RRSPs are stressful, but I’ll worry about it next year… or the year after

CBC recently published an article discussing a BMO report that found 60% of Canadians feel anxiety when it comes to the annual RRSP contribution deadline.  Debt is considered a major problem because many Canadians feel worried (or should feel worried) more about what they owe over what they have saved.  According to Statistics Canada, household debt to income ratio is at a record high. I thought about setting up a RRSP this year, but figured I’d be better off paying down debt, student loans, mortgage …  hence I was very intrigued to come across another CBC article published this week titled ‘Gen Y too busy paying off debts to save for retirement’ , there is comfort in knowing you are not alone.  And there is more comfort in the first sentence, “Canadians in their mid-30s to early 40s fretting over having never contributed a cent to an RRSP need not worry, financial analysts say. They still have a lot of time to plan for retirement”. Though I wouldn’t have described myself as “fretting“ exactly, I am certainly in the company of those “having never contributed”.  There is more good advice to be found in the CBC Business pages:’ Looking to invest? Pay down your mortgage instead ’, this article claims that “in a volatile market, a mortgage is a safe investment with a guaranteed rate of return”.  The author explains that if you have a mortgage, making an extra payment instead of a RRSP contribution is a better idea.  He recommends this mortgage calculator to help figure out what an extra payment will save you.  Of course this advice is for those with some extra savings to invest this year… The “Gen Y” article quotes Actuary Malcolm Hamilton advising against RRSPs for those in their 30s:

“I think the more sensible approach… is to work hard on getting the debt down and eliminated and then save for retirement once you’ve accomplished that.”

I’m going to put off worrying about retirement saving for this year, but for those who are going to worry, check out A user’s guide to RRSPs

Death and Taxes

Just as the famous phrase goes… nothing in live is certain but death and taxes, and so it is coming on to tax season again. Jamie Golombek at the Financial Post reports on the changes to tax numbers this year, such as:

• the federal basic personal amount for 2013 is $11,038
• the new 2013 TFSA contribution limit is now $5,500
• the maximum pensionable earnings for 2013 has been set at $51,100

read the full report here for more details

Come by the library and pick up a free copy of the CGA (Certified General Accountants of Ontario) 2012-13 Tax Planning Guide, also available online here. The CGA also has a tax resource website- PD net Tax Portal, which seems to be a resource for both accountants and the general public. They also sell an eBook version of the Tax Planning Guide, which is a more detailed and exhaustive version of the free paper booklet available at the library. The links page of the Tax Portal site would be particularly useful for those doing their taxes themselves. For those that prefer to let a professional take over the books, there is a convenient “find a CGA” tool.

We also have a few good books if you need some more tax advice… here are some recomended titles

• Wealth planning strategies for Canadians 2013
• Accounting for Canadians for Dummies, 2nd Edition
• Make sure it’s deductible : little-known tax tips for your Canadian small business

And if you really need to know more about death and taxes, see this informative article  from CGA magazine.

New Books

Mean Girls at Work: How to Stay Professional When Things Get Personal – by Katherine Crowley and Kathi Elster

Sometimes, adult life is just like high school, and mean girls can make life hell. In this slim book, the authors delve into workplaces made toxic by the behavior of these grown-up mean girls, dividing the types of mean into seven categories (including “very mean,” “doesn’t know she’s mean,” and “brings out your mean”). Their advice, specific to each type of mean girl, will help you figure out what to do — and what not to do — in order to defuse difficult situations and prickly relationships. Also included are general tips on office behavior and some true stories of mean-girl behavior.(description from nextreads.com)

Bitter Brew: The Rise and Fall of Anheuser-Busch and America’s Kings of Beer – by William Knoedelseder

Engrossing and well-written, this tale of five generations of Busch men covers the rise and fall of the legendary Anheuser-Busch brewing company, maker of Budweiser, the King of Beers. Whether you’re interested in it as a business history or for an insider’s glimpse of its powerfully successful advertising campaigns, you’ll be satisfied — and even more so if you’re intrigued by the frequently sordid tales of births, deaths, marriages, divorces, and bad behavior uncovered by reporter William Knoedelseder. From the arrival of Adolphus Busch in the United States in 1857 through Prohibition and on to the brewery’s hostile takeover in 2008 by InBev, Bitter Brew makes for “intoxicating reading” (Wall Street Journal). (description from nextreads.com)

How to Retire the Cheapskate Way: The Ultimate Cheapskate’s Guide to a Better, Earlier, Happier Retirement – by Jeff Yeager

Continuing to share his philosophy of emphasizing what you really want over what you think you want, popular blogger and author of The Cheapskate Next Door Jeff Yeager outlines strategies for retiring earlier and enjoying a more fulfilling retirement. Exhorting frugal spending practices (spend less, save more — whether it means packing a lunch or driving a beater), Yeager includes stories of those who have successfully retired early, while covering topics like Social Security (don’t depend on it) to health care and travel. If you want to retire early, secure in the knowledge that you can support yourself, check out How to Retire the Cheapskate Way to help keep you motivated.  (description from nextreads.com)

If you are interested in receiving new book information to your inbox, check out GPL’s NextReads service. A newsletter will be sent bimonthly to your inbox that gives you titles and descriptions on new books by topic.  Sign up for Business and Personal Finance and any other of the 25 newsletters.

Top Ten Finance and Career New Year’s Resolutions

Happy New Year

Here’s a list of Business & Career Bank’s New Year’s resolutions, and some resources to help you get there

1. Take care of consumer debt. even Stephen Harper agrees, this is a priority. In an interview on Global News, Harper warned Canadians to watch their debt levels and prepare for raising interest rates. So pay down your highest interest rate debt first and make 2013 the year you tackle debt.
2. Budget. Number 2 is implied by number one, but it’s an important point on its own. Need help with a budget? there are a many online tools and apps that can keep you on track, such as Moneywiz and Mint… I am going to try out You Need A Budget, expect a review soon. Budgets are essential to getting your finances in order, which leads to number 3…
3. Review your spending. How much does your morning coffee cost a year? Do you really use a gig of data a month on your phone?  Basically, there are only two ways to improve your finances: make more and spend less. There are a thousands of ways to cut costs that can be relatively easy, but first you have to know where your money goes.  January is a good month to track regular spending habits; it might be a surprising where you can cut costs in an average month. For example, I got a travel coffee mug for Christmas and changed my phone plan to pay per use data, I figure this saves me about 60$ a month and I make better coffee at home anyway.
4. Reflect on your career goals. A new year is a great time to think about where you see yourself going in 2013, or how about in 2015, 2020? Do you see yourself changing jobs, or maybe starting on a different career path, or how about starting your own business? It all starts with knowing your goals.
5. Save. Got your debt under control? Save up for something great in 2014… a vacation, a new home or renovation, starting a business or going back to school, start saving now and plan for the future.
6. Upgrade your career. Maybe 2013 is the year to go back to school? Whether its developing an important skill, moving up by gaining professional designations, or just taking on a new challenge, adding to your list of accomplishments can lead to new jobs and better pay.
7. Polish up you resume.  Be ready to apply to that dream job. Also updating your resume is a great way to reflect on your career goals. Try GPL’s new eResources Cypress Resume to help create a professional quality resumes in three easy steps.
8. Consider a new career direction. It’s always a good idea to have a look what’s out there check out GPL’s eResource Career Cruising.
9. Lower fees. Back on the spending side, review how much you spend on banking fees, credit card interest and of course insurance costs; there is probably some way to save money whether its applying for a low interest credit card (until you can pay it off) or shopping around for better insurance rates.
10. Start investing. I have read that there are ways to start investing with just 10$ a month.  It’s on my list for 2013 to find out more.