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HomeMy WebLinkAboutThe Citizen, 2011-02-10, Page 12PAGE 12. THE CITIZEN, THURSDAY, FEBRUARY 10, 2011. NC – Borrowers need to beware in 2011. Interest rates, near historic lows for much of the past two years, are widely expected to increase through the latter half of 2011. The cost of carrying debt, including mortgages, lines of credit and credit cards, will be affected. “Low interest rates have enticed many Canadians to spend more on credit,” says Stephen Reichenfeld, VP and wealth counsellor, Fiduciary Trust Company of Canada. “But an improving economy means lending rates will likely rise. It’s important to take steps today and prepare for potential higher borrowing costs in the years to come.” Four steps that can help prepare you to come out ahead: • Reduce personal debt. Do what you can today to decrease your debt load before borrowing costs increase. Review the option to lock in borrowing costs now and consolidate debt at a lower interest rate. If you’re only making minimum payments on your credit cards, start paying more. • Rethink your mortgage. If you have an adjustable rate mortgage, and you plan to be in your home for at least five years, consider refinancing options such as converting to a fixed rate mortgage at current rates. • Equity funds. Stocks tend to benefit more than fixed income products like bonds in a rising interest rate environment. Past market cycles indicate sectors like industrials and technology benefit when interest rates rise. • Don’t hesitate on a major purchase. Consider accelerating your plans to purchase now before interest rates rise. If you’re in the market for a new car, there may be zero per cent financing and other incentives available. These offers often disappear as rates rise. Remember, meet with a financial advisor to ensure these steps work for your situation. NC – To get ahead, you have to spend less than you earn. To help you do this, here is a step- by-step guide to creating a budget. 1. Start with your monthly after- tax income Write down how much money you take home each month (which is what you earn less the taxes and deductions). This is the starting point for your budget. 2. Create a list of what you NEED to pay for every month Figure how much your necessary expenses (such as food, rent and utilities) cost you each month. Be honest with yourself about what is a necessary expense. For example, you don’t need satellite television, but if you want it, you can prioritize it once you’ve figured out what are the things that you truly can’t live without. 3. Determine how much to SAVE Take into account that you should also be saving some of that disposable income each month. Many experts suggest putting away 10 per cent of your gross (pre-tax) income. Know yourself. If you are not disciplined enough to set aside money every month, arrange with your bank for an automatic transfer every month to a savings account or TFSA. 4. Decide what you WANT to do with the remaining money – and if you can afford to spend it “This is the area of your budget where you get to have fun. Think about what items, activities and other expenses you truly enjoy and want to prioritize,” says Carrie Russell, Senior Vice President, TD Canada Trust. “Make it a family decision, and get the added benefit of teaching your children sound financial habits early.” 5. Track your spending and STICK to your budget Once you know how much money you can spend – don’t spend more. This is the most important step and can be the most difficult. In particular, watch out for impulse purchases which tend to be less about ‘needs’ and more about ‘wants’. Practise taking a ‘time out’, or cooling-off period, before you make any purchases that are on your ‘want list’. If you make purchases with cash, keep your receipts. If you pay with debit or credit, keep track of what you’ve spent by regularly reviewing your transactions online. It’s hard in the short-term but ultimately very rewarding when the ramifications can be viewed in the long term. Borrowers should beware in 2011 Creating a budget can be essential Tips to find your financial soulmate FINANCIAL 2011 RSP Deadline March 1, 2011 Seek A Second Opinion! ENIB provides a total wealth management service. A licensed professional can help you plan and achieve your financial, retirement, insurance and education goals. ➟Global Diversification ➟Tax Efficient Investing ➟Private Wealth/ICPM Investment Services Contact Darren Stevenson for a personal account review. Receive a confidential second opinion of how Private Wealth Management can: ➟Reduce your Risk ➟Reduce your Tax ➟Increase your Returns Get a Private Wealth Management Account Working for you today! Call Elliott Nixon Insurance Brokers (519) 523-4481 Established 1910 ELLIOTT NIXON INSURANCE BROKERS INC. 9 Rattenbury St. E., Clinton, ON N0M 1L0 Ph.: 519-482-9924 ~ 1-888-235-9260 Res.: 519-524-9260 Check out RRSP and RRIF plans designed to meet your needs. GIC, Mutual Funds, Seg. Funds Invest in your future today! RRSP DEADLINE: MARCH 1, 2011 Have you ever considered planning your financial future? See Lawrence for a free consultation. Susan Alexander, CFP Doug Sholdice 472 Turnberry St. PO Box 69 Brussels, Ontario N0G 1H0 Phone: 519-887-2662 Toll Free: 1-866-887-2662 Fax: 519-887-2671 www.sholdicefinancial.com susan@sholdicefinancial.com PEAK Investment Services Inc. Certified General Accountant • Personal & Corporate Tax • Accounting & Bookkeeping • Agricultural Services Seaforth 519-527-1331 Email: wightman@bellnet.ca Brian E. Wightman NC – Are you and your partner financially compatible? Debt, bills, spending and saving are frequent sources of anxiety in a relationship. Understanding your “financial fit” with your partner is a measure of compatibility and may secure long-term happiness. “Money is one of the biggest areas of conflict between spouses, and talking about it today is an excellent way to avoid unpleasant surprises tomorrow,” said Dennis Tew, of Franklin Templeton Investments Corp. “Getting on the same page financially helps ensure you are pursuing compatible goals.” • Share financial histories. Discuss your credit histories, including debts. Are you both spenders or savers, or are you opposites? How do you set priorities and allocate funds? Do you budget and plan, or spend impulsively? • Communicate your goals. Discuss what your future entails. What type of lifestyle do you expect to have? Does it include travel, a larger home or other major expenses? When do you want to retire and are your current RRSP contributions sufficient? Create a financial plan that takes into account both of your goals. • Consider your investments. Choose a financial advisor together. Get advice on how to align your portfolios with your family goals. Regularly review what investments you have and ensure you both understand how your money is working for you.