It is estimated that over 100,000 Canadians file a consumer proposal or file for bankruptcy annually. Hundreds of thousands of other Canadians are struggling with their own high account balances on loans and credit card accounts. These high account balances are often coupled with high monthly payments, a tight budget and a low level of personal savings. The combination of these factors can create a financial nightmare for individuals. A single financial event, such as the loss of a job or a serious illness, can cause them to lose control of the delicate balance of their finances. The stress of this situation can be extreme, and this stress can lead to insomnia, fatigue, digestive issues, depression and more. Further, this heavy debt burden can prevent you and your family from truly enjoying life as well as from planning and saving for the future.

Turning Things Around

Many Canadians who now find themselves in a similar situation have been looking for a way to turn their financial situation around for years. The problem with high account balances is that they create high monthly payments. High monthly payments on outstanding balances makes it difficult to find extra money to pay down account balances. Many consumers feel as though they are trapped in a vicious cycle, and they simply cannot see a way to break the cycle and start paying down account balances. However, through financial education, individuals who struggle with high account balances can break this cycle and turn things around.

Eliminating High Account Balances

One of the best steps an individual can take to regain control of their downward spiraling finances and start paying down high account balances is education. For example, taking time to fully understand the difference between an installment loan and a revolving line of credit can help a consumer to learn more about why their account balances are difficult to pay off. This insight can provide a consumer with knowledge that can then be used to restructure account balances so that debt elimination is easier to accomplish. This is just one of the many areas a consumer can learn more about as a step toward debt relief.

The Best Source for Education

For most consumers, their problem with increasing account balances grew over time. The account balances a consumer carries now may be a result of many long years of overspending, insufficient savings account balances and relying on credit card accounts to pay for unexpected expenses. It can take many years to pay off high debt balances. While paying down account balances can be a long process, a consumer should note growing results in the ease of their financial burden as account balances are reduced over time. Those who are struggling with debt in Canada can use the debt guide from Debt.ca for more information about how to ease their financial burden.

There are numerous debt elimination strategies as well as debt relief options that can be put to use to ease a consumer’s financial burden. Through education about the options available, by visiting www.Debt.ca, a consumer can learn more about the options available.

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It’s been a long break, but we’re back under new ownership .   We’ll have some content coming along shortly, but for now I wanted to get something going live.  So without further ado, here’s a guest blog post on a topic that we’re all seeing all over the place – gold.

Many financial investors in recent years have recommended gold as a safe investment, and even a sort of safe haven, for people’s money. Indeed, in recent years the pricing of gold has been fairly strong, and the market for this particular resource has been relatively stable with regard to other markets, as well as the general economy in many of the world’s more financially influential countries. When you really think about it, gold is almost a strange investment to begin with, as it is, quite literally, a substance that serves no function other than to support value. Still, investing in gold at places like http://www.bullionvault.com remains a popular practice for people looking to store and grow their finances – but are these sorts of investments as stable and reliable now as they have been in recent years?

One reason that gold is usually seen as a particularly stable investment source is that its prices tend to fluctuate independently of individual economies. The world values gold differently than other resources, stocks and markets, which results in a very independent investment source that can remain stable in times of turbulent economies. Lately, with the United States economy and many of the larger European economies struggling mightily, people have looked to gold for this stability, and it has been a relatively strategic investment.

At the outset of 2012, gold value remained strong, as the price of gold increased 10% just in the month of January. However, just a few months later, the net increase in this price for the first financial quarter is just 6%, which indicates that growth has slowed, and even reversed to some extent. While these numbers do not demonstrate an alarming trend, and do not necessarily provide a reason not to trust gold moving forward, the reason behind them may do just that.

Again, gold is often sought after as a safe investment when economies struggling – however, over the course of the past few months, some of the world’s larger economies have actually been showing signs of recovery. In the United States in particular, economists have hinted at the possibility that the economy may be beginning the process of getting back on its feet; and, though this process will doubtless be a long and slow one, the signs of its beginning have restored faith in more traditional investment opportunities, as well as the value of the U.S. dollar and the strength of the economy as a whole. While we are only talking about trends over the course of a few months, these sorts of indications may signal a bit of a decrease in the strength of gold in the short term time to come, at least.

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I started this blog over a year ago to help get our personal finances in order and prepare for our wedding and eventually starting a family. Well as these things tend to go, life got busy, the wedding came and went, now here I am in the delivery room with a lot of the same financial questions.

Babies have a way of changing perspective especially on the day of their arrival. With this new perspective I need to get the following done in the next 2 weeks:

1. Confirm My Beneficiaries: Technically this should of been done when I got married but this has now become a even higher priority item. I need to make sure that my wife is in a position to receive the money from all of my accounts to support our child.
2. Get Life Insurance: I’ve slowly been working towards this by losing weight to get a better premium but I still haven’t made up my mind on whether I want term or life and exactly how much insurance. I need to calculate all of our future expenses and determine the amount we’ll need.
3. Set Up An Education Fund: As soon as the baby is born I’m off to the bank to setup an resp. Luckily I have a fairly good idea what I want to do. However I haven’t given in the analysis that I would like to make sure I’ve done my due diligence.

The future seems so exciting now that my baby is due to arrive in about 3 hours, hopefully. My list of things to-do reflects my thought to the future and the care of my wife and baby.

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P.S. If you’re wondering how I found the time to write this during labor all I can say is this “Bless the miracle of the epidural and the support of a doula”.

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Recently I’ve begun to wonder why I make the personal finance choices that I do such as understanding my need for early retirement.  If I can understand why I make theses choices then I can be in a better position to make these decisions and adapt quickly.

Why People Save

Now I’ve begun to wonder why do I save? For me saving falls into three categories:

• Fun – There are people out there who have made a game out of saving.  Their enjoyment stems from finding new and interesting ways to save and watching their bank account grow. Overall I think this is probably a healthy reason if you enjoy doing it.

• Fear – Most savings motivation probably stems from fear. Fear of the unknown and saving to compensate for that fear. Its good to have a small amount of fear in everything you do but if left unchecked it can get out of control.  Try not to turn into misers afraid of spending a dime until eventually you go the way of the  Collyer brothers.

• Just Because – Some save just because. They aren’t really fearful and they don’t enjoy doing it. They do it because its the responsible thing to do. You save for retirement, build an emergency fund, save for your child’s education, etc.

For me

My savings seems to stem from both fear and just because. My savings goal is to achieve early retirement but not really. I’ve discussed in the past that I would love to spend time traveling the world so my savings is less about early retirement and more about the freedom to travel.

Fear comes into play in the sense that it keeps me from doing extensive traveling now.  There is nothing that says I can’t work part time and save enough to start traveling now. The only thing holding me back is not knowing. I can’t bring myself to do it without the security of having income to support us.  The key is not letting this fear consume me and enjoy small aspects of my retirement now.

Talk Back:
Look deep down inside and ask yourself honestly “Why Do I Save?” I’d love you hear you reason.

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Whenever you go to a store or a dealership the salespeople focus in. They have their defined list of tactics to get the sale. Don’t be fooled by their tricks and be cautious about who you trust with your money:

1. Calls you by your first name often – By using your first name they are trying to establish some trust with you so it can be exploited.
2. Mentions their family - Joe the sales guy is out to get you but not Joe the family man. He’s a regular guy just like you and will give you the best deal. Not!
3. Last one in stock – Its a pressure tactic to get you to commit to a sale. If at any point you feel pressured you should leave even if it is the last one in stock.
4. Have another offer – Another common pressure tactic. If there is another offer then congratulate that person and move on.
5. Special promotion today only – This is the third pressure tactic. Once again just walk away if you are feeling the pressure. There will be other promotions and you will get your item at the price you want.
6. Tells you what you need – This applies to both good and bad salesmen. With a good salesman you go in for a minivan and walk out with a minivan with all of the features you need. With a bad salesmen you go in for a minivan and leave with a Porsche.
7. Talks himself up – A salesmen will try to talk about how great of a sales person they are and the kind of figures they put up. They are trying to draw you into a false sense of security. Because he puts up great numbers doesn’t mean he is giving you the best price.
8. Spin the financing – They quote the financing price using longer periods or weekly payments to make it sound cheaper then it is

Talk Back:
Are there any other sales tactics that you’ve experienced ?

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Last month I turned 31 and while some friends and I were getting a coffee I was asked a simple question:

How does feel to be 31?

I thought about this for only a second when I replied:

The same except I might be a little happy being a year closer to retirement.

What a strange response that is! I began to wonder if I’m obsessing over retirement too much. I needed to take a few moments to reflect. How does one make sure that they enjoy this phase of their life and not just rushing through it to get to the next phase?

Know Your Retirement Goals

First you need to take a moment and think about about what you want out of retirement. Theses are the things that you want to enjoy doing in retirement. This is the my list:

1. Spend at least 3 months a year traveling
2. Live abroad (I really want to live in France)
3. Learn different languages
4. Pursue all of my hobby interests from athletics to cuisine

Get A Taste Of Retirement Now

Look at your life and see what you are doing now that ties into your retirement goals. Are getting a taste of the things you want to do in retirement now? Looking at my goals this is what I came up with:

1. My wife and I don’t spend months traveling but we do get around. We like to alternate years of travel. Some years we take trips that cost a bit more like Europe and on alternate years we take 4 days trips to places like Chicago
2. We aren’t in a position to move abroad right now but I am looking into getting my EU passport just in case an employment opportunity comes up or for when we do move to France when we retire
3. I try and speak french with my wife once a week. Its a slow process but its a start
4. Right now I’m taking Muay Thai and I frequent different restaurants with varying prices ranges and menus

Goal or Obsession?

Look at you life. Ask yourself are you doing things you enjoy now or are you waiting for retirement? If you are exclusively waiting for retirement then you may be obsessed.  Take a moment to breathe and look around your community. I’m sure you’ll find something going on which will give you that taste of the things you are hoping to do in retirement.

For me, when I look at the things I do now and the things I want to do in retirement I realized that I wasn’t obsessed.  I am doing exactly what I enjoy now and my desire to retire stems from my eagerness to do even more of the things I enjoy.

I want to hear from you:
Do you have a list of things you want to do when you retire? What are you doing now that gives you a “taste” of retirement?

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I’ve been gone for quite a while. I had to take a break while I studied for a certification that I wanted to complete. Needless to say I passed my CISSP and now I’m refreshed and ready to start posting again. See everyone next week.

Are there still people hanging around ?

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Another week has passed and this time I covered some money saving tips from a teacher (my wife). We also had another increase in our net worth for the month of August. Finally I ask people to take a closer look at the extended warranties being offered instead of blindly turning them down.

Carnivals

This week I was an editor’s pick at The Canadian Finance Blog who hosted Carnival of Pecuniary Delights #22 – UFC Edition

Modern Graham hosted Festival of Stocks #156

The Canadian Finance Blog also hosted Festival of Frugality #193 – G.I. Joe Edition

Automatic Finances hosted Money Hacks Carnival #80

Stretchy Dollar hosted Carnival of Personal Finance – History of College Football Edition

Around the Blogosphere

Thicken My Wallet points out that you need more then just a will to settle your estate.

The Canadian Finance Blog looked at where to find other sources of income.

Money Energy asks if this is a good time for Canadians to invest in UK dividend stocks

Dividends Value reminds us to never fall in love with a stock.

Financial Highway covers 11 dumb ways to get into debt.

Million Dollar Journey talks about converting your principal residence to a rental property.

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It’s quite common in the personal finance community to be “hating” on the extended warranties. Some of the main points people make about warranties are the “warranty costs more then the item” and “if it breaks it will do it within the first 6 months and will be covered under standard warranty”. Now I don’t necessarily disagree with these statements however they always seem to look at warranties from a negative perspective.  Warranties are just another form of insurance and when properly accessed are a great way to protect yourself.

Things to consider

• Cost of the item – Generally speaking the original cost shouldn’t have that much of an impact on your decision to buy an extended warranty but I decided to list it first because it is important emotionally. If you’ve gone out of the way and purchased a high end item the last thing you want is it breaking right after the standard warranty runs out. This can definitely be a stressful and frustrating experience that seems to increase as your original purchase price increases.
• Servicing Your Needs – When you made the decision to purchase this item one of the things you should have done was decide what your needs where and how this item will meet those needs. Well in order to get an extended warranty you should understand how this item will continue to meet those needs and for how long. This may require a deeper look at the industry and determining what major technology shifts are on the horizon. This will help you decide how long you’ll be satisfied with the item and therefore the length of warranty required.
• Repairability – This is a real “black box” for people. Before making any purchase you should always do research at what it costs to repair an item. You will need to know cost of the components, cost of the labor and difficulty of repairing items. An example that I use all the time is PC vs Laptop. PC’s easily come apart and components are relatively cheap. Laptops on the other hand are small, difficult to take apart and the components can get expensive.
• Cost To Replace – If the item retains its value then your the necessity for a warranty becomes greater.  Or if you purchased a higher end item then it stands to reason that you will probably replace it with an item of equal cost. In eihter case it will cost you a pretty penny to get a brand new one so a warranty is a good mechanism to protect yourself from an unplanned purchase.
• Cost Of The Warranty – There is no single answer for this. This value will change based on the various criteria outline above. Obviously the cheaper the better.

An example

I recently went through this process and decided to purchase the extended 3 year warranty on my 42″ Sony XBR 5 TV. Here’s I how I came to the decision:

• Cost of the item: The TV cost us $2600, which is no small amount especially since you could get a similar sized LCD at the time for $900.  I have a hard time dealing with a product that turns out to be a lemon and get easily frustrated when it happens. I needed peace of mind with such an expensive purchase.
• Servicing Your Needs – This TV has all the bells and whistles at the time of purchase. It had the latest refresh rate and a one of the best contrast ratios. Now there are TVs with better options but what I have right now is good enough. I’m not enough of a videophile that I’ll notice minor technology advancements. Not to mention when the warranty runs out in 3 years we will most likely be moving out of our condo and into a home. When that happens we’ll probably be purchasing a second TV with the latest upgrades so I need the current TV to last until then.
• Repairabilty – LCDs are very compact in the back and are difficult to repair. Usually even if something small breaks it will require the replacement of a much larger component to fix it. My father in-law has exactly the same TV and had to get it repaired. If he didn’t have the warranty it would have cost him $1800 which is a staggering amount when you take into consideration the cost of a new TV.
• Cost to Replace – If this TV broke to the point where it wasn’t worth it to repair then I would probably go out and spend another $2600 on a similar caliber TV. I’ve had crappy TVs in the past where the different shades of black all look the same and you can’t make out anything in a dark scene. I’ve been there and done that so I’d definitely spend the money on a good TV.
• Cost Of The Warranty – The extended warranty cost $350 for 3 years. That is a mere 14% of the total cost of the TV. Considering everything above I felt this was a worth while premium to pay for the piece of mind.  Had the warranty cost more then that I probably wouldn’t have gotten it but I felt the price was reasonable.

Conclusion

There are a lot of warranties out there that are big rip offs and aren’t worth a second thought.  However just blindly turning them down is careless as well. Hear out what the warranty covers and what it costs. Consider the criteria above and you may find its worth the extra bit of cash to protect investment.

Have you ever bought an extended warranty  and why?  Do you blindly turn down the extended warranty options ?

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Another increase in August which is good. It seems we are still trying to get our footing back on some solid ground after the wedding. We manage to put some cash into savings. At first glance it may look like we took a big hit in savings but that’s because we put a large lump sum payment into the mortgage. We still manage to save about $1000 this month but the biggest gains came from our investments.  Its going to hurt next month when the market does its seasonal correction.

In addition we were looking into buying out our lease at the end of the term in 6 months. However as in all things in life it quite isn’t going to work out that way and we are now looking to purchase a new vehicle. This means a big down payment and several years of financing. A car is an albatross especially when you are leasing.  September is definitely going to be a bad month for our net worth.

Savings: We currently maintain $4500 in our personal checking accounts so we don’t have to pay any banking fees. The rest in our accounts is being set aside for an emergency fund which we hope will reach $30k.

Mortgage: There is debate on how one should include their home in their net worth. Some people try and track the present value of their mortgage and others prefer to use their purchase price and leave it at that. I’m in the latter camp. I feel tracking the value of your home on a month to month basis isn’t worth while. We have no intention of selling since we need a place to live and it takes away from true net worth growth of saving and investing properly.

Line of Credit: This is a line of credit that I took out to invest in the market. This will remain the same as I will continue to only pay the interest since I’m claiming it on my taxes. I will eventually pay down the loan I just haven’t decided on when.

Vehicle: We are currently leasing our vehicle. This is preexisting to my fiance and I meeting. Our intention is to ultimately purchase the car once the lease expires. Unfortunately it looks like when all the added items tallied up the final price came out to a lot more then what we are willing to pay. We are looking to purchase a new vehicle now. We won’t be tracking its value as it is a depreciating asset and serves no purpose in helping us achieve our goals. It’s benefit comes in the way of us running this car for as long as possible allowing us to save and invest more.

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