In their report, they went on to say “The average delinquency rate for Canada rose by approximately 19% over a one-year span from May 31, 2008 to May 31, 2009…This means that over a half a million Canadians are now more than 90 days behind on their credit payments.”

What’s even scarier to me is that Equifax claims “The sharpest increase has resulted from Credit Card and Sales Finance purchases, which have increased by 38% and 58%, respectively, since May 2008. Such transactions typically represent the purchase of durable goods, such as furniture or electronics, and consumers appear to be willing to fall behind on them first before they miss payments on their Bank Loans and Lines of Credit.”

You’re Take-Away: This information may not be news to you, nor may it make any difference to you if you’re one of those lucky few who are able to live debt free or at least manage your debt payments. The one lesson that stands out to me however is that we need to be learn to manage our cash flow better, for the sake of our financial futures and credit ratings.

After all, the reality is that those falling behind aren’t doing so in terms of their mortgages or lines of credits mainly. In fact, they’re falling behind on payments that have resulted largely from consumer purchases, which I like to call, consumer wants. The financial companies that offer no interest or payments for a year or more are still making money or they wouldn’t offer the program in the first place. Read the fine print. If you miss your payment by a day, they will back charge you for the entire period of time that you haven’t paid anything with interest rates as high as 24% and more.

The long and short, if you’re going to purchase anything using a store issued credit card, make sure to make a note and pay that purchase off at least one week prior to the deadline. If you don’t, you will see your bill jump dramatically and possibly join the Canadians mentioned above in the Equifax report.

Until next time, happy spending and have a Terrific Tuesday!

Chris

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If you understand how a mortgage pre-approval works, its probably a safe assumption that you understand that the benefit is very much in the favor of the mortgage client rather then the mortgage Lender. After all, in order for a Lender to provide an authentic pre-approval, they have to run through the same administrative process they would for a new mortgage client with a firm commitment. However, with a pre-approval the client always has the option of opting out and walking away from the deal considering there is no penalty or loss to do so.

Recently, one large bank has officially removed themself from the pre-approval market based on the internal costs incurred as a result of providing this service. In reality, less then one third of pre-approvals actually close and in the case of the major lender mentioned above, it is rumored that they had been losing $20 million in business each year before they decided to pull that service from their product shelf.

Your Take-Away: To me it seems clear that a pre-approval is really an attempt by the Lenders of the world to get their feet in the door with potential mortgage clients by offering a service that actually may or may not prove to be of any value to them from a business perspective. If that is in fact true, that implies that you as a potential client hold all the cards.

Many people feel as though they are locked in when they put a pre-approval in place or that it can somehow prove to be detrimental to their search for a mortgage. There are no penalties, nothing locking you in to any one lender, and no drawbacks to getting pre-approved. After all, if there were then the Lenders would be making money, not losing it.

My suggestion, if you are even thinking about moving or refinancing, put a pre-approval in place as soon as possible and lock in the best rate possible for the next 120 days.

Until next time, have a Terrific Tuesday.

Chris

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Although this is not at all related to our regular posts on this blog, I felt it necessary to post the link below both out of respect for what Susan accomplished, and also as a reminder that we can’t be too quick to judge. I apologize in advance to anyone who didn’t expect this post on our blog, and I hope you can understand that our blog isn’t about just people’s money, it’s about the people we help with their money. And this video is very much about all of us, as people.

Watch this very short video and be inspired, be awestruck, and be reminded!

Until next time, have a Terrific Thursday!

Chris

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Ellen Roseman of The Toronto Star recently documented one couple’s fight to get paid on a death claim that was made through their TD Canada Trust. We’ve talked about the perils of Mortgage Insurance offered through your lender in posts before, but this story is a real life experience for one Toronto based couple and I’m sure it will make you question where you hold your insurance.

The good news is that despite the original decline of their claim, to TD’s credit they did revisit the situation once the Star became involved and later paid out the claim in full. The reality however is that had they not gone to the Star for help, they may never have received that money. And even if they would have, do you think they really wanted to have to fight for something they knew all along they were entitled too? Never mind the fact that they were also in the midst of dealing with the news of a terminal Cancer diagnosis. Perfet timing it seems?!?

Your Take-Away: The most chilling comment written by Ellen was quite poignant, and one you should seriously considering thinking through. Ellen wrote: “The lesson: Banks can issue insurance and deny coverage years later if they think there was misrepresentation on an application.”

I can’t help but think it may just be time to at least explore your other life insurance options, mainly because the underwriting is done up front, not at claim time. And after all, you’re most likely going to save some money too. Not a bad thing considering the current status of our economy!

Until next time, have a very Happy Easter!

Chris

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We are hosting a prayer vigil TONIGHT at Six Steps Restaurant at 6:00pm. We are asking anyone to join us at 55 Colborne Street whether you pray or not, whether you know him or not, or whether you simply can be here to support those involved.

I’m calling anyone we know to join us tonight and lift our thoughts and concerns to our God. Please…if you can be here then do just that. It’s time put aside anything other then our friend and relative George Koutroubis and ask that God will provide wisdom, strength and clarity to those involved.

Thank you in advance for your continued prayers and support.

Chris & Elisseos

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A good friend of ours has been missing since Tuesday. He was last spoken too around 4:00pm and last seen around 7:30am that same morning. I have attached the press release below and a link to the official report on www.cp24.com can be found here with a picture as well: http://www.cp24.com/servlet/an/local/CTVNews/20090218/090218_missing_man/20090218/?hub=CP24Home

MISSING PERSONS REPORT: 

The family and friends of a missing Toronto restaurant owner have launched a massive online and in-person search for the missing man.

George Koutroubis, owner of Six Steps Restaurant on Colbourne Street, was last seen on Tuesday at 7:30 a.m. near Front Street and Blue Jays Way, police say.

However, friends of the missing man say they have received reports he contacted someone from his cellphone later that day while driving in Whitby.

The 36-year-old is described as white, five foot eleven and 230 pounds with brown eyes and short, black, receding hair. He was last seen driving a black, 2008 BMW X5 with Ontario licence plate BCSS 209.

Police say they are concerned for his safety, and his friends have organized a search in areas of Toronto and Whitby. They are posting up-to-date information on Twitter in hopes that the site’s users will have information on his whereabouts.

According to the Twitter posts, Koutroubis’ vehicle also remains missing. It is reportedly decorated with a Pittsburgh Steelers license plate border.

Six Steps is an upscale Italian restaurant located near Yonge and King Streets. It has been open since 2007.

Anyone with information is asked to contact Crime Stoppers anonymously at 416−222−TIPS (8477).

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It’s personal mainly because of the fact that each person’s situation is very unique and that means that there really is no easy answer or one size fits all solution, except one. That one exception is based on whether or not you contribute the annual maximum towards your RRSP every year, because if so, your new TFSA is by far the next best place to put your additional retirement savings.

If you don’t fall into the small percentage of Canadians who max out their RRSP contributions every year, we need to make a couple of assumptions and look forward to the day you begin to redeem money from either account. In other words, your retirement. Take a look at a couple of the different scenarios below:

• If you expect your tax rate during retirement to be the same as it is today, the choice is really yours as to whether you invest in your RRSP or TFSA as the benefits will remain fairly equal.
• If you expect your tax rate during retirement to be lower then it is today, you are far better off to maximize your RRSP contributions first and use your TFSA to fund your additioanl retirement needs.
• If you expect your tax rate during retirement to be higher then it is today, then there is no question that you are better off to maximize your $5,000 contribution limit inside of your TFSA first, and then use your RRSP room to make up the additional savings you will need for your retirement.

Your Take-Away: As I mentioned above, there is definitely no one size fits all answer to the question we are addressing today. My suggestion is that you take an overall look at your entire portfolio, revisit and maybe even redefine your goals, and then decide which account is better for you in your specific situation.

In the end, your best bet is to try and take maximum advantage of both your RRSP and your TFSA. If you’re like most and do not have that luxury, why not invest in your RRSP and then put your tax refund back into your TFSA? Just a thought.

Until next time, have a Wonderful Wednesday!

Chris

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We have discussed what the Tax Free Savings Account (TFSA) actually is and how it works, and now we need to look at why it may in fact make sense for you. The reality is that this type of account can work for just about everyone, but it is essential that you know why you want to take advantage of this new investment vehicle.

That said, there are multiple reasons and ways that you can make this account work for you. In order to keep this post short and to the point, I’ve chosen to try and put some examples together in the form of bullet points. Some of the reasons this could make sense for you could be:

• You want to save additional retirement funds outside of your current RRSP or pension plan
• You are actively saving for a specific goal, such as a new home or vacation, and need total liquidity
• You own high risk, potentially high reward stocks or funds that could grow substantially and would like to ensure not $1 of the growth is taxable
• You are saving money to pay down your mortgage and would like to invest it throughout the year with the hope of growing your account value and creating a larger deposit on your mortgage
• You are receiving retirement income from your CPP or OAS, your RIF or your pension and are not in need of the full amount but do not want to pay additional tax on the growth over time

Your Take-Away: By no means is the list above exhaustive in nature. There are multiple reasons for a Canadian to invest in the new TFSA, but it is very difficult to specify which one will make the most sense for you. The only question you need to ask yourself is “do you want to eliminate the taxes you currently pay on your investment growth?” If so, looking at the TFSA is a complete no brainer and something that certainly deserves a small investment of your time.

A couple of more posts to come on the new TFSA, but until then, have a Wonderful Weekend.

Chris

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According to the official definition as stated by Canada Revenue Agency, the TFSA is “a new way for residents of Canada to set money aside tax free througout their lifetimes.” They go on to say that “contributions are not tax deductible for income tax purposes and the income earned inside the account is tax free, even when it is withdrawn.”

Because there are a number of rules surrounding this amazing new account, I have chosen to use a point form format to better explain what they are: 

• Owner: Only the account holder can contribute to their own personal TFSA
• Eligibility: Any resident of Canada who is 18 years old and holds a valid SIN
• Beneficiary: You can stipulate who your beneficiary is and all proceeds at death are passed down tax free
• Contirbution Limit: The annual dollar limit is $5,000 per account and will increase with inflation each year
• Withdrawals: Any withdrawal is tax free and the limit for the following year increases by the same amount
• Investment Choices: You can choose from mutual funds, securities, GIC’s, Bonds, even savings accounts like ING

Your Take-Away: As I’ve mentioned previously, this is a tremendous new investment vehicle and it is well worth your time to look into this further. Learning how to properly incorporate this new account within the rest of your financial plan appears to be one the largest challenges that most will face, which is why understanding how it works is so essential.

If you would like to read more detailed information about the TFSA and how it works, please see the attached CRA document entitled “The TFSA Explained by CRA“.  

Until next time, have a Terrific Tuesday.

Chris

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