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3 Signs You Need Debt Consolidation

Debt can be overwhelming, but there are many resources available.

The good news is that you have options. Debt consolidation may sound like an easy way out of your debt problems, but it can come with a price for some people.

Debt consolidation is sometimes needed if you’ve been turned down for credit or need to rebuild your credit score after bankruptcy or other financial struggles. You should also consider debt consolidation if your current loan rates are too high and you could potentially lower them by consolidating multiple debts into one monthly payment. There are pros and cons to this approach so make sure to do the math first before starting the process!

Let’s explore these areas further.

You have multiple debts and want a single monthly payment

Juggling multiple bills and payments every month can be very stressful and overwhelming. It can be hard to keep track of what you owe and when your payments are due. Having a single monthly payment would make it much easier to manage your debts and would reduce the amount of stress you feel every month.

In today’s society, it feels as if everyone has an endless list of things they must pay for each month, which is only made worse by the fact that money doesn’t seem to grow on trees. Bills can pile up quickly, and before you know it, your bills are stacking up like a house of cards. Having multiple debts makes for some very long workdays as you attempt to pay off all of your bills on time each month. Unfortunately, there isn’t always enough money left over at the end of the month to pay down all of your debts. If you’re struggling with managing multiple bills and payments, debt consolidation may be an option for you.

You’ve been turned down for credit and need a way to rebuild your credit score

Debt consolidation may be a great option that you can explore if you have been turned down for credit and need a way to rebuild your credit score. Debt consolidation can help you save on interest rates, because it puts all your debt in one place. As a result, you’ll only have one bill to make each month. You’ll also save money because you won’t have to pay high interest rates to several different lenders.

Typically, if you have experienced being turned down for credit your debt consolidation options do become limited. However, that doesn’t mean bankruptcy is your only option. A formal consumer proposal may be the perfect option if you want to reduce your debt. Formal consumer proposals are designed to help those who have typically been turned down for credit due to their financial struggles. The proposal helps them reduce their debt and give them a chance to start rebuilding their credit score, again.

Your current loan rates are too high and you could lower them by consolidating

Debt consolidation is a good choice for those that have high interest rates on loans. Different debt consolidation options can reduce or completely eliminate interest. Debt consolidation includes the merging or combining of all your debts into one payment arrangement. This could be in the form of a consolidation loan or through a formal option like a consumer proposal or bankruptcy. Debt consolidation typically leads to substantial savings on interest over time as a common trend of consolidating is a reduction of interest. This can save you hundreds of dollars each year, which can be used to pay off other debts that might still have higher interest rates, or saved for unforeseen future expenses.

If you’re not sure which debt consolidation program would work best for you don’t hesitate to reach out to us. We’d love to help you on your debt consolidation journey

This article was written by David Moffatt. A Debt Relief Expert. He has helped assist in creating plans that have helped save Nova Scotia residents over $30 million dollars of consumer and tax debt since 2015. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring strategies can help you cut your debt by up to 80%.

If you are struggling with debt please reach out. It hurts to continue to suffer financially. Halifax Debt Freedom services Halifax, Dartmouth, Bedford, Sackville the entirety of HRM, and all of Nova Scotia.

The post 3 Signs You Need Debt Consolidation appeared first on Halifax Debt Freedom.

source https://www.halifaxdebtfreedom.ca/3-signs-you-need-debt-consolidation/

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Get Help With Debt

Being in debt can feel like you’re drowning. It becomes difficult to see a way out, and it gets harder and harder to ask for help with debt. If you’re struggling with debt and are finding that you can barely keep your head above water, don’t worry – debt help is available. 

Here are some simple steps that you can take today to get your debt under control:

1. Calculate Your Total Debt

When debt starts piling up, sometimes the knee jerk reaction is to bury your head in the sand and to stop keeping track of how much you owe. This, of course, only makes the problem worse, so the first step is to add up all of your debt. It may be overwhelming to begin with, but it’s an important first step to take. 

Make a list of everyone you owe money to and how much. This might include household bills, mortgage or rent, credit card repayments, money owed to family and friends, and any other personal or payday loans you have. It’s a good idea to jot down beside each payment how often you need to pay it, when the next payment is due, and whether you have fallen behind on any. 

Having everything you owe accounted for will make it much easier to get help with debt, as you will have a clear picture of what your total outgoings are, compared to your income. Start opening your bills straight away and filing them away in a safe place so nothing gets misplaced. Avoiding your debts only adds to the stress.

2. Categorize Your Debts By Priority

Now that you have a clear idea of how much you owe, the next step is to prioritize your debts. 

When it comes to understanding your debt options, it’s key that you know which payments are the highest priority. Paying off debts in the correct order will help you to avoid getting into further debt. There could be larger consequences for missing a payment to a debt collection agency, for example, than a small payday loan. 

The same goes for how many payments you’ve missed. If you’ve missed several payments on your rent, then you could risk eviction, making this a high-priority issue. If you’ve only missed one payment, on the other hand, then this might not be as urgent as some other debts on your list. 

Work through your debts and categorise them into high priority, mid priority, and low priority debts. High priority debts should include any urgent debts with serious consequences, like getting your electricity or gas turned off, having your home or other items repossessed, or receiving a court summons or eviction notice. If you’re experiencing any of these high priority debt issues, it’s time for you to ​​get debt help.

3. Create A Realistic Budget

If you’ve completed steps one and two, you’re already on your way to taking back control of your finances. Now that you have a clear picture of exactly what you owe and which debts need to be tackled immediately, the next step is to set yourself a budget. 

Having a realistic budget is the best way to keep on top of your finances. Learning to understand what you take in, what you owe, and what is left to live on is crucial. If budgeting is new to you, seek financial debt help from a friend or family member or from an organization that offers debt advice. 

When creating your budget, it’s important to keep track of every outgoing you have. It’s often easy to take out cash at the start of the month and lose track of how much you’re actually spending on miscellaneous purchases. 

Divide your budget into categories to make it easier to see where you can cut down on spending and make savings. The categories should reflect your lifestyle, but common examples include household bills, debt repayments, transport costs, loan repayments, mortgage or rent, leisure, and miscellaneous living costs.

Create a budget for each month –taking into account any additional one-off outgoings you might have that month– and check it regularly to make sure you are sticking to it. 

Look for easy ways to cut down spending by swapping that Starbucks coffee for a homemade brew, switching to supermarket own-brand groceries, and using public transport when possible. You can even contact your electricity and gas providers to see if they can offer you a better deal or switch providers to make the most of cheaper deals.

Learning how to budget will help you to cut costs and reduce your debts.

Source: https://pixabay.com/illustrations/piggy-bank-money-finance-banking-2889042/ 

4. Boost Your Income

Once you’ve calculated your outgoings and where you can make some savings, consider ways to boost your income to pay off a larger chunk of debt. 

One of the best ways to help pay debt is to find a way to increase your earnings while reducing your spending. Finding a part-time job could provide some extra cash to pay off your debts, providing that your earnings are small and you don’t end up paying too much tax on your second income. 

Every little helps, so get creative: sell off unwanted clothes, toys, and gadgets and put the money towards clearing debts. 

Another way to increase your earnings is to find out if there are any benefits, grants, tax breaks, or money-saving schemes that you are eligible to apply for. Speak to your local non-profit organization to find out more about what financial aid you could be entitled to. 

5. Contact Your Creditors

Freeing yourself from debt often involves asking for help. This can be difficult, but keep your end goal in mind: getting back in control of your finances. 

Take a look through your priority list and consider contacting creditors from the priority and low priority categories to ask for help for debt. While creditors are not often known for their leniency, it’s always worth speaking to them directly and seeing if they can offer any debt relief. 

The amount of support a creditor will offer depends on the circumstances, such as:

The amount of money you owe

If you have missed repayments, and how many

If there are specific circumstances that explain why you are requesting extra support

The creditor’s evaluation of your ability to make your repayments

The type of payment or debt you are requesting extra support for (eg. if it’s a credit agreement or a bill)

In some circumstances with low priority debts, your creditor may be able to offer help in debt if you have proven yourself as a reliable lender (who has gotten into arrears due to unfortunate circumstances), or if you have shown that you are taking steps to get out of debt, such as selling off assets.  

While it’s not a guarantee, contacting your creditor is worth a shot to regain financial freedom. In some extreme circumstances, where the borrower can prove that their financial situation isn’t likely to improve (for example, due to health reasons), debt can even be wiped. This is why it’s key to speak with creditors to know where you stand. 

6. Get Professional Advice

Finding an organization that can offer you professional advice will give you peace of mind and remind you that you’re not alone. 

There are a number of organizations that offer debt help on online platforms and in-person. Speaking to a stranger, without fear of judgment, can help you to gain some perspective on the situation. 

Professionals who offer debt help are especially important if you’re in serious debt and require a debt repayment plan or need to file for bankruptcy. Experienced professionals will be able to walk you through your options and make the best decision for your personal circumstances. 

There are legal debt relief programs, providing interest reduction, and debt repayment plans to help those in debt get back on their feet. Professional debt advisors can let you know if you qualify for any of these programs, which can offer a quicker path out of debt. 

Your debt advisor deals with people in similar situations to yours every day, and can offer you advice without judgment, and always 100% confidential. 

There are plenty of options when it comes to sorting out your debts, and your debt advisor will suggest the best debt options for you and make sure that you’re receiving all the benefits and other aids that you’re entitled to. Most importantly, when you ask for help with debt from a professional, you’ll know you are no longer alone.

Key Takeaways 

Dealing with debt can be stressful, but you don’t have to go through it alone. You can begin the process of freeing yourself from debt today by taking the small, manageable steps laid out in this guide.

A debt relief expert can walk you through the process and help you to understand the debt options that are available to you. They can draw up the best solution for your personal circumstances, offer advice on budgeting, and simply provide a listening ear when things get overwhelming. Debt doesn’t have to control your life. Take the first step today – tomorrow is one step closer to a debt-free future. 

This article was written by David Moffatt. A Senior Debt Relief Specialist with 4 Pillars Halifax. 4 Pillars has assisted in creating plans that have helped save Canadians over $1 Billion dollars of consumer and tax debt since 2002. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring strategies can help you cut your debt by up to 80% with less than 3% of our clients ever getting into deep financial difficulties again.

We are proud members of the Canadian Debtors Association. We work for you, not your creditors.

If you are struggling with debt please reach out. It hurts to continue to suffer financially. 4 Pillars Halifax services Halifax, Dartmouth, Bedford, Sackville and the entirety of HRM.

The post Get Help With Debt appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/get-help-with-debt/

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Licensed Insolvency Trustees Nova Scotia

What is a Licensed Insolvency Trustee?

Filing bankruptcy requires the services of an LIT (Licensed Insolvency Trustee), formally known as a Bankruptcy Trustee. They are an Officer of the Court. Their job is to investigate your affairs, ensure you are not committing fraud, and ensure you understand how the process works. They are also there to protect the interests of the creditors as well as ensuring your rights as a consumer are respected. These rights include things such as ensuring creditor calls stop, making sure you understand the process.

Due to their role, a licensed insolvency trustee is unable to act as a true advocate for the consumer. In fact, if they were to do so it would jeopardize their license.

Are all Licensed Insolvency Trustees in Nova Scotia the same?

While all Licensed Insolvency Trustees are licensed by the federal government and use the same ‘rule-book’, the bankruptcy and insolvency act, not all licensed insolvency trustees interpret the ‘rules’ in the same way. This means from one trustee to another you may end up paying, or saving thousands of dollars. This is why it is important to interview several trustees and other debt professionals (and ensure you are reviewing all other options, like a consumer proposal)

Best Bankruptcy Trustee Nova Scotia

Licensed Insolvency Trustees were formally known as bankruptcy trustees until most recently. As mentioned above, every trustee is different. Because a licensed insolvency trustee is not able to truly advocate for a consumer in either a bankruptcy or a consumer proposal we believe it is important to work with an unbiased professional like 4 Pillars.

This way all your options can be reviewed, including those outside the bankruptcy act.

We’d love to be that resource no matter the options you are pursuing. We promise the following:

We provide a free consultation that is completely confidential.

We will ensure you understand every option available including the alternatives, like a consumer proposal, and all other options.

Our role is to exclusively represent you.

We are a top-rated debt relief company in Nova Scotia and we take that very seriously.

If you want to setup up a free confidential consultation to discuss how we can help you with your financial situation click here to become debt free.

How do bankruptcies work in Nova Scotia?

At a fundamental level, bankruptcies are based upon how much income you make and what type of assets you have. To learn more we highly recommend reading our in-depth guide on bankruptcy in Nova Scotia.

What do you lose when you file for bankruptcy?

The majority of consumers in Canada lose absolutely nothing when they file, despite having assets. This is because there are provincial and federal exemptions to assets that protect them from creditors. While a larger list is available in our bankruptcy guide, linked above, please find the two most common exempt assets in Nova Scotia.

A vehicle that has a value of up to $6,500, and

RRSPs except for the last 12 months of contributions.

How do you file bankruptcy in Nova Scotia?

The process of filing for bankruptcy in Nova Scotia is no different than filing for bankruptcy in any province across Canada. If you owe at least $1,000 and are insolvent (generally defined as either having more debt than assets and/or as not being able to pay your bills as they are due) you can file bankruptcy.

To file bankruptcy in Nova Scotia we recommend that you first consult with an unbiased professional, such as 4 Pillars to review other, less invasive options.

When you meet with your debt professional they will outline all of your options, ranging from budgeting all the way to bankruptcy and everything in between, including consumer proposals and debt consolidation. Ultimately, the decision to file bankruptcy is yours. However, your chosen professional will assist you in understanding the true pros and cons related to the various options.

If you are considering any sort of debt relief and would like a professional opinion we would be more than happy to provide one! Contact us here.

This article was written by David Moffatt. A Senior Debt Relief Specialist with 4 Pillars Halifax. 4 Pillars has assisted in creating plans that have helped save Canadians over $1 Billion dollars of consumer and tax debt since 2002. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring strategies can help you cut your debt by up to 80% with less than 3% of our clients ever getting into deep financial difficulties again.

We are proud members of the Canadian Debtors Association. We work for you, not your creditors.

If you are struggling with debt please reach out. It hurts to continue to suffer financially. 4 Pillars Halifax services Halifax, Dartmouth, Bedford, Sackville and the entirety of HRM.

The post Licensed Insolvency Trustees Nova Scotia appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/licensed-insolvency-trustee-nova-scotia/

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Complete Guide To Debt Counselling

Debt counselling is recommended anytime someone is struggling with their debt, find it unmanageable, and cannot seem to get it taken care of. If you are looking for debt counselling, we can help you become debt free and provide you with a free consultation to discuss your situation. In this article, we are going to cover the most commonly asked questions as it relates to debt counselling.

What is debt counselling?

Debt counselling is like any other form of counselling. A consultant, debt relief specialist, or counsellor will sit with you to better understand your situation and provide guidance in support to help you get out of debt. They will often provide recommendations to speed up the process and be your advocate through the process. Their goal is to help you become debt free as quickly as possible.

It is important to confirm that they are good standing members of the Canadian Debtors Association. This association insures that the individual working with you truly has your best interest at heart.

Is debt counselling a good idea?

It is important to reach out and seek professional advice any time you are struggling with a debt or financial problem. A consultation with a reputable debt solution firm will be completely free and come with no obligation or pressure. They will go through every single debt relief option you have in solving your debt problem. Don’t be shy to ask your debt counsellor:

Who do you work for? Their answer should be you, and only you.

How much do you charge? They should be able to provide you a clear dollar and cents answer.

Do you support me once my debt is paid off? Most firms do not which is unfortunate as the repeat rate for debt solution firms is extremely high at an estimated 25%. We are proud that ours is less than 3%.

What does a debt counsellor do?

A debt counsellor educates you on all of your options, explains the pros and cons of those options as they relate to your specific situation and helps guide you towards the right option. This will typically occur within a free debt consultation. If you choose to engage them to assist you further they will help you implement the chosen plan. They will walk you through it step by step and ensure you take all the appropriate steps and actions to not put yourself in a vulnerable position.

Are debt counsellors free?

There are no free debt solution firms out there, despite popular belief and some deceptive marketing practices. Debt solution providers are either paid by (and work for) the consumer or the creditor. We believe it is impossible to work for both in a truly unbiased fashion.

In saying that, you can expect to undergo a full review and consultation period completely free of charge as well as have an understanding of exactly what is going to be charged by your debt counsellor. This should leave no surprises in terms of what a potential outcome could look like and what the costs associated there are.

What are the disadvantages of debt counselling?

Debt counselling is not a specific program, rather it is a complete review of your situation to help you come up with a plan of action to deal with your debt. Because of this, there are no true disadvantages to debt counselling.

How does debt counselling affect your credit?

Speaking with your debt specialist doesn’t impact your credit. Only when you implement a plan that has a credit impact will your credit actually be negatively affected. What we have found, however, is consumers who are struggling to pay their bills often times have bad credit to begin with. Because of this, debt programs can actually help improve credit over time.

This article was written by David Moffatt. A Senior Debt Relief Specialist with 4 Pillars Halifax. 4 Pillars has assisted in creating plans that have helped save Canadians over $1 Billion dollars of consumer and tax debt since 2002. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring strategies can help you cut your debt by up to 80% with less than 3% of our clients ever getting into deep financial difficulties again.

We are proud members of the Canadian Debtors Association. We work for you, not your creditors.

If you are struggling with debt please reach out. It hurts to continue to suffer financially. 4 Pillars Halifax services Halifax, Dartmouth, Bedford, Sackville and the entirety of HRM.

The post Complete Guide To Debt Counselling appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/debt-counselling/

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Bankruptcy: Frequently Asked Questions (FAQs)

Bankruptcy can be complicating, we know. We have written several topics on bankruptcy. An ultimate guide to bankruptcy, an article on how student loans work with bankruptcy, and an article on filing bankruptcy in nova scotia, just to name a few. We recommend reading those first as they will cover off many of the main questions you may have about bankruptcy. Today, however, we are going to be covering off an extensive Bankruptcy Frequently Asked Questions list.

This list was last updated on 14 July 2021 and will continue to be added as new questions pop up.

Should I really file for bankruptcy?

Bankruptcy is certainly a viable option when attempting to deal with overwhelming debt. While many believe bankruptcy is the only option available to them there are several options available to them outside of just a Bankruptcy.

In fact, based on our experience when people come in thinking bankruptcy is their only/best option, and after we explain all of their options they often leave understanding there are much better options available to them.

If I file bankruptcy what happens to my car?

You may be asking yourself can I keep my car if I file bankruptcy? In most situations you are able to retain your vehicle. Nova Scotia has a vehicle exemption of $6,500 for a vehicle. This means if you file a bankruptcy and your vehicle is worth less than $6,500 then you are able to retain it.

Vehicles that have a secured loan against them (a car loan, for example) are also able to be retained and kept as long as the payments on that underlying loan are maintained.

Can I file bankruptcy and keep my house?

It is a myth that you automatically lose your house if you file a bankruptcy. There are three scenarios that often occur:

You have no equity – If you have no equity in your house then you can retain your property as long as you continue to make the payments on the mortgage.

You have a little bit of equity, but not enough for other options – In this scenario your cost of filing bankruptcy may increase to compensate for the equity in your property. Only if you cannot afford this additional cost would you need to consider surrendering your property.

You have a paid off house – In this option you would typically have other options available for you than bankruptcy.

Equity is usually calculated differently than if you were to sell a property, but not always. This depends greatly on the area, and the LIT through which you file. 

In any case, if you are asking yourself ‘can I keep my house if I file bankruptcy’ and considering filing bankruptcy it is imperative that you consult an unbiased professional.

What is the downside to filing for Bankruptcy?

To put it simply: bankruptcy is the most severe and damaging form of debt relief. An individual’s credit is impacted between 6-14 years from the date of discharge. This is much longer than other options.

Other downsides are:

Obtaining credit will be more difficult until you are fully discharged and have fully rebuilt your credit.

During your term of bankruptcy the more income you earn, the more you will be potentially required to pay.

If you receive any gifts, inheritances, windfalls of money, etc while bankrupt you will most likely lose them.

The repeat rate is also quite high. It is estimated to be approximately 25% within a 10 year window.

What can I keep if I file bankruptcy?

There are provincial and federal exemptions that apply to assets when one files a bankruptcy. We have compiled a detailed list in our bankruptcy article in the exempt assets in bankruptcy section.

What cannot be discharged or included in bankruptcy?

The main types of debts that cannot be included in a bankruptcy are:

Secured debts where you wish to retain an asset,

Debts incurred via fraud or other crimes (from lying, cheating, stealing, etc). This would include government programs obtained fraudelently (Ex: An EI overpayment where you applied for EI knowing you weren’t eligible)

Debts or amounts payable through matrimonial or child support arrangements.

Fines and penalties imposed by a court. (Ex: Traffic & Parking Tickets).

How much cash can I keep when filing bankruptcy?

Any cash on hand must be reported to the Trustees. Cash on hand (of any amount) will typically form part of your bankruptcy estate. This means the trustee will most likely want to seize the funds for the benefit of your creditors.

However, some trustee’s will allow you to keep up to the income surplus guideline (included below), or what your average pay is, whichever is greater.

Family SizeIncome Threshold 1$2,248 2$2,799 3$3,441 4$4,178 5$4739 6$5,345 7+$5,950

What are the income cut off for bankruptcy?

There is no income ‘cut-off’ exactly. Instead, there is a guideline, set by the federal government, that determines what your payments would be. While the formula can get quite complicating, a simplistic version is one half of every dollar you make above the guideline (included below), pro-rated to your percentage of the household income, is what would be payable.

For example, if you make $2,800 and were single you would need to pay one half of  $552 or $276 per month (for 21-36 months).

Family SizeIncome Threshold 1$2,248 2$2,799 3$3,441 4$4,178 5$4739 6$5,345 7+$5,950

How does a bankruptcy show up on your credit report?

A Bankruptcy will repeat on your credit report under the Public Record section of your report. The creditors included in your bankruptcy will report as an R9.

Is it a good idea to file a bankruptcy?

Filing a bankruptcy can be a good idea depending on your situation. Typically speaking, bankruptcy is most beneficial when affordability is very low and debt levels are very large.

What is the major benefit of declaring bankruptcy?

The major benefit of declaring bankruptcy is that creditors rights to pursue you for the debt cease. This is because of the stay of proceedings that occurs when a bankruptcy is filed.

What do you lose when you file bankruptcy?

You do not automatically lose anything. An inventory of all of your assets is taken, usually before you file a bankruptcy. Once this inventory is completed you have the choice of ‘buying back’ your assets from the Trustee. Anything you do not want, or cannot afford to pay to retain is what you would lose.

This could include things such as cars, houses, cash, investments to name a few.

Should I file for bankruptcy or debt relief?

Bankruptcy is a form of debt relief. However, there are many other debt relief programs that exist. These include credit counselling, informal settlements and consumer proposals.

How much debt do you have to have to declare bankruptcy?

You need to have at least $1,000 in debt. However, we recommend that you complete a full assessment of your situation and determining whether or not a bankruptcy makes sense for your situation. Usually at relatively low debt levels such as $1,000 it doesn’t make sense to declare bankruptcy.

Who pays your debt when you file bankruptcy?

Technically speaking, you do. The funds you pay into your bankruptcy estate are distrubuted by a Trustee to your creditors.

Which is worse? Debt Consolidation or Bankruptcy?

Bankruptcy is hands down the most severe debt relief option that exists. Debt consolidation typically involves obtaining a loan to pay off several creditors.

Should I stop paying my bills before bankruptcy?

Before stopping to pay any bills we do recommend speaking to a professional. You do not want to inadvertently cause any issues down the road.

If you have a question that we haven’t covered here please leave it in the comments below. I will personally answer the questions and potentially include them in this list!

This article was written by David Moffatt. A Senior Debt Relief Specialist with 4 Pillars Halifax. 4 Pillars has assisted in creating plans that have helped save Canadians over $1 Billion dollars of consumer and tax debt since 2002. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring strategies can help you cut your debt by up to 80% with less than 3% of our clients ever getting into deep financial difficulties again.

We are proud members of the Canadian Debtors Association. We work for you, not your creditors.

If you are struggling with debt please reach out. It hurts to continue to suffer financially. 4 Pillars Halifax services Halifax, Dartmouth, Bedford, Sackville and the entirety of HRM.

The post Bankruptcy: Frequently Asked Questions (FAQs) appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/bankruptcy-faq/

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What You Need To Know To Conquer Wage Garnishments For Good

Wage garnishments, or an assignment of wages is something that few people truly understand until it is too late and they are being garnished, or until they have been threatened with a garnishment. In this article, we are going to cover everything you need to know about wage garnishments. We will start with the most requested topic…

How to stop a wage garnishment

Fortunately, there are always options available to stop a wage garnishment. This is true whether you are simply being threatened, if you have been served court paperwork, or if the wage assignment has already began.

The main ways you can stop a wage garnishment are:

Negotiate directly with the creditor to have them stop the garnishment and to pay them directly.

Get a loan to to pay off the creditor in full.

Negotiate directly with a creditor to offer them an informal settlement.

File a consumer proposal.

File a bankruptcy.

It should be noted that options #1 and 2 can be very difficult to implement if a creditor has already served you with court paperwork or if the garnishment is already in place. Option #3 can be very effective, however, most consumers do not have the ability to come up with a lump sum of money if they are being garnished.

If you have already tried options #1 through 3 and are still at a loss but aren’t quite sure whether you should look at a proposal or a bankruptcy we have written an extensive article on a consumer proposal vs bankruptcy.

How can I stop a wage garnishment immediately?

Stopping a wage garnishment immediately can only occur when filing a consumer proposal or a bankruptcy. Both of these options come with an immediate stay of proceedings. This means that creditors can not longer collect any money from you. Typically speaking, any money that is taken by your creditors after you file a proposal or a bankruptcy is to be returned to you. However, there may be a delay.

Can you stop a garnishment after it starts?

Yes - by using one of the methods listed above, you can stop a garnishment after it starts. However, the fastest way to stop wage garnishment after it starts is by filing either a consumer proposal or bankruptcy through an LIT.

Does a garnishment hurt your credit?

Judgements do get reported to your credit bureau and so can have a negative effect. More often than not, the missed payments that caused the creditor to want to take you to court and obtain a judgement cause the negative impact to your credit.

What income cannot be garnished?

Typically speaking, government income (CPP, OAS, EI, etc) cannot be garnished by non-CRA creditors.

Can a garnishment be reversed?

A garnishment can be reversed, or stopped, with either the approval of the creditor or by filing a consumer proposal or bankruptcy

Does CRA use wage garnishments?

Yes - CRA does use wage garnishments. Unlike other creditors they are not required to go through the court system and can garnish incomes that other creditors cannot.

How much can be garnished from my paycheck?

Every province varies, so it is best to check in with your specific province. In Nova Scotia creditors can garnish up to 30% of an individuals gross wages.

This article was written by David Moffatt. A Senior Debt Relief Specialist with 4 Pillars Halifax. 4 Pillars has assisted in creating plans that have helped save Canadians over $1 Billion dollars of consumer and tax debt since 2002. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring strategies can help you cut your debt by up to 80% with less than 3% of our clients ever getting into deep financial difficulties again.

We are proud members of the Canadian Debtors Association. We work for you, not your creditors.

If you are struggling with debt please reach out. It hurts to continue to suffer financially. 4 Pillars Halifax services Halifax, Dartmouth, Bedford, Sackville and the entirety of HRM.

The post What You Need To Know To Conquer Wage Garnishments For Good appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/wage-garnishments/

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Is a TSFA or an RRSP Better for Savings?

If you’ve made a New Year’s resolution to start saving at the beginning of the year, you may wonder what the best way is to save. The Canadian government has created two products for savings. A Tax-Free Savings Account (TSFA) is a registered product introduced in 2009. They presented it as an alternative to the Registered Retirement Savings Plan (RRSP), which was first introduced in 1957.  So, is a TSFA or an RRSP better for savings?

What’s the Difference Between a TSFA and an RRSP?

The RRSP program allows savings to grow tax free until withdrawn, and the contributions are tax deductible in the year they are made. Withdrawals are limited and are added to your income in the year you withdraw them, resulting in a higher taxable income. There are programs which allow you to withdraw RRSP funds to use not only for retirement but also for post-secondary education (Lifelong Learning Program) or for buying your first home without affecting your taxable income. However, both programs demand the money be repaid to the RRSP or added to your income annually over the following 10 to 15 years.

TFSAs grow tax free, but the contributions are not tax deductible. There are no limits to the withdrawals, and you can use the funds for any purpose with no restrictions like an RRSP has.

Contribution Limits

For the current year, the RRSP contribution limit is 18% of your earned income (employment and business earnings) to a maximum amount of $27,830. The maximum limit is adjusted annually based on inflation. If you belong to a pension plan, contributions will reduce the eligible amount, but any unused contributions are carried forward. You can also use your own contribution room to add to a spouse’s RRSP, which provides immediate tax relief for you, and (hopefully) a lower taxable income upon withdrawal for your spouse.

TSFAs currently have an annual contribution limit of $6,000. Like the RRSP, unused contribution limits can be carried forward and used in future years. However, there is not an option or benefit to contributing to a spousal TSFA.

What Can Be Held in a TSFA or RRSP?

Legally, you can hold almost any investment inside both TSFAs and RRSPs. What is available to you depends on your financial institution? Consult your financial advisor about the options available. You may be able to purchase products beyond simple savings accounts and invest in higher return investments, such as mutual funds, stocks, or bonds.

Which Is Best for Me?

Is a TSFA or an RRSP better for savings? It depends.

RRSPs provide immediate tax relief, but upon withdrawal, all income is treated as earned income, so growth inside the RRSP may be taxed at a higher rate. (Dividends and Capital Gains receive preferential tax treatment). If your retirement income is higher than originally planned (because of pensions, Old Age Security, or ongoing post-retirement employment), then you may get no tax savings at all. RRSPs mature by the time you are age 71, then must be converted to a Registered Retirement Income Fund (RRIF), an annuity, or completely withdrawn.

TSFAs don’t provide any immediate tax relief. But at withdrawal, you don’t have to declare the income, so it won’t affect income-tested benefits such as the Guaranteed Income Supplement. And TSFAs are more flexible because they don’t mature, and you can use the funds for any purpose throughout your life without penalty.

Happy saving! If you need help paying off debt so you can start saving, book your free consultation with us now.

The post Is a TSFA or an RRSP Better for Savings? appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/is-a-tsfa-or-an-rrsp-better-for-savings/

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Savings and Investment Options

You’ve been told for years that you need to save money and perhaps it’s one of your New Year’s resolutions, but do you know what your savings and investment options are and have you made a decision?

Three Factors to Consider for Savings and Investment Options

When deciding where to save money, there are at least three factors to consider: risk, return, and liquidity.

Risk

Risk refers to the volatility of the investment (all savings are investments) and whether the principal invested could be lost. Investing directly in businesses is riskier than investing in an equity portfolio, which is riskier than a bond. The least risky option is a savings account at your local bank.

Return

The return you earn on your savings/investment is the growth potential. There is a relationship between risk and return — the riskier the investment, the higher the potential return. When investing in a business, it could become the next Amazon … or the next Blockbuster. There is no guarantee on business investments.

Equities (stock market) are substantially risky, but there are ways to mitigate some of that risk. Bonds have a guaranteed return, but they may lose or gain value depending on the interest rate. Savings accounts are typically guaranteed by the government (up to a certain threshold) and your principal will never be lost, but the rates of return tend to be less than prime.

Liquidity

Liquidity is your ability to access the funds for personal use or investing elsewhere. There is a relationship between risk-return and liquidity. The easier (liquid) something is to access generally means it has lower risk and return.

Savings Options

Bank Savings Accounts

Banks usually offer chequing and savings account options, with a variety of savings accounts to choose from. Rates of return are generally below prime – often significantly below. Your principal is secure, and you can easily transfer money to your chequing account for use (typically in one business day). But with the return not even meeting the rate of inflation, you are giving up purchasing power if you keep all your savings in a bank account. A savings account is most useful for short-term goals, not long-term prosperity.

Guaranteed Investment Certificates (GICs)

GICs have become less popular over the years, but many banks and financial institutions will still offer them. The return is typically marginally better than prime, and the principal is guaranteed. But GICs require you to hold the certificate until it matures, which may be as little as 3 months or as much as 5 years.

Bonds/Mutual Funds

Funds invest in a wide range of equities and bonds from markets all over the world. There are thousands of funds available, which allow for a mix & match approach to risk and return — many combine the diversity of bonds and equities in the same fund. While banks offer a variety of bonds and mutual funds, to access a wide selection of options, seek an independent financial adviser. You may not have access to your money for a week or more when you choose to cash out.

Market Investment

Buying directly into the stock and bond market is more complex than the average person is willing to tolerate. There are many low-cost options available online, but they come with minimal support and require you to do the research and evaluation of prices. Stocks are more liquid as you can convert them to cash quickly, but if you’re struggling to get out of debt, diving into the stock market directly may not be your best bet.

Knowing what your savings and investment options are, and evaluating the risk, return, and liquidity of your savings options will help you decide. If you’re having trouble finding money for savings and investment due to debt, we can help! Book your free consultation with us here.

The post Savings and Investment Options appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/savings-and-investment-options/

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How to Avoid Common Debt Traps

Trying to live within your means and avoid crushing debt can be difficult. If you’ve been trying to stick to your financial New Year’s resolutions, there are many pitfalls and traps. Follow these tips to avoid common debt traps and maintain financial health.

The Fear of Missing Out (FOMO)

Media and marketing are constantly trying to convince you, the consumer, that there is a life better than your own out there. A faster car, an exotic vacation, the newest fashions … commercials and ads bombard you constantly with the illusion of something better. They attempt to convince you that you are missing out on something, which amplifies your psychological need for instant gratification.

Being aware that marketers are targeting your innate psychological weaknesses is the first step to combat their influence. Keep a firm grip on what you want versus what you need to build a resistance to the influence of advertising. Fight the FOMO.

Spending Money You Did Not Save

Have you ever found a great deal — something you wanted at an unbelievable price? Did you save $50, or $100 on that purchase? Well, the bad news is you didn’t save any money – you spent money. Sure, you may have picked up that tool for $100 instead of $200, but don’t be fooled into thinking you somehow have an extra $100 to spend. The reality is that you spent $100. The only circumstance where this is even remotely true is when the tool is in fact something you need.

Bulk Is Not Always Best

Retailers try to pump up their sales volume by offering deals. Anything good for the retailer is likely bad for you. BOGO offers and other multi-item discounts are the most common. The reality is that these sales are usually not good for your pocketbook, merely encouraging you to spend more than intended.

Bulk buying does make sense for items with long shelf lives, such as canned goods and dry goods. The trap is that you can end up with a pantry full of goods you are not using, forcing you to overspend on your grocery budget to meet your family’s needs. Starting with a plan, only purchasing bulk items when it fits your needs, and your budget can handle the bulk purchases.

Reactive Purchases

Ever heard the phrase, “An ounce of prevention is worth a pound of cure”? Unfortunately, many people make purchases as a result of an event – an item wore out or the car broke down. Planning ahead – budgeting for and following through on routine items can save money.

Car maintenance is a great example – regular tune-ups, oil changes and brake repairs (pad replacement) can prevent major engine failures and brake overhauls. As your vehicle ages, the need to allow for more frequent and higher costs for maintenance in your budget will be necessary.

Careful budgeting and a little willpower go a long way to avoid common debt traps. If you need help paying off debt, book your free consultation with us now.

The post How to Avoid Common Debt Traps appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/avoid-common-debt-traps/

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Student Loan Debt and Consumer Proposals

If you’re a student, the rising costs of attending post-secondary education can put a lot of pressure on you, both in school and once you finish your studies. You may find that economic circumstances, including the job market, have radically changed from the time you began your studies. Factor in that the maximum amortization period to retire student debt is 15 years, and every facet of your life could change before your debt is retired. You may be considering student loan debt and consumer proposals. Using a consumer proposal to ease your federal and/or provincial student debt is an option, but there are several limitations, depending on your circumstances.

A Consumer Proposal During Your Studies

If your studies are still in progress and you need to file a consumer proposal, the consumer proposal will not eliminate the student debt. We recommend consulting with the federal and/or provincial student loans office to determine if filing a proposal will impact your ability to obtain future funding.

7 Year Limit

Student debt will be discharged if the initial claim is filed 7 years from your Period of Study End Date (PSED). It is so important to understand how this date is calculated. The PSED is defined as the last day of the month during which you completed your studies. This date is not related to your graduation date or the last day of your exams. The post-secondary institution defines the study period, regardless of when classes end.

5 Year Limit

If your claim date is over 5 years since the Period of Study End Date, then you may petition the court based on hardship provisions. However, this typically requires having already filed a consumer proposal or bankruptcy. The process varies from province to province and is highly dependant on the circumstances. It isn’t simply a given and is usually an option that doesn’t work for most people. We recommend seeking legal advice if you wish to pursue this option.

Multiple Period of Study End Dates

There is a possibility you may have gone to school multiple times and have applied and received funding for multiple periods. This is a highly debated legal topic, however, most recently as long as an individual study period meets the 7-year limit rule it can be discharged via a consumer proposal. This may change in the future as case law changes.

What If You Don’t Meet the PSED Criteria?

Even if your student loans are less than 5 years from the claim date, there can still be a benefit to filing a consumer proposal to bring your other debt obligations under control. While under the consumer proposal, collection activities are frozen. Interest will continue to accrue, but you can make interest payments to lessen that expense. Additionally, Repayment Assistance Programs are available for you, as well as other debt management tools at the service provider.

Our Recommendation

Navigating student loan debt and consumer proposals can be difficult. We highly recommend seeking professional advice whenever student loans are involved. There are a significant amount of factors that must be considered before properly restructuring. Book your free consultation with us now.

  The post Student Loan Debt and Consumer Proposals appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/student-loan-debt-and-consumer-proposals/

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The Good Bad and Ugly of Debt

Debt often gets bad press, but that’s not the entire story. Let’s look at the good, bad and ugly of debt. What is the source of debt, its uses, and its obligations?

Interest Rates and Terms

The rate on your debt is important, and it’s the first criteria for determining the good, bad and ugly of debt.

Payday loans

At the high end of rates are payday loan facilities, which market themselves as a low cost, short-term alternative. However, when you do the math, a $20 fee on a 2-week $300 loan translates to an over 170% annualized rate. (($20/$300)/14 days)*365 days). Officially, it’s a fee and not interest, which avoids Canadian usury laws.

Credit cards

Store and credit card annual rates are usually in the 19% to 29% range. This is extraordinarily high, especially under today’s interest rates with the prime rate hovering around 3%. However, credit cards have their place and uses.

Unsecured loans

Unsecured loans are next in line, typically at prime +7% to 9%, including debt such as lines of credit and consolidation loans.

Secured loans

The next type of debt is secured loans, which can be had for prime + 3% to 5%. These include items such as home equity lines of credit and automotive loans.

Home mortgages

Home mortgages vary in terms but can generally be had for prime or slightly above prime. This is because a mortgage is a specialized secured loan, with an asset (the house) backing it that has proven to hold value over time, making the loan less risky than other secured loans.

When to Use Debt

Debt can be an effective tool when used to acquire assets, especially ones that can generate income. These include real estate, investments, education, or costs associated with establishing/expanding a business.

These are generally secured debts and they have a tremendous upside. Real estate historically appreciates in value. Inventory or machinery for a business can lead to expansion. Furthering your education usually means higher earning potential. An argument can even be made for using credit to purchase an automobile, depending upon the transportation requirements/limits of your profession.

What is Bad Debt?

Whipping out a credit card to buy an expensive dinner or trinket is an example of bad debt. Anything temporary that offers only short-term gratification can be classified as bad debt.

How to Avoid the Bad Debt Trap

It’s nearly impossible to exist without a credit card. You can’t rent a car, book a hotel room, or order a product online without a credit card. Virtually everyone has at least 1 credit card. Knowing how to use that card is critical.

First, obtain a card with the lowest possible annual charge. Since many cards come with additional benefits, such as travel points, there is a benefit to using the card on routine purchases. The key is to pay the entire balance each month, avoiding the prohibitive interest rates that credit cards carry.

Picking the right time to use the right debt tool can help you grow your assets, control your costs and build a great credit rating. If you need help paying off debt, book your free consultation with us now.

The post The Good Bad and Ugly of Debt appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/good-bad-and-ugly-of-debt/

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Using Simple Tax Planning to Your Advantage

There is an old axiom, “The best time to plant a tree was 20 years ago. The next best time is today.” Don’t let tax planning failures in years past hinder your ability to make plans for this year. So, how can you start using simple tax planning to your advantage, avoiding tax debt?

Using Simple Tax Planning to Your Advantage with Forced Savings

You can use taxes as a forced savings program. If you are on a regular pay plan and withholding taxes are deducted on each paycheque, then you can force a savings program. Ask for an additional dollar amount (perhaps $25 per pay), to be deducted. This overpays your taxes due during the year by $650, which would be added to your tax refund.

The upside of asking for more to be deducted is it forces you to live within a lower net-income budget and provides a bonus at tax time. This can be an attractive alternative if you have a problem with money and self-control. You can use this bonus to pay down debt when you receive your tax return. The downside is that you are lending the government funds at 0% interest. There are better options.

Creating Savings and Refunds

Instead of deducting income from your paycheque for the CRA to hold, pay yourself by putting money into a Registered Retirement Savings Plan (RRSP). If it is an option, ask your employer to deduct an amount from your paycheque to be directly deposited into an RRSP. This functions the same as the forced savings above, but with the added benefit of generating an annual refund and increasing your savings at the same time.

What is an RRSP?

An RRSP is a Federal Government program to help you save money for retirement (especially with the decline of corporate pension plans in the private sector over the last 40 years). Almost any investment can qualify for a plan, such as stocks, bonds, mutual funds, Guaranteed Income Certificates (GICs), and savings accounts. Consult a financial advisor to select the proper investment for your age and risk profile.

What if I Am Self-Employed?

If you’re self-employed, you have a unique tax planning problem. Your income streams may be erratic. This can make it tough to plan, but not impossible. Rather than using a set dollar amount, a self-employed person can save a set percentage — even a small one — in an RRSP to provide retirement income and a tax reduction for the year.

Income taxes for entrepreneurs are calculated based on net income in a year — most importantly, on a cash basis. Keeping an accurate record of your business finances will give you a reliable estimate of your income. As year end approaches, choose whether to spend on your business in the current year or wait until the following year.

Other Considerations for Reducing Taxes

Maintaining good financial records, including items that can be used to reduce taxes (such as donations, political contributions, medical expenses, or relocation expenses) can help you avoid a surprise at tax time and even provide a big tax return. Then you can put money into additional investments to pay off debt, using simple tax planning to your advantage.

The post Using Simple Tax Planning to Your Advantage appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/using-simple-tax-planning-to-your-advantage/

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Get Ready for Tax Time

As the calendar turns to February, Canadians began thinking about their annual ritual of preparing income tax returns. What can you do to get ready for tax time and make life a little easier for yourself?

Get Ready for Tax Time and File on Time

Regardless of your financial situation, it’s imperative to file your income taxes on time. For the vast majority, the deadline is April 30th each year. If you or your spouse/partner are self-employed, you have until June 15th to file without penalty. Penalties are charged as 5% of your balance owing, plus an additional 1% for each month you are late. If your tax owing is $1,000 and you file three months late, the total penalty is $80. Filing late is like throwing money away.

If you are expecting a refund, you want to file on time or even early. There is no reason to allow the government to hold your money any longer than necessary.

What if I Owe Taxes but Don’t Have the Money?

The Canada Revenue Agency (CRA) charges interest on outstanding balances due, including penalties, at the prescribed rate, on a monthly basis. Interest is compounded monthly (and usually has a relationship to long-term treasury bonds but is open to regulation changes). As of January 2021, the interest rate is 5%. Interest is calculated from May 1st onward regardless of when you file, as the due date for taxes is April 30th. Note that even for self-employed individuals with the extended filing deadline, any taxes due are payable on April 30th.

Do I Need Professional Help to File a Tax Return?

This can be a controversial topic, but in general, the answer is no. The Canadian tax system is relatively simple, despite its apparent size. While the Federal T1 form is 4 pages long, and the standard package (9 additional schedules plus provincial returns), seems daunting, have a close look at what you’ll likely be filling out. Typically, you may have a T4 slip, charitable donations, medical expenses, union dues, and RRSPs. This means entering unique information on less than 20 lines on the tax return, using simple arithmetic. However, the CRA has been actively pushing electronic submissions. There are plenty of free software tools available, which will complete all the arithmetic for you, and are acceptable for submission to the CRA.

Consider the cost when deciding whether to seek a professional. We recommend calling multiple tax professionals in your area to get an estimate on how much the cost will be.

Which Debt Do I Pay … Taxes or Credit Cards?

When you have a tax amount outstanding and high credit card debt, you may struggle over which to pay first. The CRA will always advocate for paying them first … but given the differential in interest rates (CRA debt is about 5%, credit cards are about 20%) the answer seems clear.

Check back here on our blog for future tips on how to get ready for tax time throughout the year, with the intent of getting a tax refund. If you need help figuring out what debt to pay off first or help paying off tax debt, book your free consultation with us now.

The post Get Ready for Tax Time appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/get-ready-for-tax-time/

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Are Your Student Loans Coming Due This Year?

Attending post-secondary education, whether for a certificate, diploma, degree, or post-graduate degree, is a valuable investment. If you can, avoid incurring debt to attend a post-secondary institution. But if you required funding to help invest in your future, you may find your student loans coming due this year.

When Do You Repay Student Loans?

Nova Scotia Student Loans are interest free while you are in school and for an additional 6-month grace period from the last day of the month your studies end. For example, if you complete your studies on April 15th, the grace period begins on May 1st. Repayment obligations then start on November 1st, with your first monthly payment due by November 30th.  The standard interest rate for NSSL is a variable rate of Prime + 0.5%.

During the grace period, you will receive documentation from the service provider with repayment obligations. If you are returning to school before the end of the grace period, but not accessing more funding, then you need to submit a Schedule 2 (available at your institution). Once a confirmation of enrolment is received from the school, they extend the interest free status until the new study end date, at which time the grace period begins again.

What if You Can’t Afford to Repay Student Loans?

Both the Federal and Provincial programs offer a Repayment Assistance Program (RAP), an income and family-size tested program designed to adjust the required payment to an affordable level for you. Assistance is granted in 6-month terms, which require a new application each RAP term. While on RAP, any payment is allocated to the outstanding principle. The government pays for all interest accumulated during the term.

Stage 2 of the RAP program kicks in after 10 RAP terms (60 months) or when you have been in repayment for over 10 years. The application and requirements are the same, but not only is interest covered by the government, the difference between your affordable payment and your required payment is paid down by the government. They design these programs to ensure students have paid off debts within 15 years of entering repayment.

Other options include payment deferrals, interest-only payments, and revisions of terms to assist during repayment.

Special Nova Scotia Student Loan Programs

Nova Scotia also offers unique programs, such as the 0% Interest benefit and the Loan Forgiveness Program. The 0% interest program is available only to current residents who have graduated from any designated program. The Loan Forgiveness Program includes forgiveness for NSCC programs.

What if You Default on Student Loans?

When borrowers cannot repay, they transfer loans to Service Nova Scotia Internal Services (SNSIS) for collections. SNSIS uses multiple tools that the service provider does not, including garnishments, liens, and the Revenue Canada Set-off program. The Revenue Canada program claims GST and income tax returns to pay outstanding debt. Repayment Assistance and additional funding is not available to borrowers in SNSIS collections. Rehabilitation is available, providing access to additional funding or Repayment Assistance.

Declaring bankruptcy or submitting a consumer proposal will not eliminate student debt if it has been less than seven years since the end of your studies.

Is your student loan coming due this year? If you need help to navigate debt relief for your student loans, contact us for a free consultation.

The post Are Your Student Loans Coming Due This Year? appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/are-your-student-loans-coming-due-this-year/

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How to Save Money while Paying Off Debt

Is one of your New Year’s Resolutions to save money? The beginning of the year is the perfect time to plan your budget, and save money while paying off debt.

Where to Find Money for Savings

Perhaps the biggest obstacle when trying to save money is finding it in your budget. Ideally, you will plan savings into your budget as one of your basic needs (like food and shelter). But there are ways to find additional savings.

Be Frugal

Learning how to do things for yourself such as simple car maintenance (changing spark plugs, oil/air filters), mending clothes, or making your own laundry detergent can eliminate significant money from your monthly budget.

Another area to consider is groceries. Shopping sales can help you save money. Pay attention to the cycle of sales at your local grocery store – many products go on sale consistently every 3 weeks. Buy generic instead of brand name products. Beware of buying in bulk if the food is perishable and will spoil before you use it all.

Found Money

Depending on your income level, you may max out your Employment Insurance and Canada Pension Plan premiums on your weekly paycheque during the year. This gives you a small bonus for several pay periods. Commit to living on your normal take-home pay and funnel the difference into savings and debt-reduction.

Savings Categories

Consider the reasons you need to save money and write them down. Savings targets can be categorized into short-term, mid-term and long-term buckets, the same as you do for your budget. Here are some examples:

Short-Term Goals                Mid-Term Goals             Long-Term Goals

New Phone                                           Home down-payment                 Exotic Vacation

New Laptop                                          New Car                                         Retirement

Gift Giving                                            Education                                      Endowment

Where to Save Money While Paying Off Debt

For short-term goals, you want money to be easily accessible and have a lower risk (which inevitably translates to a lower return). High interest savings accounts are ideal for short-term goals. The interest rate will be less than prime, but there is no risk to the principal invested.

Mid-term goals, because of the longer time frame for saving, can benefit from a more aggressive savings option. A Guaranteed Income Certificate (GIC), savings bond, or mutual fund provide reasonable security to the principal plus a significantly greater return than a savings account. These options may require a higher initial investment, but you can use a savings account until it meets the minimum threshold, then open the more aggressive option. Smaller monthly contributions are also available, depending upon the investment company used.

Long-term goals, with more time before you require the funds, mean more options available to invest in. Here in Canada you have 2 great options — the Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings account. These are not products in and of themselves —they are a means of creating tax structures for other investment options. A mutual fund, stock purchase, GIC, or savings account could all be registered as an RRSP or held inside a Tax-Free Savings Account.

Pick your goals, commit to how much you’ll save this year, and choose the savings method that best meets the length of your goal. This will help you save money while paying off debt as well.

If you need help paying off debt, book your free consultation with us now.

The post How to Save Money while Paying Off Debt appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/how-to-save-money-while-paying-off-debt/

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Budgeting 101 – Starting a Budget for the First Time

Establishing a personal budget is a cornerstone of prudent financial health, yet many Canadians don’t actively budget. You don’t have to be one of them. Here are some simple budgeting 101 suggestions for starting a budget for the first time.

Budgeting Wants and Needs

When creating your budget, take the time to separate your wants from your needs. It’s common to confuse the two — everybody needs food, but you want a chocolate bar. You need transportation, but you want a new car. Being honest with yourself is crucial — differentiate and assess what you need, and where it crosses the line into a want.

Here are some examples you can use to determine which category an expense belongs in:

Needs                                      Wants

Housing                             ��                Vacation

Food                                                    Dining Out

Transportation                                  Entertainment

Insurance                                           Hobbies

Automobile repairs                          Automobile accessories

Reviewing your expenses (from bank and credit card statements), and labeling each as a need or want is a good starting point. Build your budget from past spending to prioritize your needs, setting the wants aside into a discretionary bucket. Depending on your surplus income (the difference between your net income and required spending), you can slot your wants into your budget, prioritizing them until you run out of your surplus income.

Short-term, Mid-term, and Long-term Thinking in Budgeting

In the corporate world, the controlling department analyzes and tests budgets for variances based on changes — short-term, mid-term and long term. You can do the same. Grocery spending week-to-week is short-term decision making, as is whether to go to the movies. Mid-term decisions include items with annual renewals, such as internet service or insurance terms.

Examples of short-term decision making which can save you money:

Purchasing generic, bulk, or raw ingredients for groceries

Maximizing points to purchase gas

Going to the movies on cheap night

Taking advantage of takeout specials

Mid-term decision making could include:

Changing deductible limits on insurance at renewal

Moving closer to work to save on transportation

Converting to a variable rate mortgage at renewal

Moving to a more affordable apartment at end of the lease

What about long-term decisions? In the long-term, all decisions are up for discussion. Nothing is off limits.

The Most Powerful Phrase When Starting a Budget for the First Time

Once you’ve set your budget, you can make rational decisions about your spending on a day-to-day basis. Arm yourself with the most powerful phrase, “It’s not in my budget.” People have a hard time saying “No” because they have a fear of being left out or don’t want people to think less of them. However, taking control of your finances and making sensible decisions about how to spend your money is an essential skill.

Within your discretionary budget — your wants — you can make short-term decisions. If you choose to engage in an activity not in your budget, then you will have to do without something else to make up for it. If there are no discretionary funds left to offset your purchases, the answer should be an absolute, “No, it’s not in my budget.” Don’t dip into your needs budget to satisfy a short-term want.

What about Savings?

Putting money aside for short-term, mid-term and long-term goals is another essential of a budgeting plan. Treat your savings goals as a need as well, and never forgo your savings contribution to satisfy a want. Look for an upcoming article on developing savings targets while paying down debt.

Starting a budget for the first time doesn’t have to be difficult. If you need help starting a budget and paying off debt, book your free consultation now.

The post Budgeting 101 – Starting a Budget for the First Time appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/starting-a-budget-for-the-first-time/

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SMART Financial New Year’s Resolutions

Lose weight … get in shape … get motivated … volunteer more … get out of debt. It is the common refrain heard every January as we make New Year’s resolutions. Sadly, most people’s resolutions fail before the calendar turns to the month of February. How can you avoid this when making financial New Year’s resolutions?

Set SMART Financial New Year’s Resolutions

Setting SMART (Specific, Measurable, Achievable, Relevant, Time Bound) goals may be the answer. You may have already seen SMART goals mentioned in the workplace (and recently there has been legitimate criticism of their effectiveness in the corporate world for being too easily obtained). But considering the failure rate of resolutions, SMART goals might be the best option to begin your New Year’s journey.

If you are struggling with debt, especially coming out of the holidays, here is a breakdown and examples of SMART goals that can help with your financial New Year’s resolutions:

Specific

Everyone wants to get out of debt, but it is that vagueness which can serve to trip up your commitment to the goal. Focus on a specific aspect of your debt. For instance, commit to creating and sticking to your new budget.

Measurable

Use a simple spreadsheet to track your expenses. At first, stick to broad, simple categories, such as Rent, Food, Fuel, Insurance, Entertainment, and Incidentals.

Achievable

By starting in small steps, it is easier to build good habits. Keep the initial phase simple so you can build confidence in your ability to work within a budget.

Relevant

Budgeting is a crucial foundation for maintaining your financial health. Learning to live within your means can be nothing but positive for your life.

Time Bound

Focus on a short-term time frame. You can set a budget for a period from one paycheque to your next at a minimum. A monthly budget would be better, since many expenses (e.g. subscriptions) are on a monthly cycle.

More Potential Goals

If budgeting seems too overwhelming, set a smaller, more obtainable goal. With the new year starting, are you getting a pay increase soon? Is your insurance reducing their premiums? Either will cause a small increase in your take-home pay.

With the discovery of extra income, it is easy to use it as discretionary (fun) spending. However, if you are trying to get in front of your debt problem, then it would be best to use that found money for debt reduction. If you can commit to taking half and putting it into savings, and the other half into an extra payment on a high interest credit card, you’ll reduce your debt and accumulate savings at the same time. But do not forget, you are still living under the same income constraints as the previous year.

Make SMART financial New Year’s resolutions, take them one step at a time, and keep them all year long. Watch for more tips on savings, debt management, and budgeting in our future articles. If you need help with debt relief, book your free consultation now.

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source https://www.halifaxdebtfreedom.ca/financial-new-years-resolutions/