Facing A Reduction of Income or Wage Cut

Canada Tax Preparation Software 2009

When you are made redundant, there is usually some form of remuneration payment and the prospect, no matter how bleak it may appear at the time of further and new employment. For some, the lucky few, there is the encouragement of being told that your employment is secure, and that there is also the possibility of a pay rise or promotion further down the track. However, there are some who have been given an assurance of ongoing employment, only at cost of having to work reduced hours and for a reduced pay check at the end of each week.

Meeting the challenge of a reduction in pay is something that can bring out resourcefulness in many different ways.

The first thing that should be done is to make a complete list of what income is actually spent on each month. Often, by the simple process of listing and setting out in writing what each expenditure is, it will immediately be seen which are essentials and which, consistent with maintaining a reasonable standard living can be cut out, or pruned back.

Compare the total of this list with your total after tax income and you will have a precise amount, the deficit that you will have each month if expenditure remains at the same level.

Part of the expenditure will be fixed, in the form of loan or debt repayment. You can look at taking advantage of new lower interest rates by considering a debt consolidation loan, converting all your monthly debt repayments into one, lower interest rate, debt servicing repayment, against which you may be able to offset the interest charge even more by having the repayments made weekly instead of monthly, which can save years of repayments in terms of a home mortgage debt.

Charges for Utilities, and rates are often able to be paid on a weekly repayment arrangement if you make contact with the relevant authorities and inform them of your situation, rather than having to meet the entire cost of pre-payment in one lump sum.

Expenses associated with motor vehicles can be drastically reduced, and give you the possibility of a much needed capital sum, if you consider selling one of two motor vehicles and making use of public transport and  sharing the use of the remaining vehicle. For some, using public transport might mean that a private car is no longer needed.

Look at your savings – it is a good idea to keep some on call funds for possible emergencies – but there is no point in having funds in a savings account, earning little interest if you have high interest debts that you could use this money to repay, and so reduce your monthly outgoings.

Every voluntary expense can be looked at to see what can be discarded, and which will need to be reduced. Subscriptions can be cancelled. It is often tempting to reduce expenditure on food, but this can often be a mistake, as you will need to keep healthy and fit, and to have a lot of spare energy to survive a financial crisis

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Canada is among the countries that are seeing an upswing in the economy, with spending up and unemployment down since last year. Canadians are expecting the economy to continue improving since the recession that lasted for three quarters.

Home sales are up for the first time since last year, with an increase of up to 73%. Experts are hesitant to say that the rising prices of homes are a permanent change, however. There are some who worry that the exponential price increases are going to last for only a short period, and that the current real estate market is simply a bubble. New cars sales are among the factors that show the economy is improving.

New car sales have risen over three percent since September, and while sales are still slightly below average they are consistently improving on a monthly basis. There is some controversy over the rising levels of debt among citizens, who are now taking advantage of the lowered interest rates that have been put into place through government initiatives to help fight the recession. Citizen debts are now at an all time high, and even though the numbers of bankruptcies are down by over 27%, there are fears that debt may be increasing too much for citizens.

Despite debt concerns, most business owners remain optimistic about the future. In fact, nearly 70% of business owners are expecting to see an increase in business over the next year. With unemployment down by 8.4%, the business owners have good reason to be optimistic. Canada has experienced an influx of over 30,000 jobs in September alone, providing relief just in time for the upcoming holiday season.

Among the factors influencing the economic recovery in Canada is international trade. US automakers have begun to supply Canada with a fresh stock of automobiles, which have become less readily available since the recession began. Some experts feel that the relief is temporary, and see the unemployment rates rising again in the near future. Others have predicted a trend that will lead to further economic improvement in the country, with expectation of 2.6 percent growth in 2010, and 3.9 percent growth in 2011.

The Canadian and US economy are very closely tied, since the US is Canada’s number one trade partner. The improvement in the US automobile industry has helped to improve the Canadian economy, but there are also trends in the US that will predispose the improvement of the Canadian economy over the next two years. The US economy has been improving, and the impact will be positive for Canada, as well.

Among other factors that are improving the Canadian economy are stimulus spending, an increased budget for infrastructure, and lowered interest rates which are at an all time low. Canadians can expect to see stimulus spending remain steady throughout 2010, which will improve the economy further. The lowest unemployment rates won’t be expected until 2011, although they have continuously been falling and are expected to remain under nine percent throughout the next two years.

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I will be participating at The December 2009 Toronto Small Press Book Fair. For more details, visit this link –

MEET CANADA’S PERSONAL FINANCE AUTHOR A. DAWN AT THE GLADSTONE HOTEL

Hope to see you all.

 

 

 

 

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Avoid Extra Credit Cards

It may appear that today many Canadians are walking a sort of a tightrope and the decision they make may not really be about whether or not to have a credit card but how many they are going to have in the first place. We all know with acclaim that with a credit card you can get to spend money you do not have, as long as you are able to pay up when you earn, there really should be no cause for alarm. Depending on how efficient you are with your payments, this can either be a blessing or a curse.

There is so much freedom and ease in amassing credit cards these days that one may need to really ask themselves if the really need to have that extra card they are applying for, or they just want an extra reason to spend money they have not earned. Because we do not have to pay upfront, there are many people who will get the extra card just in order to beat the limit they have in the other card they have, thus managing to acquire stuff they otherwise would not be able to afford. Of course the truth of the matter is if you are short of cash and you really need something, all you do is pull out your card and the shop attendant will swipe it and you walk away with all you ever needed, just as simple as ABC. It can come in handy when you are between the devil and the deep sea in some situation, which at times could actually be life saving.

We all know also that having a credit card helps you avoid the inconvenience of having to walk around with lots of cash and with a good use of one you will be able to track all your expenses. Shopping can become quite convenient and for those who may want to borrow some cash in future they provide a good credit history for you. There are even some companies who offer special discounts for those who shop using their credit cards and so you can imagine that there are plenty of advantages of owning a credit card. All you need to take care of is the management of your debt repayment and you will be safe.

However, just like with any other good thing there is always the downside of having a credit card. It becomes very easy fro the frivolous spender to amass a big amount of debt in small bits until most off the time they discover they are buried deep in it. In a little while many people discover that they were actually spending money they were not going to have in the next many months, it is no wonder that some people are many months ahead of their income in debt.

So do you need that extra card really? If you have managed your life without one you most likely can move on without a card, do not go for an extra card if at anytime time you have fallen behind in payment with your current one. Depending on what you earn, multiple credit cards may actually mean multiple problems and since the decision is yours to make, remember the responsibility will also be yours to settle the payments.

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Don’t be a slave to your credit card

All Canadians agree that the credit card is one of the best things to happen on us of this generation. It comes in handy at those times you just need that item and you have no cash in your wallet, or sometimes you just do not like carrying cash all over the place. All you do is simply swipe your card and the transaction is done. Even with all the convenience that the credit card has brought, many people are discovering that little care needs to be taken in their management, lest one becomes a total slave to the plastic card.

When the credit card is not used intelligently, one will actually end up losing a lot of their money and begin a vicious circle of earning to repay a never ending debt. But with good insight and following some simple tips, anyone is bound to save themselves a big load of their cash. These are tips that have been followed universally and you can benefit from them as well.

To start with, the worst thing you will eve r do with your card is to carry over a balance. Avoid carrying a balance on your credit card like you would avoid the plague. Canadian credit card providers are the beneficiaries when you do not pay up you whole balance. However, when it looks like you are stuck in a corner and may have to carry over a balance, it would be better if you considered alternative borrowing methods which are slightly cheaper.

Coming on the heels of that tip is the second one which simply says you desist from taking cash advances. When you use your credit card for buying purposes only, most Canadian banks give you an interest free grace period during which you can actually pay back the debt. However, trouble is when you dare take a cash advance using your credit card. Here there is nothing like a grace period. From the moment the cash rolls from the machine to your hands and until you pay up, there is a great interest consideration. And on top of that interest you must remember that the dispenser of the cash will also post charges that you pay for. Once again in the unlikely case that you have to borrow cash this way, it is in your best interest that it is paid as soon as possible.

Today every other Canadian banking institution is advertising their credit cards but the wise person will take time to read the fine print before they commit themselves to any particular card. It is usually the things they do not say loudly in the adverts that really count. Choosing one without care may tie you down to a card whose condition you may not meet adequately in the future.

The one important tip we cannot forget to mention is the importance of you always paying up on time. You actually opt for pre-authorized monthly payments which will ensure you are always on time with your payments. The secret with credit cards is to make sure you do not get to pay interest at all, and this becomes possible only when you pay your bills within the grace period. Of all the loans that people procure, credit card debt is the most expensive of them.

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Keep Your Eggs Safe

In easier times, livestock and land managed ones wealth. An old saying “not to count your chickens before they hatch” has remained with us over the years and is still used widely today. In today’s financial turmoil it may appear that, the Global Economy is on a steady up swing yet we are still hesitant to take that deep sigh of relief.

It is fair knowledge in the financial world that the IMF (International Monetary Fund) has recorded that our global recovery is succeeding at an accelerated gain, yet perhaps not as well as some may have hoped. With the unemployment rates, still climbing the up swing can be accounted by the government aid and stimulus packages, which were implemented to stimulate the market. Although overall, our gains are increasing hope in the financial market but on an individual level, many are still in crisis.

Canadians are Confident

With the current economic concerns, it appears that Canadian residents are still maintaining hopeful outlooks towards the financial future and after several months of polls is still on the rise. Canada is also rising in the competitiveness field of Global Banking as surveyed by the World Economic Forum. It is to wonder as to their rise if it is due to their supported confidence. The US remains at the 2^nd spot on the compositeness Global Banking Reports even though their confidence has been reported to be much lower than Canada which was ranked as 9^th, a definite climb for Canada from 13^th place in 2007.

Moreover, one should consider that several polls based on consumer confidence vary widely in terms of questions and statistics but overall Canadian consumers are still more aggressive in the retail markets. Their knowledge to boost the market by spending and maintaining their over all confidence has been noted by several reports. They are the first to step out of the recession and appear to be going strong in the right direction. While their neighbours are more guarded they may be realizing that their border partners may be leading the path to recovery successfully and follow suit.

Other contenders for speedy recovery have been spotlighted with Brazil definitely on the heels of the US and Canadian Markets. Their success can also be measured by the steps taken by the Brazilian Government to aid and boost the economy safely and effectively.

It is still a hazy road at best for most and ways to boost the economy and confidence in spending are being targeted. It is useful knowledge to follow these updates and reports to find we have dodged a very dangerous economic down turn and we are in control of how we manage this swing in the right direction. Safety is key and keeping your egg basket close on the home hearth seems to be the overall advantage in some countries. Many are still skeptical as to how the road to recovery will continue. It is important that the Governments keep maintaining their stimulus support for sometime to ensure the confidence that the World Economy so definitely needs to remain hopeful in this time of such economic uncertainty.

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The Soaring Loonie and Improving Canadian Economy

The improving Canadian economy has got a target in its sights as the country moves towards 2010 with its recession seemingly an ever-dimming memory. That target is the US dollar, which is very nearly in reach of parity with its Canadian counterpart. The strengthening loonie is the latest indicator of an improved national economy, and is a source of a great deal of interest at ground level – not least because it may lead Bank of Canada governor Mark Carney to puncture expectations that he will keep the interest rate at a record low level. This may be a good time for anyone considering taking out a loan to take the plunge.

Carney made the commitment earlier in the year to keep the interest rate at a quarter of a percent until the middle of 2010. This commitment was made at a time when the economy desperately required stimulation, and that kind of stimulation seems to have been provided, and boosted the economy to the point where, paradoxically, a lower interest rate may be difficult to sustain, and where a rise in the interest rate in order to stabilise the climb may be necessary. Carney has pointed out that that pledge was specified at the time to be “an expectation” rather than a specific promise.

This speculation has been heightened in the wake of Australia’s Central Bank deciding to increase its interest rates in the wake of successful stimulus spending in their economy. The number of economies announcing positive results in the last few months has led to a note of caution being sounded with regard to over-optimism in the immediate aftermath of a recession. The US dollar is falling against most currencies, and with the loonie having picked up three cents against its American counterpart it means that the two currencies are now close to absolute parity.

Currencies are given to movement of extreme nature, which can cover a long way in a short time, and when momentum gets behind one and against another, there can be extreme financial consequences. Not wanting to be taken by this momentum to a runaway economy, it would make sense for the Bank of Canada to work in the interests of stability by raising interest rates. Though this may not be popular with borrowers, neither is market instability.

Cheap borrowing for those with the means to get it has been one positive aspect of the largely negative global financial crisis. The return to relative normality, or at least the effective end of the global recession, was always going to have an impact on the level of interest rates. Should the loonie hit parity with the US greenback, there would be little problem, but too much of a change too quickly might have results that would be negative for al parties. Paradoxically, higher interest rates may give the currency at least an initial boost, and given that the central bank has made clear its concern that the Canadian dollar may move too quickly, they have a tough decision to make.

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Consumer Confidence Is Important

For the seventh month in a row – almost unheard of in a global downturn – the consumer confidence felt by surveyed Canadians is on the increase. This was the finding of the latest monthly survey from the Conference Board of Canada, which found that, based on a fairly complicated index of statistics and consumer response, the confidence of Canadians with regard to potential future jobs and larger-scale purchases has rises by two and a half percentage points to break the 90% mark (at a total of 90.9%). Meanwhile, south of the border in the United States, the level of consumer confidence sits at 53.1%. This is due in no small part to the deeper nature of the recession in the States – an economy which is showing recovery, but later and slower than that in place in Canada.

Of course, although these statistics sound great for Canadians and less so for the American public, there is a reason that they are not trumpeted as broadly as harder financial figures. The clue is in the wording of the results and indeed the questions asked. “Confidence” and “sentiment” are hard things to measure exactly. The indices used are based on a lot of different data, and prone to be skewed by false confidence or misguided bullishness depending on the prevailing public opinion of the time. Another survey entirely, carries out by the University of Michigan in collaboration with Reuters, puts the US numbers up at 73.5, on a rise and therefore going in a completely different direction from those of the US Conference Board. Which is right? Possibly both, possibly neither, it depends on the questions asked among many other variables.

However, this is not to say that consumer confidence is unimportant. It most certainly is not, in fact there is a great deal to be said for having a consumer force out there who are confident of earning and ready to spend some money. This in itself helps drive recoveries, and if belief can be spread at such a crucial time it is not something that we should be cynical about. Of course, we’re talking about finance here, so there is going to be cynicism – indeed, if you could bottle a sneer and sell it, the entire global economy could be expanding by multiple percentage points tomorrow – but the knowledge that people are ready to start making purchases again is certainly something to be pleased about.

The pattern of skepticism in our world is something that makes it difficult to read anything into any package of figures released – and more so when the figures contradict each other so frequently. It would be interesting to fast forward into 2011 and see if people are still as dubious about the recovery and how it will hold then. Perhaps this tougher crust will at least enable us to see the warning signs ignored by so many when they were being waved frenetically a few years ago. If not, then this crisis has taught us nothing. What we seem to be seeing in the latest figures is encouraging in that respect – a guarded optimism that takes nothing for granted.

 

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The financial crisis in which we have been living for some time now has changed the realities which we had accepted for some time, and many of those realities have changed for the worse. But for borrowers on credit cards who had been panicking about the pursuit from the issuers, there is one statistic which has improved. The issuers of credit cards are charging off a record amount of debt – meaning that they have accepted that people are not able to make their payments, and chasing them for those payments will not change the reality that they simply cannot afford to pay. It should be noted that this is not the case for every customer – if you can afford to pay but don’t want to, then the status quo will remain.

The simple truth of the matter is that with the unemployment rates having increased due to the global financial crisis, there are more and more people who simply cannot meet their credit card payments. Traditionally, this has led to  a troublesome situation where the banks pursue people to make any kind of payment at all, promising in many cases that if you can make “just a small payment” your account will be held for a while and that pursuit will be ended. For many customers, this pleasant notion has been miles away from the reality, which has been that a small payment alerts the company to the fact that you are responding to pressure, and the pressure just gets ramped up that little bit more.

When a company finally accepts that there is nothing they can take from you, they charge the debt off. What this means in practice is that they lay off collections activity and write the amount off, taking a hit on their profits which needs to be covered by the amount of money each bank sets aside for such reasons. It does mean that annual bonuses for the bank workers will be a little bit lower, but you will find fewer and fewer people complaining about that eventuality. As much as the everyday workers at a bank are relatively blameless for the profligacy of the bank’s lending policy, we are all having to cut out coats according to our cloth these days.

The fact remains that people who knowingly borrow and spend recklessly will have to be pursued to make their payments. Now is not a good time to take out a credit card and run up a mountain of debt which you have no intention of meeting. Quite apart from anything else, banks are still hugely reluctant to lend large amounts of money unless they are sure, on the basis of their own research, that they will see a good return on that investment. If you have a good credit rating, they may well still lend to you – but would you want to risk a good rating now of all times? If, however, you are looking for a fresh start, now could be the best time to get that start.

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Canada Welcomes The World

Where Are We In Terms Of The Global Financial Situation?

There has always been a feeling in this world that the near neighbours of the larger or more prominent and influential countries in the world suffer from something of an inferiority complex when placed against their neighbour. As New Zealand is to Australia, as Scotland is to England, there is a feeling that Canada is the poor relation to the United States of America. This feeling comes from nothing more than a cheap, basic reading of the geography and the media profiles of the countries, and is typically quite wide of the mark, but it is still prominent in the way that people talk about the “junior” neighbour. So it should be embraced and celebrated when it is made clear, in any way, that the so-called “little guy” scores a notable success.

For instance, in July the number of people traveling North to Canada from the USA increased by nearly five per cent. There is an increasing feeling that Canada is far from being the “poor relation” here, but rather the more grown-up, sensible alternative to the admittedly attractive superpower with which it shares a border. Since the global financial crisis really dug its claws in (and the vagaries of global trade are such that when it got to one major country its neighbours and trade partners would be affected too), there have been experts in Canada and outside falling over themselves to credit Canada with being uniquely well-positioned to deal with a recession.

Part of Canada’s problem, if it really has one to be concerned with, is that “sensible” is seen as being an unsexy word. There is something of a problem in this world with “dumbing down”, and a country which can claim to be sensible – a highly desirable quality to have, surely – will raise fewer eyebrows than one which can come out, all guns blazing, and promise to really put on a show you will never forget. However, there is now a sense that we are tiring of dumbing down, and that this world has more to offer than the typical and well-worn attractions of the “bigger” neighbours. It is not just Americans who are pouring into Canada. The increase in visitors from Japan in July was a huge 32.4% – and visitors from all over the world increased too.

What this means for Canada is something essentially quite simple. Where there is tourism, there are dollars. As Canada boosts its visitor numbers, it will increase its income from holidaying families and also increase the demand for jobs in its travel sector. This is something that will increase further in the New Year as Vancouver plays host to the Winter Olympics, bringing visitors to Canadian shores in yet greater numbers and showcasing a country that has plenty to be proud of in terms of natural beauty, ease of visiting and a thriving hospitality sector. When Canada welcomes the world, what the world sees is not simply a country which is sensible, but the country that many others would like to be.

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