Canadian interest rate hike: 5 tips for consumers

With the today’s announcement that for the first time in seven years the Bank of Canada has raised the Canadian interest rate to 0.75 per cent from 0.5 per cent, it is a good time to get your financial house in order using both a cautious and deliberate approach.growthchart_burgundy

Rob McLernon, a Licensed Insolvency Trustee with Grant Thornton’s Nova Scotia practice, offers the following 5 recommendations to Canadians:

  1. Review your debts. Do a complete review of your debts to determine whether they will be susceptible to a rate increase now (variable rate products) or at renewal (fixed rate products).
  2. Review your spending plan. If you don’t have a spending plan, create one. Determine how much money you have left at the end of the month presently, the impact the interest rate increase will have and make adjustments.
  3. Create a debt repayment plan. Create a structured and focused approach to paying down your debts. For the greatest impact and most improvement on your monthly cash flow, attack debt with the highest interest rate first.
  4. Consider making cash-only purchases. Stop the accumulation of more debt and interest by relying less on credit.
  5. Seek out the advice of a financial expert.  Debt help experts, such as License Insolvency Trustees, can provide free advice regarding your personal financial situation.

To book a free consultation with one of our debt help experts, visit www.grantthornton.ca/consumer_insolvency to find a location near you.

RobM_HS
Rob McLernon is a Licensed Insolvency Trustee (LIT) and a Chartered Insolvency and Restructuring Professional (CIRP)  with our Nova Scotia Grant Thornton team. He’s been working primarily in the consumer insolvency area since 2003. In addition to being a LIT, he is a Certified Insolvency Administrator and Counsellor. Rob has extensive background knowledge on debt restructuring and brings this to his current role.

 

 

Tips for Valentine’s Day on a budget

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If you’re having trouble making ends meet, you don’t have to succumb to holiday pressure and spend money you don’t have just to show someone you love them. Some of our Licensed Insolvency Trustees across the country exposed their romantic side by sharing these great low-to-no-cost tips for having a memorable Valentines Day in 2017.

ALBERTA:

Freida Richer tells us how to have a romantic day in Alberta without breaking the bank!

  • Outdoor skating: Bundle up and head outdoors for skating at Olympic Plaza or snowshoeing at Bragg Creek or the Kanasksis Silver Skate Festival and enjoy Edmonton’s picturesque Hawrelak Park in the River Valley. You can get hot chocolate there or bring some of your own for afterwards and have a romantic winter picnic.
  • Plan and prepare a romantic dinner at home together: Staying in is a great way to save money, and enjoying a meal at home can be more romantic than eating dinner in a noisy, crowded restaurant. Set the stage with candles, and dig out your good dishes and wine glasses!
  • Explore the city: Exploring your own neighbourhood with your loved one is a romantic way to spend an evening without breaking the bank. There are plenty of activities around town that are perfect for a date night on a budget including a Telus Spark adult night a few days before Valentine’s Day, the Penguin March at the Calgary Zoo, cheap seats at the Calgary philharmonic (which start at $25), or try cooking classes at SAIT or  “Get Cooking, MacEwan University”.

HALIFAX:

We discovered Rob McLernon is a romantic at heart when he shared these tips with us.

  • Outdoor skating at the Emera Oval: Plan a romantic outing to the Emera Oval with your significant other and enjoy an evening of skating under the stars. Bring some hot chocolate and snacks for afterwards and have a romantic winter picnic
  • Explore the Halifax / Dartmouth waterfront: Walk the boardwalk, take the ferry across the harbor, and stop into a coffee shop for a snack. Exploring your own neighbourhood with your loved one is an exciting way to spend a romantic evening without breaking the bank
  • Plan and prepare a romantic dinner at home together: Staying in is a great way to save money, and enjoying a meal at home can be more romantic than eating dinner in a noisy, crowded restaurant. Set the stage with candles, and dig out your good dishes and wine glasses!
  • Go snowshoeing: Consider renting some snowshoes or cross country skis (or better yet, borrow equipment from a friend) and head out for a jaunt in Shubie Park or Point Pleasant Park.

CAPE BRETON ISLAND:

Thanks to Cape Breton, Nova Scotia Licensed Insolvency Trustee Blaire MacNeil for these tips for planning Valentine’s Day activities around the island.

  • Venture outdoors: Consider renting some snowshoes or cross country skis (or borrow equipment from friends) and head out for a snowshoe hike around the Clyburn Loop at the Clyburn Trail in the Cape Breton Highlands National Park.
  • Go to the movies – it’s cheap night: Movie tickets are cheaper on Tuesdays, and Valentine’s Day just happens to fall on a Tuesday this year! Take advantage of cheap night and grab a couple cheap movie tickets for you and your significant other.
  • Cook a romantic dinner together: Staying in is a great way to save money, and enjoying a meal at home can be more romantic than eating dinner in a noisy, crowded restaurant. Set the stage with candles, and dig out the good dishes and wine glasses.
  • Attend a community hall dance: If staying in is not your thing, the Practical Nursing Students are hosting a Valentine’s dance with a silent auction on Saturday, Feb 11 from 9pm to 1 am at Grand Lake Road Fire Dept. All proceeds go towards Loaves and Fishes, and tickets are $15 per couple! Call 902-317-1389 for tickets.

NEW BRUNSWICK:

Kristi Stuart and the New Brunswick team shared these tips.

  • Outdoor Skating: Plan a romantic evening of outdoor skating at the Arts & Culture Park in Quispamsis, or skate to music under the stars at Lily Lake Pavilion in Saint John. Bring some hot chocolate and snacks for afterwards and have a romantic winter picnic
  • Plan a romantic stroll through Rockwood Park: Bundle up, grab your loved one, and embark on a romantic stroll through Rockwood Park. Bring some hot chocolate and snacks and have a romantic winter picnic after your walk
  • Cook a romantic dinner together: Staying in is a great way to save money, and enjoying a meal at home can be more romantic than eating dinner in a noisy, crowded restaurant. Set the stage with candles, and dig out the good dishes and wine glasses!

If your debt load is causing you stress beyond trying to plan the perfect Valentines Day gift, contact one of our debt help professionals near you for a free, no obligation debt consultation.

5 steps for getting your financial house in order this year

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Now that we are well into January, you’ve probably had many possible new year’s resolutions running through your head…lose weight, quit smoking, exercise more, spend more time with family…the list goes on. Where do you start?! My belief is that “getting my financial house in order” should be on, if not at the top of, most Canadian’s new year’s resolutions lists for 2017, and here is why.

As Canadians find themselves dealing with ever-increasing debt levels, a greater and greater portion of their monthly paycheck goes towards servicing this debt.  With grocery and gas bills on the rise, it’s predicted that the average Canadian family could spend $1,600 more in 2017 than 2016. So, now is the perfect time to review your financial health and set a plan for the coming days, weeks and months.


Step 1: Determine your personal net worth.

Review your current financial situation by creating a personal net worth statement. This should be done annually so you can see if you are gaining ground or not. List all your assets (e.g., home, car, investments) and give a realistic value for each. Then list all your debts (e.g.,mortgage, car loan, credit cards, lines of credit, etc.). File this away for next year so you can review your progress year over year

Step 2: Plan to pay down debt.

Review your list of debts from your personal net worth statement and create a debt reduction strategy.

Higher interest unsecured debt should be attacked first.
By reducing this debt first, you will free up more of your monthly income to be used to reduce other debt, or create savings. Paying down high interest, unsecured debt is a two-pronged approach:

  1. Stop (or limit) the future use of the unsecured debt.
  2. Pay more than the minimum the lender requires.

This seems simple in theory but can be difficult in practice because “life happens”. The budget you create should have some provision for unexpected expenses which can help with reducing the tendency to use the debt for such unexpected expenses.

Use cash on a go forward basis
Plastic (credit and debit cards) is very convenient and can lead to unanticipated or overspending. Leave the cards at home (in a safe place) to limit your access. Get receipts for everything you spend. Remember you are now using cash and without the receipts you have less ability to track where the cash went.

Step 3: Create a budget.

A budget is not a four letter word and it is not something to fear. A budget is merely a plan for how you want to spend your money. There is the old adage: If you fail to plan, you plan to fail. Nothing could be more true!  A budget is key to improving your financial health. If you already have a budget, pat yourself on the back. If you don’t, the beginning of the year is a good time.

The best way to create a budget is to review your spending patterns over the previous months because where your money has been going is probably a good indication of where it will go in the future.

  • As a starting point, look at your bank statements, credit card statements, etc.
  • It doesn’t matter what form your budget takes (pen and paper, Microsoft Excel, software, online), as long as it done in a method that you are comfortable using regularly.
  • It doesn’t matter what form your budget takes (pen and paper, Microsoft Excel, software, online), as long as it done in a method that you are comfortable using regularly.
  • Some resources to check out include the online budget calculator offered by the Federal Consumer Agency of Canada, and the budget tool and free mobile apps at Mint.com. Software for purchase such as Quicken can be useful, however, they come with a cost to purchase.
  • Look to online tutorials to help you create the best budget for your situation.
  • For your budget to be most effective and to be most successful achieving it, be sure to involve your spouse and your children (they will need to learn this as they get older) in the process .

Step 4: Create savings.

Pay yourself first.
Your budget should also have a monthly savings amount built into it. An effective way to do this is through payroll deduction. This way you aren’t tempted to dip into any savings you planned for at the end of the month.

Piggy bank_lavendarAutomatic Money Transfer
Another method of “forced” savings is to have your money automatically transferred from your checking account to your savings account according to your pay schedule. Start small and after a few months if you can handle slowly increase the amount. Out of sight is out of mind – over time you won’t even miss it!

Use a piggy bank
Collect your loose change. Loonies and Toonies can add up quite quickly!.

Step 5: Track spending.

An often overlooked step, you need to track your actual spending and compare it to your budgeted amounts. Review your budget at least monthly to see if your spending compares to your budget. If you find you are spending more in a category then the budgeted amount, you either need to increase the budgeted amount or decrease the amount you are spending.


Getting your financial house in order an important resolution. Create a plan and work towards achieving your plan. Don’t try to change everything overnight as you are more likely to give up and return to your old ways. If you find you are in over your head reach out to a professional such as a Licensed Insolvency Trustee for help.

RobM_HS
Rob McLernon is a Licensed Insolvency Trustee (LIT) and a Chartered Insolvency and Restructuring Professional (CIRP)  with our Nova Scotia Grant Thornton team. He’s been working primarily in the consumer insolvency area since 2003. In addition to being a LIT, he is a Certified Insolvency Administrator and Counsellor. Rob has extensive background knowledge on debt restructuring and brings this to his current role.

 

 

8 ideas for a fun & frugal festive season

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The holiday season can be a time of friendship, laughter, and holiday cheer… and a time when you feel the expectation to spend a lot of money that you may not have. This is why it can be an especially difficult time for many people: the pressure to keep up with those around us, the fear of disappointing those we typically buy presents for, the stress of not being sure how you will afford food for the table let alone presents for under the tree.

Our debt solutions counselors at Grant Thornton Limited have shared some of their tips for trying to refocus this holiday season so you can make it more about enjoying the time with the people around you. Hopefully using some of these tips will help you feel refreshed in the New Year, as opposed to wondering how you will recover from the spends made in December.

  1. Talk to family / friends about the cost of gifts. Sit down and make decisions about a dollar limit for gifts. If money is tight then consider doing a secret Santa with the family. Remind everyone that thoughtfully chosen gifts are more important than expensive ones.
  2. Take advantage of the sales. Shop the sales throughout the year by making a “Christmas closet” that you can add items for people that you find throughout the year , or after Christmas and by discounted Christmas decorations. This is also useful if you have a drop in guest who brought you a gift and if you wanted to give them something in return.
  3. Have the kids make a list.  Ask them to pick 3 items that they want: 1. One that is a real want, 2. One that is a need, and 3. One that is a small / inexpensive.item.  Let them know that they will likely only get one item off of the list – this helps teach children that Christmas is about more than presents, they put real thought into what they want, and your pocket book gets to save by not buying them gifts they don’t really want or need.
  4. Cut out unnecessary items.  This could include ribbons, bows, and fancy tape. Use brown paper bags as a fun alternative with colorful marker to write the “To” and “From”.
  5. Sell old toys / clothing.  Find a local consignment store and get extra cash for new gifts.
  6. Do Christmas baking instead of gifts.  This helps cut costs, and has the added benefit of spending time with family to make the bake goods.
  7. Take advantage of the free events to get into the spirit. Santa Claus parade, craft fairs, outdoor concerts and tree lighting ceremonies are usually offered at no-charge.
  8. Hold a “Catch up Christmas”.  This one is great if you overspent last Christmas and your budget is super stretched. Consider not spending for one Christmas. Instead, focus on a nice family meal, taking in the Christmas parade, driving around seeing the Christmas lights, and really devoting your holiday to your family by giving your time. It enables you to spend quality time with your family and no one will be stressed because the focus is on time and making memories, not spending.

Other fun free activities include: a hot chocolate and Christmas movie night, ice skating at the river, or sliding in a park, take a drive around / walk around the neighborhood for Christmas lights. Center this Christmas on family activities instead of gifts and goodies.

We put a lot of pressure on ourselves to spend money at this time of year. Let’s try to take some steps to break that cycle, enabling us to end the year and start a new year with a fresh, positive, less stressful approach. Enjoy the loved ones in your life and the memories you can make rather than worrying about the debt we can incur.

If you have money-saving gift-ideas, we’d love to hear them.  If you are finding this holiday season particularly stressful because you feel your debt load is overwhelming, please reach out to us and let us present you with some options for your situation during a confidential, no obligation consultation.  Sometimes just knowing you have options can help relieve the stress you are feeling.

krististuart
Kristi Stuart is a  Licensed Insolvency Trustee (LIT) on the New Brunswick Grant Thornton team. In becoming a trustee, she won the 2015 Jack Biddell Gold Medal for finishing the Canadian Association of Insolvency and Restructuring Professional’s 2015 National Insolvency Exams with the highest standing in the country.

 

 

 

Black Friday & Cyber Monday: How to get past the hype and shop smart

pexels-photo-230544_72Door crasher deals. Limited quantities available. Lowest prices of the year – 4 days only!

With the holidays right around the corner and discounted deals constantly advertised to you, Black Friday and Cyber Monday is a time when you can get wrapped up in spending. Online shopping has become more prevalent and more convenient than ever before but can quickly send you into a spiral of debt if you’re not careful.

There is a psychology behind all the advertising and promotions surrounding Black Friday and Cyber Monday. It’s important to be aware that retail “events” like these are really just marketing tactics meant to over-hype discounts and deals that could promote and result in overspending. The advertising feeds on our emotions and plays into the fear many of us have of missing out on something big. There is a lot of buzz and excitement created as marketers aim to whip shoppers into a frenzy by putting high demand items on at seemingly deeply discounted prices — available only for a short period of time.

If you aren’t careful, you will end up buying more than you had intended – and spending more than you have by using credit and buying impulsively. If you are planning to participate in big retail days like Black Friday/Cyber Monday, be smart about it.

Tips for Smart Shopping

  • Don’t shop because you fear “missing out on something big”. The reality is that deals or discounts come in waves and will be available at multiple times throughout the year. Do the math to determine if it’s really a “deal” not to be missed.
  • Give yourself a financial reality check before shopping. It’s important for you to quickly pull out a statement of your largest debt (credit card or loan statement) to see the dollar amount owing on that account. You need to think about how you will feel tomorrow if you add on more debt today. Decide if it’s worth it.
  • Make a list. With discounts available on so many products, it can be easy to lose track of what you are looking for and make impulse purchases you will regret later. Making a list of exactly what is needed allows you to be in control of where your money is going.
  • Set a budget and stick to it. In addition to planning which items are on your list, set a strict budget of how much you are able and willing to spend. As you are shopping, keep a tab of how much you are spending and cut yourself off once you reach that limit. Despite the discounts being offered, some items may simply be beyond a reasonable budget.
  • Be aware that online shopping can result in overspending. These days, people don’t have to leave their homes to participate in Black Friday/Cyber Monday shopping. The problems with the ease of shopping via your home computer or cell phone is that you will likely use a credit card for the purchase and you’ll end up purchasing multiple items within a short time frame since it’s very easy to submit a payment and move on to the next item.
  • Is it really a “deal” if I buy it on credit? If you buy that great deal on credit, are paying only the minimum monthly payments on your credit card balance and it takes you more than 6 months to pay off your purchases, your overall cost with interest will end up voiding any original deal or discount you are getting.

Overall, just be honest with yourself about your financial situation. With the weakened economy and the unfavorable US exchange rate, many consumers do not have the financial means to participate in holiday shopping. If you are living pay cheque to pay cheque, assess if holiday shopping is a smart financial decision or if there are more economical gift options you can explore, like giving the gift of your time or making home-made gifts.

Do you have some great tips you use to avoid overspending? We’d love to hear them.

I’ve overspent! Now what?!

If you’ve already shopped and fear you overspent, don’t remove the tags. Leave the items in the bag and look at them the next day to decide if you still feel the same excitement. You might discover that an item in the bag was more a want than a need and you can still return it.

What are some warning signs that you are spending more than you should?
• You’ve maxed out your credit card (and are already only making the minimum payments).
• You feel guilty about your purchases – knowing you’ve bought ‘wants’ and not ‘needs’.
• You’re regularly spending more than you make.
• You’re dipping into your savings.

If you recognize some of these warning signs and are feeling the pressure of carrying an overwhelming amount of consumer debt, book a free consultation with one of our Licensed Insolvency Trustees. They can look at your personal financial situation during a confidential, no obligation meeting and make recommendations on what options are available to you.

freida_hs
Freida Richer is a Licensed Insolvency Trustee with our Edmonton, Alberta practice. You can watch her Money Smarts segment on the third Monday of every month on Global Morning News Edmonton.

 

 

Do my student loans still have to be paid even if I go bankrupt?

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Larry Crandall, Licensed Insolvency Trustee

Yes, but with some exceptions.

If you ceased to be a full-time or part-time student more than seven years before declaring bankruptcy, your student loans will be extinguished when you are discharged from bankruptcy.

If the period between your termination of studies and bankruptcy is less than seven years a student loan guaranteed under a federal or provincial program will survive your discharge from bankruptcy. You continue making payments.

After five years, however, the Bankruptcy and Insolvency Act permits an application to the Court for waiver of your obligation if you experience, and will continue to experience, financial difficulty. The Trustee can help you with the application to the Court.

As well as proving this level of hardship to the Court, you will be required to show that you acted in good faith in connection with your student loan. You may be asked how you used student loan money, how you have used your education, how diligently you have tried to repay the loans and whether you have stayed in touch with the lender and appropriate government agencies, availing yourself of interest relief plans and other repayment programs.

New Repayment Assistance Plan 

As of November 1, 2016, the Canadian government put new measures in place to help recent post-secondary graduates manage their student debt. Canadians don’t have to repay their Canada Student Loan until they’re earning at least $25,000 a year.  Learn more…

If you have questions or would like to have a free consultation with one of our trustees, contact one at our location nearest you.

Some people are driven to deliver quality. Fortunately, some are awarded for it.

frank_head-and-shoulders

Frank Fabiano, CPA, CA, CIRP Licensed Insolvency Trustee Partner and Vice President

 

A strong commitment to quality is core to everything we do at Grant Thornton. It is foundational to our success as a firm.

Frank was recently presented with our National Professional Excellence Award recognizing him as a partner who exemplifies the commitment to professional excellence to which the entire Grant Thornton team aspires.

Frank services Thunder Bay and Northwestern Ontario.  If you, your company or your client is experiencing financial difficulty, give Frank a call. Not only is he the right professional to consult, he’s understanding, respectful and here to help.

Learn more about Frank and book your free consultation.

 

 

What is a reasonable amount of debt to have?

Henry Francheville, LIT

Henry Francheville, LIT

A reasonable amount of debt allows you to make your monthly payments on time and in full while allowing you to maintain your other expenses.

You should be in relatively good shape if:

  • you’re able to pay your credit card balance in full each month;
  • your housing costs do not exceed 30% of your monthly income;
  • you’re not using payday loans or living in your overdraft; and
  • you’re able to put some money into your savings account.

For a large number of Canadians this is not always possible due to various reasons such as illness, job loss, separation/divorce, helping family members or simply the lack of a workable income.

We are pleased to offer a free consultation to discuss your situation.

Should I use my RRSP to pay debts?

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Larry Crandall, Licensed Insolvency Trustee

Larry Crandall, Licensed Insolvency Trustee with our Saint John, New Brunswick office, shares what you should consider before withdrawing money from your RRSP:

  • RRSPs are intended to save for retirement. Every dollar you withdraw today is a dollar that won’t be available when you retire.
  • Funds taken from an RRSP will be considered income in the year in which it is withdrawn. The institution will withhold income tax based on a sliding scale, but depending on your income, they may not withhold sufficient tax. This could leave you with a large tax bill at the end of the year.
  • Depending on the amount that is withdrawn from the RRSP, your increased “income” for the year may bump you into a higher tax bracket, which would increase your overall amount of income tax.
  • RRSPs are exempt in a proposal or bankruptcy (except for contributions made in the last 12 months). This means that if you file a proposal or go bankrupt, your RRSP will not be affected. If you have already withdrawn RRSP funds to pay debts and later file a proposal or go bankrupt, those funds are gone – your Trustee cannot get them back. However, the Trustee could help take care of the income tax liability created by the RRSP withdrawal.

Grant Thornton Limited provides advice and solutions to individuals and businesses experiencing financial difficulty.

Advice for Canadians facing housing foreclosure


Given recent news that nearly 1 million Canadians would be unable to keep up with their monthly payments if interest rateshouse-icon_purple  increased by only 1%, Freida Richer, Licensed Insolvency Trustee with Grant Thornton’s consumer insolvency team in Edmonton, warns that consumers who are unable to continue their mortgage payments may be facing a housing foreclosure.

She’s worked with consumers in a variety of financial situations and offered her advice for consumers in this situation:

  • Approach the situation earlier rather than later: A housing foreclosure can be more damaging to a consumer than filling bankruptcy. While facing financial worries can be daunting, approaching these situations earlier rather than later allows more time to find a solution that works for both the lender and the borrower.
  • Work with the bank: Banks don’t want to see a house sitting empty, if you work with your bank you may be able to live in the property until it is sold, granting you much more time to find alternative options.
  • Know your equity: More equity in a home often means a longer redemption period for a homeowner. Having more equity in a home could mean the difference between one day and six months in that home.
  • Resolving your exposure when foreclosure occurs: A mortgage deficiency judgment obtained against you as a result of the foreclosure is treated as an unsecured claim which can be resolved through a Consumer Proposal or Bankruptcy.

To learn more from Freida, visit www.gt.alger.ca