Are you managing your take home pay as well as you could be?Ever wondered if you could be doing a better job managing your take home pay? Did you know you are working with after tax dollars when you are dealing with take home pay?
Want to know what you could be doing more effectively? http://www.astepbeyond.ca/
Many budgeting software programs only show us what we are spending, very few actually tell us what we should be spending because there are no hard and fast rules that fit everyone's situation. We are all different. We require different percentages of our take home pay in different areas depending on where we live, how much debt we owe, if we are supporting dependents, all of these factors will contribute to what our individual budget should look like.
Some credit and debt specialists suggest the following guidelines(remember these are only a guide):
Housing Expenses which include:
rent (condo fees), mortgage (first, second, etc.), house insurance, property taxes, utilities, cable, satellite, telephone, housing maintenance 30 - 35%
Living Expenses which include:
food, automobile expenses (insurance, fuel, lease payment, repairs and maintenance) medical expenses, child support or alimony payments, life insurance, prescriptions, vitamins, pets,retirement savings, Co-signed debt or other secured types of debt, miscellaneous 40 -45%
Work Expenses which include:
Gas / travel, lunch, coffee breaks, Child Care, work clothing, parking
these expenses may be captured under Living or Personal Expenses, if not, they would be additional to those areas
Personal Expenses:
Smoking, drugs, alcohol, Entertainment, Recreation, Child care, barber, hairdresser, gifts, donations, tuition, school expenses(kids), extra curricular activities (kids), allowances (kids)
bank service charges, and anything else 8 - 10%
Debt Repayment Less than 20%
When you break your expenses down by category you get a much clearer picture of where your money is going.
If any of your categories require a higher percentage than what is listed, it means you must reduce and use a lower percentage of your take home pay in another category.
You only have so much coming in every pay day and that is what you are trying to use to live and manage within those means.
Saturday, August 11, 2007
Using Your Visa to Pay Your Mastercard?
Have you ever thought about doing this? Maybe you've actually used one credit card to make a payment on another.
If you would like to know why this isn't an effective money management tool, what things you should be aware of, what are some of the pitfalls of using this technique, what are some of the dangers of using one credit card to pay another visit http://www.astepbeyond.ca/ for answers to these and many more questions.
Using one credit card to pay another credit card is a very expensive form of borrowing especially if you are using cash advances from one credit card to make a payment on another credit card.
Many people like to use this technique as a way of transferring balances from one credit card to another. They usually are not aware of the pitfalls of using this technique until it is to late.
Whats the actual cost of using this form of credit? Most of these lower rate cards are introductory offers only. What happens when the promotional period is over?
If you would like to know why this isn't an effective money management tool, what things you should be aware of, what are some of the pitfalls of using this technique, what are some of the dangers of using one credit card to pay another visit http://www.astepbeyond.ca/ for answers to these and many more questions.
Using one credit card to pay another credit card is a very expensive form of borrowing especially if you are using cash advances from one credit card to make a payment on another credit card.
Many people like to use this technique as a way of transferring balances from one credit card to another. They usually are not aware of the pitfalls of using this technique until it is to late.
Whats the actual cost of using this form of credit? Most of these lower rate cards are introductory offers only. What happens when the promotional period is over?
Monday, May 7, 2007
What are Registered Plans
RRSP - Registered Retirement Savings Plans
- are plans that individuals use to set aside money to be used in retirement
- Income tax is not paid on any money in the retirement account until the money is withdrawn
- All withdrawals are added to your taxable income the year after they've been withdrawn
- Interest is not taxable when it accrues on the retirement income in the registered plan
- over contributions are allowed in the amount of $2000 without incurring penalties
- You can make contributions until age 69 for you and age 69 for your spouse
- You can make spousal contributions, beneficial if spouse in lower tax bracket when funds withdrawn
- To have funds added to spouse's income must not have a made a spousal contribution in the last three years or the attribution rules will apply
- Funds are usually withdrawn from the registered plan at retirement when your income is much lower
- Because funds are withdrawn when your income is lower the amount of tax payable on the retirement income is usually lower
RESP - Registered Education Savings Plans
- These are tax sheltered investment plans used to accumulate funds to finance children's post secondary education
- Interest earned on these investments grow tax free until the funds are withdrawn
- The student receives the principal amounts and claims the income on their taxes which usually results in very little income tax being paid on these funds because students are usually in much lower tax brackets when going to school.
- Parents, grandparents, anyone who wants to assist children in pursuing education can set up one of these plans
- The federal government will make contributions in the form of grants representing 20% on the first $2,000 in annual contributions to a RESP for children under 18. These payments are known as the Canada Education Savings Grants.
- Maximum payments can be made to these plans in the amount of $4,000 per year
RRIF - Registered Retirement Income Fund
- The plans assist you in withdrawing your RRSP investment income
- You are required by law to convert your RRSP into a qualified form of retirement income once you reach age 69
- You may set up a plan where you withdraw regular amounts of income over several years
- All withdrawals are added to your taxable income for that year and you may be required to pay income tax on the withdrawal amounts.
- There are minimum amounts that must be withdrawn from a RRIF every year.
- You can base the age on your spouse's age if they are younger than you to decrease the minimum withdrawal amounts
- Plans are flexible in the sense that you determine the amounts to withdraw as long as you meet the minimums
- You can decide how often you'd like to receive the payments, monthly, semi annually, annually
- You can make changes to the amount you receive and the payment schedule at any time of the year
- The RRIF can be closed entirely and you would pay the appropriate tax on the amount of money you received
Tuesday, March 27, 2007
Couples, Debt and Marriage
As a women have you ever been told, "I pay the mortgage so it's my house?" Most of us can't even believe that our partner would actually say that to us. Would you believe that there are some people out there who actually believe this statement to be true? They think because they make the mortgage payment it is there house and that your opinions do not matter. Even when they are married or living with a significant other they may believe this to be true. In this day and age of enlightenment it's hard to believe that there are those out there who think this statement is actually true.
How do you feel about a person who makes these kinds of broad general sweeping statements. Do you feel loved? Do you feel like you are part of a relationship or do you feel insignificant? These kinds of statements can cause huge rifts in relationships especially if the person making the statements believes them to be true. If your partner makes these kinds of statements as a way to push your buttons that is a different matter entirely from the type of partner who actually believes that they are the one who owns the house.
The type of person who makes these kinds of statements is acting as if they are single. This person doesn't realize that they are in a partnership with someone who has the same rights as they do, no matter who pays the bills. These types of people actually believe that what they say goes because they are paying the bills.
When these types of persons grew up in homes where those attitudes and behaviours were practiced by their parents, those behaviours actually became learned behaviours. This learning will need to be done over again, this time learning new behaviours as part of an equal partnership that has two voices. New skills will need to be learned and put into practice. There will be lots of work to do by both partners. Negotiation, communication and assertiveness are necessary components of a marriage or partnership and both partners will need to learn these new skills to get what they want or need out of the partnership. Some partners may need only refresher courses while others may need to learn the skills for the first time if they have not practiced these skills as part of the partnership in the past.
We all have our own ideas about money and how things should be done. The challenge comes in trying to put your views together and come out with one plan that works for both persons. Negotiation is a great tool which can be practiced by both partners so they both can get what they want. Both parties want to be happy, feel like they are contributing and that they are valued in the partnership. Many decisions need to be made, decisions about goals, individual as well as shared goals, how will they be accomplished, who will pay, who has the responsibility for accomplishing which tasks? All of these decisions can be negotiated.
Communication is essential to a partnership when trying to answer these types of questions: How do you share the money that is coming in? Whose responsibility is it to pay for certain things? Who pays the debts? How do you determine whether a big ticket item is purchased? What's the process? Who manages the money that is coming in? How do you keep each other appraised of what's going on with the money, debt, obligations, etc.? These are some of the questions that you need to discuss and find answers for.
If you would like some assistance to be able to answer these questions, Debbie Squier-Bernst has worked with couples for five years to discuss finances within a marriage. Getting married? Debbie would be happy to meet with you and your significant other for a confidential session.
877-738-3328 (Debt), 807-345-3328 (Debt) or www.astepbeyond.ca
How do you feel about a person who makes these kinds of broad general sweeping statements. Do you feel loved? Do you feel like you are part of a relationship or do you feel insignificant? These kinds of statements can cause huge rifts in relationships especially if the person making the statements believes them to be true. If your partner makes these kinds of statements as a way to push your buttons that is a different matter entirely from the type of partner who actually believes that they are the one who owns the house.
The type of person who makes these kinds of statements is acting as if they are single. This person doesn't realize that they are in a partnership with someone who has the same rights as they do, no matter who pays the bills. These types of people actually believe that what they say goes because they are paying the bills.
When these types of persons grew up in homes where those attitudes and behaviours were practiced by their parents, those behaviours actually became learned behaviours. This learning will need to be done over again, this time learning new behaviours as part of an equal partnership that has two voices. New skills will need to be learned and put into practice. There will be lots of work to do by both partners. Negotiation, communication and assertiveness are necessary components of a marriage or partnership and both partners will need to learn these new skills to get what they want or need out of the partnership. Some partners may need only refresher courses while others may need to learn the skills for the first time if they have not practiced these skills as part of the partnership in the past.
We all have our own ideas about money and how things should be done. The challenge comes in trying to put your views together and come out with one plan that works for both persons. Negotiation is a great tool which can be practiced by both partners so they both can get what they want. Both parties want to be happy, feel like they are contributing and that they are valued in the partnership. Many decisions need to be made, decisions about goals, individual as well as shared goals, how will they be accomplished, who will pay, who has the responsibility for accomplishing which tasks? All of these decisions can be negotiated.
Communication is essential to a partnership when trying to answer these types of questions: How do you share the money that is coming in? Whose responsibility is it to pay for certain things? Who pays the debts? How do you determine whether a big ticket item is purchased? What's the process? Who manages the money that is coming in? How do you keep each other appraised of what's going on with the money, debt, obligations, etc.? These are some of the questions that you need to discuss and find answers for.
If you would like some assistance to be able to answer these questions, Debbie Squier-Bernst has worked with couples for five years to discuss finances within a marriage. Getting married? Debbie would be happy to meet with you and your significant other for a confidential session.
877-738-3328 (Debt), 807-345-3328 (Debt) or www.astepbeyond.ca
Sunday, March 4, 2007
Financial Terms for February
RSP -- Registered Savings Plan
RRSP -- Registered Retirement Savings Plan
Spousal RRSP -- Spousal Registered Retirement Savings Plan. Partner makes contributions to their spouses registered plan. Contributing partner gets the tax deduction while the funds accumulate in their spouse's name.
Spousal RRSP attribution rules -- If a contribution has been made to a spousal plan in the last three years and funds are withdrawn from the spousal plan, the funds will be added to the spouse's income who received the tax deduction. They will also be taxed at the higher income earners' tax rate. The funds are taxed at the lower income spouse's rate when the funds are withdrawn after the three year time frame.
Over contribution RRSP -- allowed to over contribute to your RRSP by $2000 without attracting a penalty.
Group RRSP -- contributions usually made through an employer RRSP. Some employer's match employee contributions up to a certain percentage, usually 2 - 4 % of earnings.
RRSP deduction limit -- This is the amount you can deduct from your RRSP contributions for the year.
Excess contributions -- cannot be deducted in the current tax year, they may be able to be deducted in the following tax year.
Notice of Assessment -- Canada Revenue Agency sends the Notice of Assessment after you have filed your tax return for the previous year. The Notice of Assessment shows the maximum amount you can deduct from your RRSP contributions for the current taxation year.
Unused RRSP contributions available for carry forward are also shown on your Notice of Assessment from Canada Revenue Agency. This amount tells you whether you have made any prior RRSP contributions that you have not deducted from your tax return and are available to be used for a deduction.
RRSP -- Registered Retirement Savings Plan
Spousal RRSP -- Spousal Registered Retirement Savings Plan. Partner makes contributions to their spouses registered plan. Contributing partner gets the tax deduction while the funds accumulate in their spouse's name.
Spousal RRSP attribution rules -- If a contribution has been made to a spousal plan in the last three years and funds are withdrawn from the spousal plan, the funds will be added to the spouse's income who received the tax deduction. They will also be taxed at the higher income earners' tax rate. The funds are taxed at the lower income spouse's rate when the funds are withdrawn after the three year time frame.
Over contribution RRSP -- allowed to over contribute to your RRSP by $2000 without attracting a penalty.
Group RRSP -- contributions usually made through an employer RRSP. Some employer's match employee contributions up to a certain percentage, usually 2 - 4 % of earnings.
RRSP deduction limit -- This is the amount you can deduct from your RRSP contributions for the year.
Excess contributions -- cannot be deducted in the current tax year, they may be able to be deducted in the following tax year.
Notice of Assessment -- Canada Revenue Agency sends the Notice of Assessment after you have filed your tax return for the previous year. The Notice of Assessment shows the maximum amount you can deduct from your RRSP contributions for the current taxation year.
Unused RRSP contributions available for carry forward are also shown on your Notice of Assessment from Canada Revenue Agency. This amount tells you whether you have made any prior RRSP contributions that you have not deducted from your tax return and are available to be used for a deduction.
Monday, February 19, 2007
RRSP Season Ends Soon...
It's that time of year in Canada. RRSP deadlines for 2006 are looming, March 1, 2007 is the last date you can purchase an RRSP and use it as a deduction for your 2006 taxes. An RSP or RRSP is a registered retirement savings plan. What this means is that the investment can accumulate earnings tax free within a registered plan. Income taxes are paid when the registered funds are withdrawn. Income tax is deducted at the source by the financial institution dependent upon how much you are withdrawing.
Non-registered investments have already paid tax on their income when it was earned.
Consider a spousal RRSP if you are in the higher tax brackets. The idea of a spousal RRSP is to save money for retirement in a registered plan in your spouse's name. The contributor usually the higher income earning partner receives the tax deduction. The idea behind spousal RRSP's is that when the money's are needed for retirement the money is withdrawn by the spouse with the lower income and therefore income tax is paid on the money at the lower income spouse's tax rate.
Don't forget about the tax implications of withdrawing RSP or RRSP'S. RRSP income is taxable income and the full amount withdrawn will be added to your income in the following year of your withdrawal. Many people have forgotten they withdrew RRSP's by the time they have to claim them. They may not have realized what the tax implications would be. Therefore they may not have put away additional monies to cover the taxes that could be owed. When RRSP income is added to your gross income for the year the extra income can push you into a higher tax bracket. Therefore you could end up owing additional taxes beyond those which were deducted by the financial institution when you cashed them in. Many people are not prepared for this when it comes time to claim this RRSP income on their taxes.
Just to be on the safe side I advise people to put an additional 20 to 30% of the money they've withdrawn from their RRSP's into savings until they have filed their taxes and claimed the withdrawn RRSP amounts. This way you will have the additional money if you owe additional taxes. If you don't owe additional taxes you can start an emergency fund, or reinvest in RRSP's for the following year with the additional funds you've saved.
Increase your financial wellness at www.astepbeyond.ca.
Non-registered investments have already paid tax on their income when it was earned.
Consider a spousal RRSP if you are in the higher tax brackets. The idea of a spousal RRSP is to save money for retirement in a registered plan in your spouse's name. The contributor usually the higher income earning partner receives the tax deduction. The idea behind spousal RRSP's is that when the money's are needed for retirement the money is withdrawn by the spouse with the lower income and therefore income tax is paid on the money at the lower income spouse's tax rate.
Don't forget about the tax implications of withdrawing RSP or RRSP'S. RRSP income is taxable income and the full amount withdrawn will be added to your income in the following year of your withdrawal. Many people have forgotten they withdrew RRSP's by the time they have to claim them. They may not have realized what the tax implications would be. Therefore they may not have put away additional monies to cover the taxes that could be owed. When RRSP income is added to your gross income for the year the extra income can push you into a higher tax bracket. Therefore you could end up owing additional taxes beyond those which were deducted by the financial institution when you cashed them in. Many people are not prepared for this when it comes time to claim this RRSP income on their taxes.
Just to be on the safe side I advise people to put an additional 20 to 30% of the money they've withdrawn from their RRSP's into savings until they have filed their taxes and claimed the withdrawn RRSP amounts. This way you will have the additional money if you owe additional taxes. If you don't owe additional taxes you can start an emergency fund, or reinvest in RRSP's for the following year with the additional funds you've saved.
Increase your financial wellness at www.astepbeyond.ca.
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