Wow, can you believe that the end of 2017 is fast approaching?
With the holidays coming in December, you're probably fighting to get those last minute gift ideas out of your head and into your Amazon shopping cart.
You're busy, I get it. You have to find the time to finish your shopping, see family and friends for the holidays, go on those cute winter dates with your partner and enjoy all of the hot chocolate and cookies! But let me be your friendly financial advisor and remind you: don't forget to review your finances before year end!
With almost a full year of spending, investing and saving, you'd be surprised at what's been happening in your accounts!
Here are some questions to ask yourself before we wrap 2017 up to ensure you have a solid financial footing for 2018:
Spending more than I can afford
Sometimes, we overspend on things we can't afford. Can you get out of it? For sure. In 2018, consider starting a budget. Track your average monthly income and see how many dolla dolla bills you must allocate to each expense category: groceries, transportation, entertainment, clothing, insurance, rent, cellphone, utilities, etc. This will help you be more disciplined in saving and spending within your means.
Haven't established that emergency fund yet? It's okay, turn a new page in 2018 and re-adjust. After you build your budget, ensure you set up a percentage of your paycheque to pay yourself first and establish that emergency fund. Seeing the numbers laid out will help you understand where the inefficiencies are in your spending.
TFSA or RRSP?
I get this question a lot, and it really depends. If you do have some extra savings, you want to consider investing and growing these funds tax free and tax deferred. Depending on your income and savings, a mix of both or simply one of the two could be the most efficient. Plan it out with your accountant and financial advisor for the best results.
Pay off that Debt
Best advice: pay your smallest debts first and eliminate them. If you owe $250 on your credit card, tackle it. Eliminate it.
When it comes to loans like your mortgage, if you have extra savings, paying off a little more on your mortgage (depends on your mortgage rules) can help you reach a mortgage free home sooner!
Or, you could stick to the normal payments if you see better investment opportunities in the markets. This is a whole other topic to discuss, so we'll leave that for another time.
The markets have been hot hot hot!
I really hope you were invested in the markets in 2017! It was a hot one!
Overall, equity markets killed it worldwide. Bitcoin had an amazing 800%+ return since January 2017 (and I'm still crying about not getting in when I had a chance). Real estate prices continued to boom, regardless of government intervention. It was a crazy, awesome year to make some money.
Ask yourself if you're in the best position to grow your wealth. If you aren't happy with your past investment performance, consider better options to grow your investments.
All in all, we have a new year fast approaching with wonderful opportunities ahead of us. Take initiative to control and understand your finances. We'll be here to guide you along the way.
Yay! You graduated! Congrats! You've worked very hard to complete your degree and that is a huge accomplishment. I just recently witnessed my sister's convocation and I couldn't be more proud.
For many of us, the transition from school to the workplace full time will be a scary change! But rest assure: it is a new chapter you'll learn a lot from.
Now that you're looking for or have found a job, you'll be making some money! Time to splurge and enjoy that pay cheque, right?
Not so fast: you still got that OSAP money to pay back, remember?
Don't wait to start paying it off.
You remember how you have that "six month grace period" after graduation? Who cares: you still owe money. If you can start paying off some of your loan now or even before graduation, you'll be ahead of the game!
Interest accrues daily on each dollar owed even during the six month grace period. Those dollars will add up. Instead of leaving that money in the bank to make zero interest (unless you read my previous post here), put it towards paying down your loan. Those summer job earnings you saved could be put to work right now. This way, you will reduce the original loan amount, meaning, you will owe less interest moving forward.
Make extra payments (no matter how little) and pay a little more than the minimum.
Every bit counts.
With OSAP loans, there are no penalties to paying down your loan more than the monthly stated amount.
After six months, the National Student Loans Service Centre will send you a statement with the principal owing, accrued interest, and estimated monthly payment plan to pay off your student debt.
When you get this, you know it's time to keep up with those monthly payments. But if you can, why not double or triple the monthly payment? Or make that minimum payment, but twice a month on the 15th and 30th, or on each pay day?
With online banking, you can set up recurring bill payments. You can set up a system where $20 every week is paid to your OSAP loan, on top of your monthly minimum.
Whether it's weekly, biweekly or monthly, the point is to try to make a few extra payments when you can to pay your debt off sooner. The faster you are to pay it down, the less you'll owe in interest later.
Use your tax refund to pay down your OSAP loan.
Since you paid tuition over the past years, you've most likely accumulated quite a bit of tuition tax credits. The Government of Canada allows you to refund some of your taxes already paid with tuition tax credits.
For every dollar you spent on tuition, you'll be able to recover $0.15 of the taxes you already paid for that year. So when you get your first job after college/university, get ready: our team at Aryandale Financial will be making you smile come tax season, letting you know to expect a nice, juicy tax refund.
When you get that refund, pay down some more of that debt, okay? You'll be happy to see those hundreds or even thousands come back into your bank account come tax season, but sad to see it go to pay off your OSAP... But in the long run, you'll thank yourself.
There are no magic tricks when it comes down to paying off student debt.
Honestly, you just gotta pay them down fast.
Time is everything. Starting sooner rather than later for paying off debts will hurt less in the long run. It's about using time and money effectively and efficiently.
Pay sooner, pay often. Don't let time and interest grow that balance to a beast you cannot tame. Student loans don't disappear from bankruptcy in most cases, too... They are with you for life. So tame the beast and pay it off.
You can do it.