October 29, 2021

That's why it's so tough to save money!

Budgeting is tough, particularly when you're trying to actually set some money aside for the future.

Like losing weight or battling any addiction, saving money resides in the realm of behaviour that sometimes seems immune to rational solutions, says one ex-banker turned blogger. But it's often tough to get out of the gate without some help.

"My guess is that the best person to help you figure out how to save money is somebody who has suffered from living beyond their means in the past, and who has developed effective strategies for overcoming this problem," he says. 

But if that person isn't readily available to you, you still need to figure out what's holding you back. That means tricking that rational mind and helping it get with the program, he suggests, including developing a better sense of just what's going on upstairs. 

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October 17, 2021

Why your budget may not be working

Got that nagging feeling that you’re just not doing enough to manage your money? You’re probably right, which leaves you with two options. Keep writing cheques and melting plastic until your money runs out, or get a handle on things right now by establishing some sort of spending plan.

A reasonable spending plan can provide a shot in the arm for many households – particularly those where there are dissenting views as to where the money actually goes.

Once you've decided how much your family is likely to burn through in big-ticket categories like cars, housing and food, then you can work towards either predetermined savings goals or emergency planning.

Here's one story of how someone ended up suddenly without a job -- and without a firm idea of his household’s spending.

The important thing to remember is that money is fungible, maintains economist Emily Oster. In reality, all dollars are the same. There is no such thing as a gas dollar, a grocery dollar, or a “fun” dollar.

So simply slotting expenses into envelopes depending on what you think you might spend may actually hinder you in the long run since it doesn't allow for much flexibility.

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August 22, 2021

Investors fail to realize how rising rates kill bonds: report

If the results of the latest research are any indication, investors are in for a big shock once interest rates start rising and bond prices start falling.

In a survey of U.S. investors, investment firm Edward Jones found that two-thirds of the respondents don't understand how rising interest rates will affect their investment portfolios. Twenty-four per cent admitted they “feel completely in the dark about the potential effects.”

And it gets worse.

One-third of those between the ages of 18 and 34 admitted they have "no idea" how interest rate changes will impact their investments. While the level of awareness increased a bit with age, one-quarter of those 65 and older -- who typically gravitate to the income and perceived safety of bonds -- also indicated they had "no idea."

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August 14, 2021

Consumer proposals slowly replacing bankruptcies: report

Having lost a bit of its stigma, declaring personal bankruptcy has long been a viable option for people sinking under the weight of unmanageable debt.

So much so that roughly 118,000 Canadians went broke last year, according to the most recent statistics.

It may have a certain 'get out of jail free' appeal, but bankruptcy isn't necessarily an easy — or pleasant — fix for those who fall behind in their payments.

First off, you'll need to a hire a trustee to balance both your and your creditors' rights. Something of a referee, the trustee is there to make certain you understand the rules and that they're applied fairly.

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July 30, 2021

Canadians better off than they think: report

Despite shouldering record-levels of debt, Canadians are actually richer than ever with household net worth eclipsing the $400,000 mark for the first time in history.

The average household's net worth grew by 5.8 per cent at the end of last year from $378,093 at the end of 2011, largely, due to roughly a 5 per cent increases in real estate values and savings, according to a recent report from Environics

This keeps Canadian households ahead of their U.S. counterparts for the sixth straight year although, on a currency-adjusted basis, the gap isn't that dramatic.

In fact, that gap has actually narrowed a bit recently, largely because Canadians continue to borrow where most Americans seem to be saving a bit more. And U.S. housing prices are on the increase.

But will this gap continue?

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July 24, 2021

More Canadians carrying debt

Nothing can be said to be certain, except death and taxes...and now debt.

According to a new report from BMO Bank of Montreal, more Canadians are carrying a household debt load (83 per cent) compared to 74 per cent in 2012.

The survey found that mortgage debt was the main source of debt for many Canadians followed by car loans and funding education.

The study also found that the average monthly debt payment has declined, dropping from $1,138 to $986.

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Could a Canadian city go the way of Detroit?

The recent bankruptcy filing in Detroit is raising red flags about other major U.S. cities also cracking under the weight of dealing with billions in retiree benefits and unpaid loans.

Could the same thing happen here?

Canada's municipalities may be unlikely to face the same fate, but the financial fall of Motor City carries lessons for towns and cities in this country as well, suggest some urban planners.

"Detroit is a wake-up call to say that long-term problems can eventually get to you if they're allowed to remain long term," policy consultant Brian Kelcey told CBC News.

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July 18, 2021

Is student debt preventing you from getting on with your life?

The transition from adolescence to adulthood is already being delayed, with young people taking longer to marry, buy a home and have children, but large student loans can slow the process even further.

The dead weight of student loan debt has been referred to as “the anti-dowry” in certain circles. And this anti-dowry is getting larger and more burdensome, with students who took out loans graduating with an average of $27,000 in debt last year.

Unlike a dowry, which in some cultures helps a young couple get set up in life, a stack of student loan debt is a millstone preventing many young people from getting on with their lives, maintains researcher Allan Carlson. 

This may mean boomeranging home with parents for years, or forestalling any kind of serious relationship with a potential life partner (let alone marriage), he adds. And, when they do eventually find that partner, that debt is often top of mind prompting delicate conversations about just what to do about it

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July 10, 2021

Just how long could you go without a paycheque?

According to a recent survey, 27% of Americans have no money at all in savings.

In addition to those who admit to having nothing in the bank, less than 25% reported having the recommended six months of living expenses stashed in the bank and fewer than 50% had even three months of living expenses tucked away.

Are Canadians any more frugal? Apparently not. A recent poll from the Certified General Accountants Association of Canada indicates that 29% of households here find it difficult to sock away any money once key bills were paid.

So much so that 47% admit they'd be in dire straits if their pay cheque was delayed as little as a week.

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June 27, 2021

Couples singing the wedding blues

1038218_66480936The "Big Day" may be farther away than you think.

Financial priorities seem to be getting in the way of that special wedding day, according to a new survey by BMO Bank of Montreal.

The cost of walking down the aisle is estimated at $14,281 and upwards -- a hefty sum for couples just starting their married lives together.

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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...