How to Pay Off Your Debts?

What can you do when there is nothing more you can do to take charge of your debts?

 

One of the most significant stressors in our daily lives is the feeling of being overburdened with debts. Blair Mantina Licensed Insolvent Trustee with Sands and Associates, tells us in our video interview that most people wait too long to seek proper help because don’t they don’t know what is available to help them.

In our latest “Street Smarts With Taayla” episode, we are getting to you the right information on what it means to file bankruptcy and whether that option is right for you. We had to the chance to ask Blair some burning questions when it comes to filing for bankruptcy and what are the options.

 

Go straight to the video for the full scoop on what is to file bankruptcy and what other options you can explore before then. In this next section, we give you some main points we collected from our interview but I promise you, the video is worth your time to check out. ?

Our Q&A with Blair Mantin 

 

What is a Licensed Insolvent Trustee?

Previously known as a Bankruptcy Trustee, they are authorized by the Canadian Government to help you restructure your debts through either a personal Bankruptcy or Consumer Proposal. Their end goal is to get you to a place of having no debts.

How bad does it have to get before someone comes to see you?

Some examples of the typical warning signs:

  • Many collection calls at your home or work and garnishing* of wages.
  • You make your payments and find that you are still not getting ahead each month.

*Garnishing is when someone is taking something from you. So, if you owe the government or credit card company an amount of money and they sue you. They are eligible to take up to half your income.

Is there a required debt limit to consult with a Licensed Insolvent Trustee? 

There is a minimum of $1000, but that is an outdated amount. The average person that would walk through the door have between $20,000 to $40,000 of debts they are struggling with, but it could go into the millions. The deciding factor is, can you handle it? In one or two years from now, will your situation get better? If the answers are no, it’s a good indicator that you should seek help.

What is the difference between a Bankruptcy and Consumer Proposal? 

They are both only available through a Licensed Insolvent Trustee, and they both protect from your creditors.

In a bankruptcy, you can’t pay back any of your debts and what you pay is really to cover the cost of filing. In a consumer proposal, negotiating a deal with the creditors is based on what you can afford to pay back. With a consumer proposal, it’s more of a win/win situation. The creditors get to recover some of the money, and the person pays back a small percent (such as 20-30% of the balance ), and it has less of a sting on their credit score.

How does a bankruptcy or a consumer proposal affect your credit?   

Bankruptcy usually takes nine months to a year and a half to complete. It gives you an R9 rating (credit rating is from R1 to R9) on your credit report and can impact you for six more years after it is over. However, it is possible to start rebuilding your credit within a couple of years.

A consumer proposal is less severe on your credit with an R7, and the rating stays for three years after the plan has been paid. Depending on what the negotiations, it could take two to three years to complete the consumer proposal, and then you tack on three years for the rating impact.

What is the difference between working with a Credit Counselor and a Licensed Insolvent Trustee?

Credit Counselor cannot make a consumer proposal for their clients. They are more about teaching you the soft skills to manage debts. They may be able to negotiate a break on the interest with the creditors, but the payment is in full. With a consumer proposal, there is automatically no interest, and you pay back the negotiated percentage of the total debt.

How are fees structured?

A complimentary initial consultation is where you can review your position with the Trustee and understand your options. All fees are transparent and put together into the payment plan of either the bankruptcy or consumer proposal payments that you can afford. You can necessarily view it as the creditors are paying for the cost of the Trustee.

What is a summary of the negative or positive impacts of filing for bankruptcy?

  • The Negative – your credit will be affected, and that can be for five to seven years. And you can’t be a director of a corporation and also file for bankruptcy on the business side.
  • The Positive – imagine a life without debts. The Trustee is there to handle the creditors for you.

How to get more information?

To contact Blair Mantin, email bmantin@sands-trustee.com at www.sands-trustee.com

He also hosts a radio show called Dollar and Sense:  https://globalnews.ca/bc/program/dollars-and-sense

 

Thank you for taking the time to join me on Street Smarts with Taayla in this new episode of dealing with debts. I learned a lot from talking with Blain on this matter, and I am so happy to have this platform to share it with you. Please take a few minutes to give me your comments about this video and others so I may serve you better with materials that matter to you. If you want to watch my video on credit card debt and how to pay it off faster click here.

 

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The Eden Project FUNdraiser Update

Hello friends,

I would like to personally thank everyone who has donated to the Eden Project fundraiser so far.  We have a long way to go to meet our goal of raising $25,000 so that we can launch Eden Cafe this fall, but I am so grateful for your encouraging responses and support!

My fundraising team and I want to recognize your generosity by giving back to you in some small ways and we’ve developed a fun rewards program.

For your donation of:

  1. $500+ you get homemade cookies or cheesecake delivered to your home or work (guaranteed delicious)
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  3. $2500+ you get your car(s) washed, or a home cleaning (your choice of one)

Donate to the Eden Project

 

Watch our latest rewards on video:

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Located at The Quay on the Fraser River, Angelina’s is the perfect place to enjoy a wonderful breakfast, delicious coffee or lunch on their seasonal patio.

And last, but not least, here’s our “Pac Man cupcake” challenge. If you’d going to do this at home, don’t forget to chew!

Don’t forget, every donation over $20 will get you a registered charity income tax receipt.

 

 

RRSP

Is RRSP right for YOU?

Are you thinking about your retirement and wondering if an RRSP is right for you? In the latest Street Smarts with Taayla video, we’ll dig deeper into this question and find a solution that works for you.

What is an RRSP?

If you’re unfamiliar with or new to RRSPs, you’re not alone! An RRSP, or Registered Retirement Savings Plan, is one of the most commonly misunderstood types of investment accounts.

My clients will ask me if an RRSP is right for them, and as much as I’d like to give a simple “yes” or “no,” I usually tell them it depends — because it does!

How to know if an RRSP is right for you

Before I can know if an RRSP is the right choice for you, I need to know five key things about you: your age, income, first home, education, and emergency funds.

When to take advantage of RRSP savings

An RRSP can be an excellent tax savings and a great way to save for retirement. However, if you’re under the age of 30, chances are you’re not at an income state where you can best take advantage of the RRSP savings.

Why?

Because when you make less money, you’re also paying little to no income taxes. If you wait until your earning increases before you contribute to your RRSP, then the potential to save on your taxes could be higher than they are now.

While I don’t usually recommended having an RRSP for incomes under $50,000, if you do decide to contribute to one, you don’t have to claim the plan on your taxes for the current year — you can carry it forward indefinitely.

For example, if your income is $20,000 today, and you believe your income will continue to increase over time, then start saving in your RRSP today. Just make sure to wait until you are at a higher marginal tax rate before you apply your RRSP against your income, whether that’s next year or somewhere down the road.

How to use an RRSP to reach your goals

In my previous video on RRSPs, I talk about how you could use your RRSP toward the down-payment of your first home, or toward the cost of a full-time education. While RRSPs are an investment account for your retirement, there are many benefits to utilizing your RRSP sooner rather than later.

If you’re looking to buy your first home, or want to pursue higher education, then go back and watch how RRSP can help you achieve these goals.

When to prioritize an RRSP

The last thing to consider when deciding if an RRSP is right for you, is the status of your emergency fund. If you have little to no emergency fund, then establishing a solid fund should be your first priority!

Fill your emergency fund before your RRSP, because an RRSP cannot protect you quite like an emergency fund can. While you can withdraw money from your RRSP, there are tax consequences for doing so.

I recommend to my clients to keep an emergency fund worth at least three months of their salary — ideally six months.

Let’s think about this scenario: you have accumulated $30,000 in your RRSP and now you have an emergency where you need cash quickly. You decide to take out the $30,000, but what you don’t realize is that when you do that, 30 percent is being withheld. Now you only have $21,000 you can use!

You would then have to include the $30,000 withdrawal from your RRSP in your income taxes for the year. So if your standard income for the year was, say, $50,000, and you added the $30,000 to that, your income tax return would then be based off $80,000 — a much higher marginal tax rate.

RRSPs are meant to be withdrawn from strategically, and in emergency, you don’t have time to plan for that.


Thank you for reading along in my latest post. I hope this dive into RRSPs has been helpful in allowing you to decide whether or not an RRSP is right for you.

Ask me questions in the comments section below, and let me know what other savings vehicle you are using for your retirement. I’d love to learn more!

Please like and share my videos, it let’s me know when I’m doing things right! If you have not subscribed to my channel, please do so now so I can get more segments and topics to you each month.

Private-Reserve-For-Your-Financial-Success

Private Reserve: The Life Insurance Policy For Both Today And Tomorrow

Private reserve: the life insurance policy for both today and tomorrow.

What is a private reserve? Apart from the source of your favourite bottle of wine, it’s actually a life insurance policy you should be taking advantage of today.

In the latest Street Smarts with Taayla video, I explain how a private reserve is a safe, hands-OFF way to have money work for you. Moreover, it’s wealth building, tax-free and specially designed to provide you with both cash-flow for now and a reliable nest egg for down the road. The best of both worlds; an asset for your future that you can access now.

This particular life insurance policy functions to create and preserve your estate, as well as provide tax-free distribution to named heirs and survivor benefits.

What are the ways in which a private reserve could benefit your lifestyle?

  1. Funding, in the case of an unexpected emergency
  2. Sizeable purchases, such as a home renovation or new vehicle
  3. An education fund for your children
  4. Debt consolidation
  5. Retirement costs such as supplemental health fees, housing, or day-to-day enjoyment
  6. Investments
  7. Cash flow to scale your business

Why haven’t you heard about it before? Probably because many insurance advisors aren’t trained in private reserve life policies!

How do you get started?

  1. Set up an investment grade life insurance policy.  This policy will protect the investment growth from being taxed
  2. Call me to learn about the process of designing a plan that would fit your lifestyle and financial goals perfectly

Learn how you can take advantage of an investment strategy that will provide you with complete accessibility and control over a pool of continuous growth for years to come.

I’d love to hear your feedback, or if you have a similar story, please share with us in the comments below! I will do my best to help support you through it. Please like and share this video, and subscribe to our channel: Engrace Financial Solutions, financial success made simple.

How to Pay Off Your Credit Card Debt Faster: Snowball Debt

How to Pay Off Your Credit Card Debt Faster: Snowball Debt

Did you know that there is such a thing as “good” debt along with “bad” debt?

Today, we’re going to talk all about debt. It’s a big issue in our society, but we’re going to bring you a solution and unravel this problem.

What is “Good” Debt?

Good debt is when you borrow to buy an asset that is appreciating, like a home. It’s an investment that grows in value or can generate long-term income. Another example is taking out student loans to pay for post secondary education. Student loans and mortgages usually have a lower interest rate compared to other loans. With student loans, your education increases your value as an employee and potentially raises your future income.

What is a “Bad” Debt?

A bad debt is consumer debt like your credit card, the most common debt amongst people. Bad debt is incurred when you purchase things that don’t give you increasing or long-term value or income, carries a high interest rate, and you’re unable to pay it off right away. For example, you purchase a high-end purse on your credit card, thinking you will just pay it off “later”, but when your statement comes in you realize you can’t pay off the balance so you leave it or a portion of the amount. Eventually that purse will cost you more than the price you paid, calculating the interest you incur, and then it’ll be out of style so it’s not at all any long term investment.

What Can You Do: The Snowball Method

What we will show you in this video is a way to pay off your consumer debts. It’s called a Snowball Method. Essentially it’s a debt reduction strategy where you pay off your debt according to smallest to largest amounts. Overtime, momentum is gained as each debt paid off. Once you pay off one debt, the budget you had allotted for it gets rolled into your next debt, hence the name “Snowball Method”.

In this video, these are the steps we use:

Step 1

List your different amounts of consumer debt, from smallest to largest, with a total of the sum. It can be a department credit card, bank credit card, and lines of credit.

Step 2

List your different interest rates involved and the minimum that you have to pay for each debt with the total amount so you can see the overall budget.

Step 3

You will want to focus on one debt at a time so that means for the first period you budget so that you can pay as much as possible on your smallest debt, and just pay the minimum for the other debts so those don’t fall behind.

Step 4

Once the first debt is paid off, you take the budget you had for that and roll it over to the next smallest debt, and continue to pay the minimum for the other debts.

Step 5

Repeat each step until each debt is paid in full.

Alternatively, people will split their budget into the x amount of debts they have so that they pay a little more than the minimum for each. However, in the long-term they will find that it takes them longer to pay off their debt, and what’s even more demoralizing is that it can take an average of 3.5 years to pay off a credit card.

You can try the Snowball Method or any other methods out there, but the point is to figure out a plan to pay off your debts because you simply don’t want that in your life.

Why Does the Snowball Method Work?

It’s actually more about behaviour modification than it has to do with math. If you start with the largest debt, it will follow you for a while. You may see the numbers going down, but eventually you may hit an obstacle that will prevent you from paying extra, and your other debts will still exist.

With the Snowball Method, once the smallest debt is paid off, it’s gone forever! You will see the momentum this method gives you and your other debts will eventually fall off as well. Stay committed to the plan, and you can succeed in becoming debt-free!

Ready to Conquer Debt?

Get in touch with us! Contact Taayla today to learn how to apply this method to YOUR debt and help you plan!

Subscribe to our YouTube channel! We will be posting new video content once a month, so don’t miss an episode and get my financial tips and tricks sent straight to your inbox.

Street Smarts with Taayla

What is a Registered Disability Savings Plan?

What is a Registered Disability Savings Plan?

Do you have a disability and have you heard of the Registered Disability Savings Plan?

Many people haven’t! In my latest Street Smarts video, I’m happy to share another option for people with disabilities. It’s a great way to add to your retirement and ensure you have more money for your future.

Maybe your financial advisor has told you about it. Maybe you’ve heard about it from your bank. Maybe your friends have talked about it.

But how much do you really know about RDSPs? I’m here to help explain more about this important savings plan!

Registered Disability Savings Plans is a program provided by the Canadian government

The government wants to provide more options for people with disabilities to have a more financially secure future.

This money is given through grants and/or bonds after an initial investment. There are a variety of options for that initial investment. There is a certain amount you can contribute and the government has a schedule for matching.

How much money can I get from an RDSP?

You could receive hundreds or thousands of dollars from these government bonds and grants.

For example, one of my clients named Mike initially invested $500. Within three months, he was already given $9,700 in grants and bonds.

Another example in an eight year old girl. Her parents started an RDSP for her with an initial $200. She received $6,000 in grants and bonds!

Nancy is another great example. She started with $2,500 AND ended up with $12,000 in grands and bonds.

EVERYONE IS UNIQUE IN HOW THEY WOULD QUALIFY.

What determines how much you receive from an RDSP?

RDSP amounts are based on specific qualifications. Each individual can receive a different amount depending on things like income and LENGTH OF DISABILITY.

What you receive initially may change year-to-year, depending on your income.

Your grant will be matched by your initial contribution. Your bond is qualified by a low income tax return.

How long does my money have to stay in an RDSP?

Another important detail is how long your money must stay in the plan. The money has to stay IN THE PLAN for a minimum of 10 years from the last contribution.

How do I qualify for an RDSP?

In order to qualify for a Registered Disability Savings Plan, you need a disability tax credit for when you file your tax return. This will be your first step in starting the process for an RDSP.

What if you don’t have a disability tax credit? Not a problem. Click here to find out more about disability tax credits and how to get one. 

Talk to a financial advisor to find out more details about RDSPs.

What’s the best age to start an RDSP?

Anytime! But if you’re under 50 years old and have a disability tax credit, having an RDSP is a great option to save for your retirement. Even if someone is under 18, getting the guardians to start an RDSP is a very smart financial decision.

Scroll to the bottom and let us know in the comments below if you want to know more about mortgage insurance or if you have any feedback on our new show.

Get in touch with us!

Let’s get in touch! We’d love to answer all your questions. Contact Taayla today to learn more about RDSP. Subscribe to our YouTube channel! We post new video content once a month, so don’t miss an episode and get my financial tips and tricks sent straight to your inbox.

CBC Marketplace investigates mortgage insurance, Post claim underwriting for mortgage insurance

CBC Marketplace “In Denial” – Mortgage Insurance

CBC Marketplace takes a deep dive into mortgage insurance with the investigative report “In Denial”.

They take a look at what really goes on when someone decides to purchase mortgage insurance from a major Canadian bank.

CBC Marketplace poses an important question everyone should ask about mortgage insurance: how much are you really covered?

As I talked about in my latest Street Smarts video, mortgage insurance pays off your mortgage should you become sick or pass away.

That way, insurance payouts will go to you or your loved ones instead of going to the lender.

Medical questions and monthly premiums

CBC talked to two households who purchased insurance, which cost them somewhere between $20-45 a month. They showed the easy sign-up process. When they took out or renewed their mortgage, they answered a few simple “yes or no” medical questions and started paying monthly premiums.

However, when one woman’s husband suddenly died of a heart attack, and the other woman’s husband became sick with cancer, the insurance company denied their claim.

Why? How?

Post-claim underwriting

It’s all a part of a process called post-claim underwriting.

In some states in the U.S., it’s illegal. In Alberta, they made it mandatory to become licensed before you can sell mortgage insurance.

Post-claim underwriting is when they examine your medical records only after you file your claim.

Many people think they’re covered

This means the bank is collecting premiums from people who don’t even qualify – but because the questions on the medical questionnaire are confusing, it leaves many people thinking they’re covered when they really aren’t.

Jim Bullock, who has been in the insurance industry for 35 years and fights for families to get paid out for their mortgage insurance, says the questions are made to trip you up. “[There is] virtually no chance of doing it accurately. I haven’t seen anybody do it,” he says.

What should you take away from this program?

That buying mortgage insurance is very easy, but understanding if you’re actually covered is fairly difficult. Take your time filling out the medical questionnaire and ask questions if you have them. Make sure that when it comes time to file a claim, you have properly understood what is – and isn’t – covered.

To see a shortened version of the episode, watch below:

Get in touch with us!

Please subscribe to our YouTube channel! You’ll get all new episodes of Street Smarts straight to your inbox.

Make sure and let us know in the comments below if you learned something new. I’d also love to answer any questions about mortgage insurance or about any of my other blog topics!

Download our handy chart to see the differences between bank mortgage insurance and self owned mortgage insurance. Bank vs Personal Mortgage Life Insurance.

Disability Insurance

Living Benefit Coverage

Disability insurance can provide you with a benefit that is usually 60% to 70% of your annual salary in the event that you are disabled and are unable to work. Many companies offer their employees this type of insurance through a group disability plan but there are many individuals who do not have access to this type of plan.

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Engrace Mortgage Insurance

Mortgage Insurance As A Bank Product

Mortgage insurance seems like a responsible way to ensure your family will be cared for should anything happen to you and it fits easily into any budget. But is it really?