Forms and Links

• Debt/Save Trap
  Breaking the "paycheque to paycheque" chains once and for all.....

  Many Canadians live like this, and there is a way out. Let's look at a typical household....
  
  Mortgage, car loans, and credit card debt (most of which have high interest payments), and little to no money saved. With a fixed income or salary, it may seem hard to pay it all off. First and foremost, you MUST look at the Smart Equity™ system. This is a powerful debt management tool that can save tens of thousands in interest, WITHOUT increasing your current monthly mortgage payments.
  
  Second, let's take a look at the old strategy of paying off all destructive debt first, then saving money. This is the common reason why people are always in debt. If you pay off all destructive debt first (excluding the mortgage) you may feel great, however you have no money saved. This is where life happens: the transmission in your car goes, need a new roof or deck, hot water tank and furnace go, and on and on. Since you have no money saved, guess what, you go right back into debt for any expenses. What's worse, is a possible lack of discipline and borrowing money for excessive or totally unnecessary wants.
  
  The books say to pay off all destructive first, so as to reduce the interest payments on credit cards, credit lines and so forth. This is a short term view. Yes, you will pay a litlte more interest by saving first (any interest earned offsets interest paid), however, it is insignificant to the total savings made by following this very simple but effective strategy in the correct order...
  
  1) Save 6 months of gross family income to establish emergency fund, use all disposable income.
  
  2) Make the minimum debt payments along the way without increasing or adding to your debt.
  
  3) Re-allocate the current monthly savings from (1) and attack your debt full force, starting with the highest debt balance (excluding your mortgage).
  
  4) Pay cash for all life's needs: do not use credit cards or credit lines.

  It may take 2 - 5 years to reach this Financial Independence goal depending on debt load and income, however, once done, you will have control of your cash flow, no debts (excluding mortgage) , and have a healthy emergency fund. Now you can apply the cash flow from (1) to Retirement savings, new home purchase, investments, etc.

• Do RRSPs Make Sense?
  Many people ask if investing in an RRSP makes the most sense, or are there other ways to invest in a tax efficient manner? The answer is yes to both. It depends on the stage of your financial life.
  
  Leveraging to invest in non registered funds can be more effective than RRSP's, however, there are dangers to leveraged investments that are not for rookies. Although mathematically this strategy is better than an RRSP, it is less liquid and you could end up owing more than you borrowed. A minimal RRSP portfolio may not affect any future Old Age Security clawbacks. You need to have your financial affairs in a certain order and other liquid investments before you engage in this type of planning.
  

  RRSP or Leveraged Investment 

  However, at the right time, this can prove to be a very effective strategy in allowing your money to grow faster, while at the same time recuding future taxes, without forfeiting any tax deductions today.

• Cash Flow Management
  One of the most overlooked areas of Financial Planning is focus on your Cash Flow. Every successful company large or small needs to know exactly and precisely the inflows and outflows of capital. This scrutinizing is essential to know how to manage resources and take advantage of investment or growth opportunities.
  
  Although you may be working with a family budget, the process is the same. Many people do not realize how much money is being wasted away, simply because they do not pay attention to their budget. It's not about making sacrifices so much as investing in your future. The smarter decisions you make today, the better off you'll be in the future.
  
  Smart Equity™ can also assist in managing your cash flow by significantly reducing the time it takes to pay off any and all debt, especially your mortgage.
• Deduct Your Mortgage

  This is a common question asked by many Canadians: is there a way to deduct my mortgage payments? The answer is yes, if certain conditions are met. There are typically 2 ways to do this:

  1) If as an example you have $200,000 of mortgage debt and a $200,000 investment portfolio, you can deduct your mortgage interest payments by liquidating the portfiollio to pay off the mortgage, and then simultaneously borrow back to re create the same portfolio you had prior. What this does in effect is change the loan from a mortgage on a home to money borrowed to invest or generate income, which is now tax deductible.

  2) The second method is to utilize the Smith Maneuver™, however this is more complex and involves leveraged investments.

  Both have their merits depending upon your financial situation.

• Joint Ownership
  If you are married or in a common law relationship, it may be prudent to consider the Joint Ownership with Right of Survivorship of your assets in case of premature death. Many people fail to do this, and it can result in delays of accessing, using, and controlling these assets such as your home, vehicles, investment portfolios, and so on.
  
  It is essential to obtain the correct legal advice on these matters, including updating your Will, so that your assets transfer to your intended survivors and beneficiaries as planned.
• Mortgage or RRSP?
  One of the most common financial planning questions is "do I allocate any extra disposable income against my mortgage or invest for tomorrow?"
  
  The simple answer was, if the interest rate on the mortgage was greater than the expected rate of return on the investment, then it would make sense to pay off the mortgage debt first. Or vice versa, if the rate of return was greater than the mortgage interest rate, then invest the extra. The ultimate goal was to increase your net worth as effeciently as possible.
  
  As each situation is unique, it is critical to run the numbers or calculations to see what makes the most sense (please review the attached sample).
  
  

  RRSP or Mortgage Paydown 
  
  There is actually a better strategy which can combine both ideas together. First, take at look at the Smart Equity™ debt management tool. This is a very powerful program that can save tens of thousands to hundreds of thousands in interest, WITHOUT increasing your monthly mortgage payments.
  
  This now frees up any extra disposable income for any and all types of investments, to further enhance your net worth, and possible retirement savings. Now you don't have to choose, you can always allocate extra funds to any and all investments of your choice.

Life Insurance Policy Types 

Term Comparisons 

Frequently Asked Questions:

Disability or Critical Illness Insurance 

Disability or Group Insurance 

Are you Really Covered by Workers Compensation 

Frequently Asked Questions:

Disability or Critical Illness Insurance 

What Does Critical Illness Cover 

Frequently Asked Questions:

Life Insurance or Mortgage Insurance 

Employee Benefit and Coverage Options 

Life Insurance or Mortgage Insurance 

CPP Income Options 

Pension Maximization 

West Coast Actuaries

Keeping the Cottage 

Estate Liabilities 

The Importance of Having a Will