question most people your age face. Seeing retirement as a looooooong way away, makes it easy for some people to put it off. But the longer you put it off, the more you'll have to save because you'll have robbed yourself of time and the magic of compounding return. At your age, you need only put 6% away for retirement consistently.

Okay, if it were my money, here's what I'd do. Assuming I have 20% to save, I'd put the first 6% in an RRSP. If my marginal tax rate isn't that high right now, I wouldn't claim the deduction. I'd hold on to it until saving on taxes became more of an option, at which point I'd start claiming those unused deductions. I'd use the remaining 14% to build my emergency fund. Remember, you need six months' worth of essential expenses: rent, basic food, and car payment, whatever you HAVE to cover every month to stay even. Once that was done, I'd use that 14% to save for my home downpayment.

Share this on Facebook


Share this on del.icio.us


Digg this!


Share this on LinkedIn


Stumble upon something good? Share it on StumbleUpon


Tweet This!


Subscribe to the comments for this post?


Email this to a friend?

RRR: Yoga Mats

You know that yoga mat you bought that stays rolled up in the corner? Ready to put it to good use? (Or maybe you're such an enthusiast, you wore yours out and bought a fresh one. Don't just throw the old one away.)

Trim it and put it under your dog and cat dishes to stop them scooting all over the kitchen floor.
Cut them into shapes, letters and numbers for your children to play with.
Cut them to fit on your table so when the kids are doing their crafts or making play dough creations your tabletop stays safe.
Keep it in the car for the pooch to sit on.
Lay it over your dash and steering wheel on really hot days.
Cut it to line the bottom of your closet or entryway to save your floor from muddy shoes.
Glue onto the back of a beautiful tile to gift as a trivet.
Cut rounds to fit under houseplants to provide a barrier between the moisture of the pot (yes even the saucers are moist) and your floor.
Put it under your litter box to catch all the sand that comes off kitty's feet when she jumps out.
Have some very slippery stairs? Trim your old pad into step treads.
Line the bottom of a pet carrier so your beastie doesn't slip and slide inside when you're transporting.
Trim and use as a mat in the bathtub so children don't slip.
Keep it in the car for impromptu picnics or to sit on while you're watching the kids play soccer. Or they can be moveable bases if your family loves to play baseball.
Trim them and use them as furniture pads (for the bottoms of future legs) so your floors don't get scratched. It'll also help if you have furniture that moves around seemingly all on it's own!
Use as draw liners in the kitchen. Or line your shelves and your glasses won't slide around.

Your turn. What would you with an old yoga mat?

Share this on Facebook


Share this on del.icio.us


Digg this!


Share this on LinkedIn


Stumble upon something good? Share it on StumbleUpon


Tweet This!


Subscribe to the comments for this post?


Email this to a friend?

Choosing a Credit Card

Have you noticed how many websites are popping up which are designed to help you decide which credit card is right for you?  With hundreds of different credit cards available, it's a little like looking at the screwdriver aisle in Crappy Tire, or the hair dye aisle at the drug store.

Here are three things you should think about as you shop for your credit card:

1. The annual fee. Lots of credit cards have annual fees. Many don't. Typically, the more bells and whistles on a card, the higher the fee.  Are you prepared to pay an annual fee for those points you're earning towards flights or whatever else is being offered? How many points will you have to earn (how much will you actually have to spend?) to make up for the whopping fee. If your card charges $120 annually, how much will you have to spend to recoup that $120 in actually travel dollars.

2. The interest rate. If you never carry a balance on your credit card (Yes!) then you don't give too hoots what interest rate your card is charging. But if you're one of those dopes that's still using your credit cards as extra disposable income, you better be darn-tooting sure you've got the lowest possible interest rate going.  Know that there's a huge range of interest rates available.

Beware of low introductory rates and how they may change. Very often an enticingly low interest rate will skyrocket into the stratosphere as soon as the introductory period ends. You could see your interest rate zoom from 1% or less to 14.9% or more. Introductory rates work best if you plan to be paid in full by the end of the term of the special offer. And for heaven's sake, stay on the right side of the rules. Just missing a payment by one day could end your "special offer" and take you into deadly-interest territory.

3.  The provider. If you're a debtor, do NOT have your credit card with the same financial institution that you do your banking with.  Most people don't realize that if you have money on deposit at a bank and also have your credit card at the same bank, your deposit account can be tapped if you're delinquent on your credit card. That's right, the bank has the right to go into your accounts and take the money if you are falling behind on payments. That could mean you have no money for food or your mortgage/rent payment will bounce. Ouch! So do NOT have your credit card at the some FI where you have your savings and chequing accounts.

A good place to start your comparison shopping is at the Financial Consuemr Agency of Canada's website. But don't stop there. Do your own legwork and make sure you're getting the card that's going to work hardest for you. Credit cards can be wonderful tools for managing your cash flow. I put all my purchases on my credit card, earn points for groceries (I'm a simple girl) and pay it off in full at the end of the month. Not only does that get me free groceries, but it reduces the number of transactions on my bank account, so it helps minimize my bank fees. Two birds, one stone.  Love it.

Here's another tip: If you like to shop online, get yourself a separate (no fee) credit card with a low balance for your online shopping. I find the peace of mind of knowing I'm not putting my primary card into all those cyber-storage devices priceless.

Share this on Facebook


Share this on del.icio.us


Digg this!


Share this on LinkedIn


Stumble upon something good? Share it on StumbleUpon


Tweet This!


Subscribe to the comments for this post?


Email this to a friend?

Rent or Buy?

Sometimes buying is the only way to go: think tooth-brushes and underwear. But for just about everything else, there's a rental option that could let you try before you buy. So when does it make sense to rent?

Everyone knows renting a movie is about 20% of the cost of buying the same DVD. Hey, you can watch 5 great flicks for about the same cost as buying one. So does the same thing apply to other stuff? Sure it does. And there are times when renting definitely has the advantage.

If you're not sure your new acquisition will be fit you well then it may make sense to take a trial run. Sure that convertible looks really cute on you? But where will you put the suitcase or the cat-carrier? Better to try it on for a few weeks to see what the downsides may be. Ditto that expensive camera or sports equipment. How about that new gaming console?

My girlfriend, Jazz, decided against buying a car after we had the rent versus own chat. Turns out that since Jazz lives in the city and can get around just fine on transit, she's way better off renting when she needs a car for longer jaunts. It's also far more cost-effective for beginner skiers to initially rent equipment. It gives you a chance to hone your skills without brutalizing your own gear. And after you've mastered the basics, you can "try-on" more expensive gear to get a real feel for different lengths, styles and makes. When you go to buy your own stuff it'll be an informed decision.

If you're likely to use your new acquisition only a couple of times, then renting makes more sense than owning.  Think power-washers, carpet steam-cleaners, camping gear, and myriad tools and equipment. That treadmill sitting under all those clothes might also fall into this category, even if that wasn't your intent. And that time-share you bought… well, maybe it wasn't the deal you though it would be.

And then there are those special occasions when you want to live large but your wallet doesn't have what it takes. Rather than buying on credit, you could rent that designer dress. Hey, if you want to tool around in a vintage car with the top down and you've got the daily rate, make your dream come true.

Before you decide if renting or buying makes more sense, do the math. Figure out what the item's cost per use will be before you bring it home permanently. Sure, that steam cleaner is on sale, but if you only use it two or three times it was no bargain. Before you whip out your credit card, divide the purchase cost of the item by the number of times that you expect to use it in a given time period. ?Knowing an item's cost per use will help you to see whether renting or buying is the better financial move.

There are some things you should avoid renting. If you're planning to rent-to-own, you're likely going to end up paying double or triple the cost. So when I'm talking about "renting" is for temporary use, not a way to have everything you can't wait to get your sticky little fingers on.

Sometimes it's tough to find a place to rent, or shipping costs are prohibitive so renting locally is the only way to go. If you're determined to have that jukebox for your honey's 50th birthday bash, you may have to shop hard to find what you're looking for. But you may be surprised at what's available and how much less expensive it can be.

When it comes to renting, make sure you know the rules before you put down your money. Does the price you've been quoted include everything? Very often set-up costs are separate. Find out what happens if the item you're renting is damaged while in your possession. Insurance may be offered to offset your liability, but if it isn't, see if your credit card company offers rental insurance or if it will be covered under your home policy. If you're trying on with the intent to possibly buy, see if you can buy the item at a discount once you've rented. And if you're done with your rental sooner than you expected to be, can you get a refund on your rental fee?

Share this on Facebook


Share this on del.icio.us


Digg this!


Share this on LinkedIn


Stumble upon something good? Share it on StumbleUpon


Tweet This!


Subscribe to the comments for this post?


Email this to a friend?

Why Do You Work?

Ask 10 people this question and 6 will say because they have to. There are bills to pay, children to raise, needs to be met. Two might say because they love the work they do. And two more might say they try not to as much as possible because work gets in the way of their lives.

So many of us drag our sorry butts out of bed every morning and haul our hulks to a job we can barely stand just to bring home the money to pay the bills. If this is you and you feel like your life sucks, I'm sorry (empathy, not apology.) You have fallen into the trap of working for no reason. And I'm not surprised you're unhappy.

Everyone needs a reason for heading off to the mines. When I was much younger, my reason was to be independent and to make a name for myself. When I had my kids, I worked because they were the most important things to me, and I wanted to be a good provider. I didn't miss not eating out. I didn't miss not travelling. I didn't miss not buying clothes. Every penny I spent on my kids was spent joyfully and brought me huge pleasure. Now I work because I find it incredibly rewarding to watch people's lives change for the positive because of something I've said or written.

Yes, I worked for money. But the money was the by-product of working for things that were truly important to me: my career development, my kids, my ability to help.

When I did the first season of Til Debt, it was to build up our travel fund to take the children on great adventures. My ex was making enough money to support us all and I was mucking out the horses and volunteering at school three days a week. Taking the TDDUP gig was a way to fuel the fun fund. I knew why I'd accepted the contract to do the show and that was what let me be okay with heading off to work.

It was hard though. I'd never spent time away from my kids before and I was going to be away two days every week. I was lonely and sad in my hotel room after work, missing my kids and longing to be back home, but I knew why I was working. The kids did too. And we planned where we would go and what we'd do when we got there. The planning was fun. The time away from my kids, not so much.

As it turned out, it was a blessing because the following year my ex was unemployed and it was my turn to support the family.  Even as we struggled to deal with the lower income coming into the house, I refused to touch the money I'd made from the first season of TDDUP. That was for the travel fund and there it stayed. We trimmed back on our expenses and made do with what I was making.

We did end up taking two great trips together as a family; we had a great time seeing some of the world together. And the kids and I have been to NY City three times to see the sights and do Broadway.

I still don't work for the money. Don't get me wrong, I do make a good living. But that's not what makes me drag my sorry butt out of bed at 4 a.m. to head out to a cold car and drive into the big city. Nope. It's not the money. It's the work. And it's the other stuff I want to accomplish, like the next big trip.

If you can figure out why you're working, and if you can focus on that, you're much more likely to have the life you want as opposed to always wanting the life you don't have.

So, now it's your turn. Why do you work?

Share this on Facebook


Share this on del.icio.us


Digg this!


Share this on LinkedIn


Stumble upon something good? Share it on StumbleUpon


Tweet This!


Subscribe to the comments for this post?


Email this to a friend?

I Can Read with My Eyes Shut

I meet people all the time who want me to save them from their debt. I've written hundreds of blogs about getting out of debt. I've provided tools for folks to use to help them make a plan. I've even written a book that's kinda like having me come to your house and give you what-for and a solid plan. And still people write to me to ask me how to do it. Hey, read a little sumthin' sumthin' and you'll figure it out.

One of the simplest – but perhaps one of the most important – lessons from the world of Dr. Seuss is that we live is a place of constant change, and you can't go far wrong if you're willing to look at things a little differently… and if you're willing to keep your eyes open.

The Cat in the Hat is back, with a youn'un in tow. And the message of the day is to learn, keep learning, and keep being open to new ways to see things.

The more that you read,

the more things you will know.

The more that you learn,

the more places you'll go.

Sure, this is a book about the joys of reading; it's a great lesson for our children. But it's also a lesson in on-going personal development, in taking charge of your own knowledge base and learning to expand it.

There are so many things to learn about.

BUT…

you'll miss the best things if you keep your eyes shut.

Having a closed mind never leads anywhere good. Trying to read with your eyes closed is a metaphor for people who have already made up their minds about things even as they "pretend" to be expanding their minds.

Pick up Debt-Free Forever with the attitude that debt's not so bad, or that debt is a way of life, or that debt is unavoidable, and you're reading with your eyes shut. And if you download a copy of Money-Smart Kids, but you've already decided that kids should never be given money they haven't worked to earn, your eyes are squeezed shut. Open 'em up!

If you read with your eyes shut

you're likely to find

that the place where you're going

is far, far behind.

While you're reading I Can Read with My Eyes Shut to your children, grandchildren, nieces or nephews, goddaughters and godsons, ask yourself when last you explored an idea that was in direct conflict with something you thought you knew.

Are you reading with your eyes open?

Share this on Facebook


Share this on del.icio.us


Digg this!


Share this on LinkedIn


Stumble upon something good? Share it on StumbleUpon


Tweet This!


Subscribe to the comments for this post?


Email this to a friend?

10 Easy Ways to Build a Credit History

I am constantly astounded at the number of people I meet who are in a bind because they have no credit history and can't borrow money. This is something we used to associate with older, widowed women who have been cared for by loving, controlling spouses. But that's just part of the story. Not having a credit history isn't the domain on slightly out-of-touch women; there are men out there who haven't got a clue because their wives do EVERYTHING. And it isn't the exclusive territory of our elders; there are young professionals who haven't bothered to establish their own credit identities.

Everyone needs to have the ability to borrow money. That's true whether you've just found yourself in the new role of single parent without an emergency fund or you're a young adult starting out.

1. Get a Secured Credit Card. The fastest, cheapest and easiest way to establish a credit history is with a secured credit card. Since there's no risk to the lender because you've put up the cash to cover your balance, secured cards are great for new borrowers or people trying to re-establish credit after a bankruptcy.

Lenders usually want twice the credit card limit. So if you want a $500 credit limit, you'll have to ante up $1,000. Once you've established your ability to manage the card – anywhere from six months to a year – you can ask for the security requirement to be dropped and your deposit returned.

2. Get a gas or department store card. Gas or department store credit cards are often easier to get and can be good ways to establish credit. You must pay your bills in full and on time because the interest rates on these cards are often astronomical. But as long as you don't miss a payment – which you never will, right? – it makes no difference what the interest rate is. Use these cards wisely and they can be a great toe-hold.

3. Borrow for an RRSP. Borrowing money to contribute to an RRSP is a great way to establish a credit history. While the RRSP are not officially used as collateral for the loan, lenders know where to find their money so approvals come more easily and the interest rate won't be horrendous. Make sure you only borrow as much as you can afford to repay in six months. How much you borrow doesn't mean much; repaying the loan quickly without a misstep does. Don't let anyone talk you into more. Once the six months are up, use the amount you were using to repay the loan as your month retirement savings contribution. Now you're building up your assets, which will be good for your credit history too.

4. Get a co-signer. While I'm not a big proponent of signing on for other people's debt, if you can find someone who loves you enough to put their credit history at risk for you, do it. Make sure the loan history is being reported in your name and not the co-signer's.

5. Put up collateral. If you have someone a lender can sell to get back his money, you're more likely to get credit. Collateral comes in all sorts of forms: from the car you're buying to those GICs you've got stashed away, if you have something a lender values, you're in the money.

Of course, getting credit is only the first step to building a credit history. How you use that credit will be the real test.

1. Pay all your bills on time. Yes, including your cell phone bill, since some cell providers report to the credit bureau. Setting up pre-authorized payments is a great way to ensure payments are made on time.

2. Avoid applying for credit too often. Since repeated requests for credit may be interpreted as a sign that you're in trouble and need a way to cover your butt, this will adversely affect your credit score.

3. Charge regularly and pay off in full.  Responsible on-going use of credit will produce a good credit rating. Just having your card sit in your wallet does nothing to add positively to your record.

4. Don't over-expose yourself. Having multiple forms of credit with small balances can add up quickly and become unmanageable.

5. Don't use credit to pay off credit. Taking cash advances on one card to make payments on another means you're in over your head. Cut back on your spending, pay off your debt and get back to the business of using credit to keep your record active and healthy, not to spend money you haven't yet earned.

Share this on Facebook


Share this on del.icio.us


Digg this!


Share this on LinkedIn


Stumble upon something good? Share it on StumbleUpon


Tweet This!


Subscribe to the comments for this post?


Email this to a friend?

The A, B, Cs of Money: T

TAKE A BATH: If you have experienced a large loss or the value of your investment has declined significantly, you're said to have taken a bath. I guess it's because you've been clean out.

TAX: What you give the government from your income to provide services like health care, education, transportation and policing. Everyone thinks they pay too much of this, yet few people are prepared to do the work to actually pay only as much as absolutely necessary. Some people think not filing a return is the way to go. Boy-oh-boy! You can end up paying a penalty of 50% of the tax owed on top of the tax owed if you don't file your tax return on time. Stupid.

TENANTS IN COMMON: One way to hold title to property so that each person owns their share with no rights of survivorship. If one owner croaks, the other doesn't automatically get the goods as with "joint tenants." Instead, the deceased's share goes to his or her beneficiaries.

TERM DEPOSIT: A fixed income investment with terms ranging from 30-364 days. The interest rate is set at the time you buy the term deposit. TDs offer more liquidity than GICs.

TESTAMENTARY TRUST: The trust created under the terms of a will that takes effect when the body croaks.

TESTATOR: The person making the will.

TIGER: An acronym for Treasure Investors Growth Receipts (some people spell it TIGR but still pronounce it like the big cat.) It's a government-backed strip bond.

TOP HEAVY: A price point at which supply exceeds demand.

TOTAL DEBT SERVICE RATIO: TDS is the percentage of your gross annual income required to cover payment associated with housing and all other debt obligations. I don't get why gross income is used. Your gross income is irrelevant to what you have to spend. All these calculations should be done based on net income. Course, most lenders only pay lip service to TDS these days, choosing to use the credit score as the primary credit-granting tool. Oy!

TRICKLE DOWN THEORY: Economic speak for the idea that if you give businesses lots of support (read tax breaks) and they flourish, that'll mean folks will do well because they'll have jobs and so they'll have money to spend, which is good for the economy as a whole.  It's why corporations get the big breaks and individuals pay more tax.

TURKEY: Not what you eat for Christmas or Thanksgiving. That's a delicious beast.  In the investment world a turkey is a losing investment.

25% RULE: This is a little like TDS for government. The thinking goes that bonded debt over 25% of a municipality's annual budget is excessive. Hmmm. Wonder how many municipalities are still paying attention to the 25% Rule?

Share this on Facebook


Share this on del.icio.us


Digg this!


Share this on LinkedIn


Stumble upon something good? Share it on StumbleUpon


Tweet This!


Subscribe to the comments for this post?


Email this to a friend?