Should live kidney donors receive $10,000 for an organ donation?

If governments and hospitals want to attract more kidney donors, they might want to consider paying living donors $10,000, according a recent study released by the University of Calgary.

This would raise the number of transplant surgeries by five per cent and it would help save an overall $340, since the patient would no longer be on dialysis while adding an extra 0.11 years to a patient’s lifetime compared to our current donor system.

If kidney donations were to go up by 10 per cent, patients would save $1,640 and add 0.21 years to their lifetime. And if rates improved to 20 per cent, we can always hope for the best, patients would save $4,030 and add 0.39 years to their lifetime. Time is money and in this case, patients could gain time and spend less money. There would be wins all around.

Canada faces an unfortunate shortage in organ transplants. It leaves some patients on waiting lists for years as they undergo treatment and hope that they will be next in line for a donor organ, but it also contributes to a demand for black market organs overseas. Unfortunately, the number of donors hasn’t changed over the last decade, which means it leaves many people out of luck.

In 2011, there were 4,500 Canadians waiting for an organ to save their lives, while about 250 people died while waiting, according to the Canadian Health Institute for Health Information.

There’s a lot of debate surrounding the use of financial incentives to attract more donations. While we expect that they’d likely bring in more donations, the idea brings up many moral and ethical issues. Naysayers say this could exploit the poor since many people in poverty could see selling their organs as another income stream. Of course, that would only work if they were healthy and didn’t run out or organs to sell.

It’s understandable that it can be tricky to encourage donors because it’s not as simple as giving away money and walking away. If you were to donate an organ, there’d likely be a recovery period, which not everyone can afford, but also, how would the financial incentive apply to someone who died and donated their organs?

Meanwhile, instead of financial incentives, another idea that’s been floated around is an opt-out plan. This means that any Canadian resident could be automatically registered to donate their organs, unless they choose to opt-out of the program. Prince Edward Island considered this option and countries such as Greece, Spain and Luxembourg currently practice this idea.

But that doesn’t solve everything. The Economist attributes Spain’s high deceased donor rates to the smooth organ donation process, along with the country’s marketing of the importance of organ donations.

Donating an organ isn’t like donating blood and because of that there are many more issues to consider before someone goes ahead and makes that choice. But there’s one thing we know for sure, Canada needs to improve its system, not only to save more lives but to relieve some of the burden on our healthcare system.

What do you think about giving money or tax breaks to organ donors?

RRSP season is nothing to sneeze at

Enough about flu season – it’s time to stop sniffling and start seriously thinking about RRSP season.

The deadline date for making contributions to the Registered Retirement Savings Plan for the 2012 taxation year is just around the corner on March 1.

An RRSP is a plan that helps you save for retirement while offering you some other great tax benefits. For instance, deductible RRSP contributions can reduce the amount you owe on your income tax or even give you a bigger refund (depending on your income). And, as long as the funds remain in the plan they are exempt from tax as it grows.

You don’t have to make one annual lump sum to contribute to an RRSP either. RRSPs can be made easier to carry through monthly payments that suit your budget needs. However, if you are considering making a lump sum contribution before the March 1 deadline but don’t have the on-hand cash, another option is to talk to your financial advisor about an RRSP loan.

There is a maximum amount you can contribute to an RRSP based on your income and how much you previously contributed. You can contribute 18 per cent of your previous year’s income, up to a maximum of $23,820 in 2013. But keep in mind, if you didn’t contribute the maximum in previous years your deduction limit will be higher. Also, if you contribute to a workplace pension plan your deduction limit will be lower.You can set up a RRSP through your financial institution such as a bank, credit union, trust company or insurance company. You may also want to consider setting up a spousal or common-law partner RRSP. The bonus to this plan is that if the higher-income spouse or common-law partner contributes to the RRSP for the lower- income spouse/common-law partner then the contributor gets the short-term benefit of the tax deduction while the spouse or common-law partner receives the income and reports it on his or her income tax return.

While we’re on the topic of income tax, the deadline for personal income tax is April 30, 2013 while those who are self-employed have until June 15 unless there is a balance owed and then the deadline is April 30, 2013.

As with everything in life, make sure you do your research and find out more about Registered Retirement Savings Plans and the benefits.

Click on the Canada Revenue Agency link for some helpful information on RRSPs.

Will you be considering contributing to an RRSP this season?

Are extended warranties ever worth the money?

You buy some high-end television or smartphone after mulling it over for weeks, and then you have about 15 seconds to consider buying what amounts to an overpriced insurance policy on it.

When prompted, do you usually sign up for an extended warranty?

Many do, of course, even though consumer experts have long recommended against buying extended warranties, a high-margin profit centre for retailers.

Most products don’t break down within the warranty period and even when they do, repair fees generally end up costing the same as money you shelled out, they maintain.

As well, sales staff regularly mislead customers when they sell extended warranties, according to a recent BBC report. And, if these folks are to be believed, the same thing happens on this side of the ocean.

Truth is, buying a warranty his isn’t really a financial decision at all — it’s about regret, which is a very uncomfortable feeling that we all try to avoid, says Dan Ariely, author of Predictably Irrational.

And because we want to prevent that feeling, we’re all too willing to do something that’s actually not that financially wise. Most of us simply want to know that we won’t have to worry about this down the road.  And as a consequence, we often pay too much money for that solace, he maintains.

If you’re the type that might sleep easier thanks to the additional peace of mind an extended warranty might offer, go right ahead. But at least understand why, he suggests.

Do you generally buy extended warranties? Using what criteria? How have things worked out?

How are you going to save in 2013?

If you’re like me it isn’t always easy trying to save money.

It seems whenever I put a little money away into a savings account or a secret stash at home some unexpected expense always seems to arise. Car repairs, home repairs and uncovered medical expenses can pop up at any time. Begrudgingly, I am forced to dig into what little savings I have or choose to add onto my already pumped up credit cards.

But I am optimistic. According to a new report from BMO Bank of Montreal, Canadians are planning to save on average about $9,859 this year. That’s an increase of $600 over the previous year.

And how do they intend to save? Well, the majority are using a Registered Retirement Savings Plan (RRSP), 63 per cent; chequing account, 57 per cent; Tax Free Savings Account (TFSA), 49 per cent; high-interest savings account, 29 per cent; and Guaranteed Investment Certificates (GICs), 25 per cent.

Ernie Johannson, Senior Vice President, Personal Banking, BMO, says it’s encouraging to see Canadians increasing their savings this year. “While it’s important to pay down debt – particularly high-interest debt – it’s essential that households build themselves a financial cushion as well, whether it be for retirement or other goals.”

And just what are Canadians saving for? Well, the report, conducted by Pollara, indicates the majority are saving for vacations and for purchasing luxury items, entertainment and hobbies. Retirement and emergency savings tied for second spot.

Other top things Canadians are saving for include home renovations (29 per cent); new vehicle (20 per cent); education (19 per cent); and a new home (15 per cent).

The report also found that men plan on saving a little bit more than their counterparts by hoping to stash away $11,631 compared to the ladies with $8,091.

And by province it appears that Albertans plan on saving the most with $18,035; followed by British Columbia, $11,109; Ontario, $10,465; Manitoba and Saskatchewan, $9702; Atlantic provinces, $6,698; and Quebec, $5,477.

It’s always nice to be able to put a little away for a rainy day however, the study found that only half of Canadians polled feel they are saving enough to meet their goals.

Some of the barriers to increased savings include high expenses (71 per cent); low income (65 per cent); and debt repayment (52 per cent). Now I can relate to that!

Check out the full report here.Will you be saving money this year?

Adult children give parents’ money handling high marks: report

While adult children say they recognize the need to discuss inheritance and retirement planning issues, roughly half of them don’t feel they’ve done a very good job talking with their parents about these issues, according to a intra-generational study by Fidelity Investments.

But they do have a much more favorable view of their parents’ handling of money than what parents think of their children’s financial acumen, according to a follow-up study.

Nearly half of adult children surveyed by Fidelity (47%) feel their parents actually haven’t made any mistakes financially. Only one-quarter (24%) of adult children feel their folks didn’t save for retirement soon enough and even fewer (22%) say mom and dad saved money in the wrong type of accounts.

Parents, on the other hand, were more than happy to point out the errors their children had made, including racking up credit card debt (42%), followed by not saving for retirement early enough (38%) and not building a large enough emergency fund (36%).

The parents surveyed — to qualify for the study, they had to be at least 55 years of age, have children over 30 years of age, and have at least $100,000 in investable assets — listed saving for retirement (38%) or for a grandchild’s education (28%) as their top priorities.

What’s more, nearly a third (30%) say they have no financial issues.

Does this sound like your family? Do you think your parents have looked after things appropriately? Would they say the same about you? 

Managing finances before and through a divorce

Divorce is always devastating. But for some couples, parting with their other half is easy compared to dividing income and assets fairly.

While some partners may have unrealistic expectations or simply aren’t emotionally ready to settle up, others are dishonest and deliberately try to hide or deplete their assets.

Either way, the financial negotiations of divorce will be the largest financial transaction most individuals will ever participate in, says Justin A. Reckers, a financial planner who works with couples that have or are contemplating a split.

Most every divorcing person will prefer things, at least the financial side, to remain the same post-divorce as they were during their marriage. In reality, the pay cheque doesn’t go as far when supporting two completely separate households, so everyone loses financially in divorce, he points out.

If you think your relationship might be on shaky ground, here are a few things he suggests you think about long before you knock on his door.

* Couples may have previously decided one of the parents should stay home to raise the kids at the expense of career development. The end results in divorce are child support, spousal support, and retraining to enter the workforce outside the home.

* Couples often make a joint decision not to purchase long-term care insurance because they plan to care for each other in the event they need it. When they divorce, the caregiver is lost.

* A couple may choose not to set aside funds for college education because they can afford to pay the expenses from cash flow when both are working. But with two separate households college becomes a low priority when even saving for retirement seems no longer possible.

* Partners may choose not to save aggressively for retirement because one expects a large inheritance to take care of things. In most circumstances an inheritance received after a divorce will only benefit one of the parties.

* A couple may decide to reinvest all of the profits from their small business back into growth instead of paying down a mortgage or saving for retirement. When it comes time for divorce, it is often not possible to turn that business into cash because a sale is not advisable.

Sound familiar? Knowing what you know now would you do anything differently?

It’s tough being single

It’s tough being single … at least when it comes to money. Most financial plans tend to centre on milestones that have a lot more to do with couples than singles: Get married. Merge your financial lives. Buy a house. Have a child. Buy some insurance. Start saving for college — it’s a pretty traditional pattern.

Expect that today people are marrying much later or just aren’t marrying at all — to say nothing of all those relationships, same-sex or otherwise, that fall somewhere in between.

Just as with married couples though, the older singles get, the more assets they accumulate. And they’ve got an even greater need than a couple to put a plan in place that will protect what they’ve got, including that earning power. After all, there’s no spouse who’ll automatically inherit property or who can make up for some of your lost earnings if you get fired or become sick.

The asset singles most need to protect, however, is probably their earning ability. One way to do that is with a disability plan, income-replacement insurance that provides a tax-free income in the event you can’t work because of injury or illness. It’s a perk that many employers don’t offer, or at least not at the level that higher-income earners might find useful, and it’s one worth exploring.

Consider it one of your New Year’s resolutions.

Things are going to be different next year

Even the best of us make poor money choices and sabotage our financial future as a result. Sure, it’s not easy to change. But the important thing is to do something, starting right after the holidays.

For example, are you putting off saving for retirement because the “deadline” seems so far away? Or are steering clear of addressing your unwieldy debt load because it’s so intimidating? Don’t. Instead, ask yourself where you want to be in five years. Then try these simple steps…

Make a written plan. You can’t sidestep your financial responsibilities forever. Your odds of following through will increase dramatically if you set milestones. This way, you’ll hold yourself accountable for your choices.

Set specific goals. Break each one into several objectives: short-term (less than 1 year), medium-term (1 to 3 years) and long-term (5 years or more). Talk often about these goals with a partner, friend, or family member. You might even consider recruiting someone with the same outlook and work at things together.

Budget for savings. Pay yourself first. Just as you learned to budget money every month to pay bills and cover the essentials, you should also budget to save. The amount isn’t the issue at this stage -– focus on the process.

Track your spending.
Do you know where all your cash is going each month?  Are you honest with yourself or your partner? Prove it. Keep a spreadsheet of your spending for a few months and look for patterns. Try to figure out why you failed to pick up on unanticipated costs.

Monitor the results. Make sure you keep an eye on results, periodically comparing them against those milestones. If you’re not making satisfactory progress on a particular goal, reevaluate your approach and make changes as necessary.

Consumer confidence hits a record low

No surprise that the latest measures show consumer confidence in Canada is at the lowest ebb since the recession of 1981-82. According to the Conference Board of Canada, we feel that we are now worse off than we were six months ago. And we expect to be even worse off six months from now.

People cite uncertainty about their employment prospects, which feeds directly into their ability to manage their current debt load and their willingness to spend a nickel that’s not necessary.

But arguably, the political games, the search for scapegoats and the general absence of leadership is exacerbating the lack of confidence.

The fragile political balance, means that compromise and deal-making trump bold action. On the corporate front, multinational ownership and offshore head offices have also heightened the sense of a lack of control. And on top of that, the witch hunting, finger pointing and blaming has begun.

Economists say that lack of confidence will translate into the need for an even bigger government stimulus initiative to kick start the economy. Effective leadership is never cheap, but for once we may actually be able to put a pricetag on it.

Turn and face the future

Interesting article about what makes investors tick from MorningstarAdvisor , a U.S. publication that offers practice management and business building advice to financial advisors.

For months now, people have been abandoning stocks in a kind of slow-motion crash that reveals growing apprehension about what is likely to be a long and deep recession. In short, they’re running scared.

To understand why you have to look at how the “physiology of fear” affects investors, says Deborah Price, founder of the Money Coaching Institute.

The more people listen to the news and replay all the negative information, the more fearful they become. The barrage of bad news triggers the amygdala — that’s the part of the brain that stimulates the fight, flight or freeze response. And that’s where they get into trouble.

People can tolerate this fear, however, if they’re fairly sure the situation is going to end within a specific time frame. That’s how most of us handle roller coasters. We ride them because, on some level, we have a sense of trust and we know the ride is going to end.

Clearly, no one can be sure when this current market situation is going to turn, but we do know that — historically — U.S. recessions have averaged somewhere between eight and 16 months. And we also know that the stock market is a discounting mechanism which historically bottoms well before the end of a recession.

There, feel better?