Tag: financial health

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INVESTMENT FUND: EXPENSE RATIO CAN INSTANTLY PRODUCE AWFUL RETURNS!

investment fund, expense ratio, high expense ratio, balloon payments, APY, Annual Percentage Yield, financial health, prospectus, confusing financial terms, trustee, ira smith trustee, financial health, investment fund types, private investment fund, national investment fund, investment fund wiki, hedge fund, investment fund vs mutual fund, real estate investment fund, romspen mortgage investment fund, expense ratio formula, expense ratio insurance, expense ratio calculation, expense ratio example, expense ratio etf, expense ratio mutual funds, operating expense ratio, expense ratio in banksInvestment fund introduction

We have handled many insolvency cases of people and companies where an investment fund with negative returns, combined with a highly leveraged balance sheet, was a major reason for financial problems. This week we’re continuing our series on confusing financial terms that can cost you more than you bargained for. As trustees we see people in financial distress from a variety of reasons, but there seems to be a commonality – most people find financial lingo confusing.

This confusion magnifies when it relates to an investment fund they have bought, but don’t really understand. We have handled many cases where people having read articles about the tax and investment benefits of leverage, borrowing for investment purposes, do so by borrowing against the family home to invest in financial products they don’t understand!

Sometimes, if they have invested too heavily, not only is their investment at risk, but so is their family home! This series of blogs should clarify many confusing financial terms and with this knowledge help you to make more informed financial decisions. We’ve previously discussed Balloon Payments and APY – Annual Percentage Yield. Our current topic is expense ratios.

What is an investment fund expense ratio?

An expense ratio is a percentage of your investment fund or ETF that’s charged annually to cover its operating costs. These operating costs may include administrative charges, management fees, custody costs, legal expenses, marketing and transfer agent fees among others.

How can I find out what the expense ratio is on an investment fund that I’m interested in investing in?

Every investment fund has a prospectus (a legal document providing details about an investment offering for sale to the public) containing the expense ratio. The prospectus is sent to shareholders every year and shared with potential investors. And, since we live in the information age, a fund’s expense ratio can also be found on financial websites and in newspapers (both online and in print).

How can an expense ratio negatively impact my investment funds?

The expense ratio directly reduces an investment fund’s returns to its shareholders, which reduces the value of your investment. The lower your costs are the greater your investment’s return will be. Every dollar you pay in operating costs is one dollar less that’s earning money for you. Even small differences in fees can impact on your investment over time.

What if my investment fund heads south and I can no longer service my debts?

Making the right financial decisions is crucial to your financial health. Unfortunately many Canadians are now struggling with debt that seems insurmountable. The Ira Smith Team is here to tell you that we’re here to help, regardless of how dire your situation seems now. Make the right decision and give us a call today. Starting Over, Starting Now we can get you back on the road to financial health. Watch for future blogs when we’ll be discussing other confusing financial terms that can impact you financially.

 

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CREDIT SCORE CHART MATCHMAKING SECRETS

budgetingX CreditX credit scoreX credit score chartX credit score rangeX credit scoresX DebtX Federal ReserveX financial healthX financial stressX money managementX starting over starting nowThe Federal Reserve uses the credit score chart for matchmaking?

Did you ever envision that your credit score chart would provide the key to successful matchmaking? From newspaper columnists to Dr. Phil, everyone is a relationship guru; but you may be surprised to learn that the Federal Reserve is also dispensing relationship advice.

Economists Jane Dokko, Geng Li and Jessica Hayes believe that the credit score range contained in a credit score chart has an important role to play in predicting the stability and potential longevity of a relationship. This is what they discovered:

  • People with credit scores at the higher end of the credit score chart are more likely to be in a committed relationship and stay together
  • People tend to form relationships with others who have a similar credit score as them
  • The strength of the match, both in the headline credit score and its details, is predictive of whether or not a couple are more likely to break up for observable reasons pertaining to finance and household spending
  • Credit scores are indicative of trustworthiness in general, and couples with a mismatch in credit scores are more likely to see their relationships end for reasons not directly related to their use of credit

Better budgeting and better ranking on the credit score chart leads to better relationships

Echoing these findings, in a recent survey by Ally Bank 55% of respondents said that a strong budgeting and saving strategy was the most appealing money-related quality a partner or potential partner could have. In addition, 75% of the respondents to this survey said it was moderately or highly important to find a partner with a similar approach to money and budgeting.

Get your rightful place on the credit score chart now

Financial stress and poor money management can ruin your relationship, but it doesn’t have to. Don’t be afraid of debt. Face it head on with the help of the Ira Smith Team. We can help you restore your life to financial health Starting Over, Starting Now. Contact us immediately so that we can create your personalized plan to get you your better place on the credit score chart. Give us a call today.

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BANKRUPTCY TRUSTEE SAYS A BALANCED BUDGET IS TO FINANCIAL HEALTH WHAT A BALANCED DIET IS TO PHYSICAL HEALTH

balanced budget, bankruptcy trustee, budget, financial health, debt, bankruptcy, proposal, credit card debt, trustee, starting over starting nowIn our last bankruptcy trustee blog A Balanced Budget Is To Financial Health What A Balanced Diet Is To Physical Health – Part 1, we discussed the importance of a budget to help you establish your spending limits, reduce your spending and if you stick to your budget, live within your means. This week in A Balanced Budget is to Financial Health What a Balanced Diet is to Physical Health – Part 2, we’ll be discussing a case from our files and explaining how important a balanced budget is when working with a bankruptcy trustee.

When we consult with a consumer debtor, one of the most important things for them to have is a balanced budget. In the cases of bankruptcy or proposal, a balanced budget is not optional; it is a requirement that they present us with a balanced budget as it needs to be filed in the public domain as part of their bankruptcy or proposal. In fact I will not sign off on one that doesn’t balance (except in extenuating circumstances). There are several reasons that a bankruptcy trustee says a balanced budget is a requirement for bankruptcy or proposal:

1. An insolvency filing cuts off access to credit for the debtor so they have to live within their means.
2. It is a requirement of the Act to show rehabilitation.
3. Living off credit is a likely contributor to the financial difficulty in the first place. While a proposal or bankruptcy will settle the present debts, if the lifestyle changes aren’t made the greater problem, chronic debt, won’t be solved. A bankruptcy trustee has the duty to ensure that rehabilitation has taken place.

From the files of Ira Smith Trustee & Receiver Inc.: Brian and Julie are married with no children. They can no longer afford their present lifestyle based on their income. Brian works limited part-time hours (and clings to the belief that he needs to be home at all times to work on call so he can work his way up in the ranks). Julie lost her full-time job and is having trouble finding one with equivalent hours/pay. This has been going on for over 2 months now and they have not readjusted their budget to account for the change in income. Although they do not live an extravagant lifestyle, they have become reliant on credit to maintain their lifestyle. Now they are caught in a viscous cycle; they are taking on new debt at a time they are seeking relief from the old debt they can’t pay. The reality is that until they balance a budget, even on a temporary basis, as a bankruptcy trustee, we can’t help with the old debt as they cannot live on their combined family income without incurring more debt. Therefore, they are stuck in limbo.

There are many ways to get into debt, but getting out of debt is not a do-it-yourself project. If you’re experiencing serious debt issues you need professional help from a bankruptcy trustee as soon as possible. Contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now we can put you back on track to financial health.

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A BALANCED BUDGET IS TO FINANCIAL HEALTH WHAT A BALANCED DIET IS TO PHYSICAL HEALTH – Part 1

balanced budget, financial health, household debt, mortgages, consumer credit, installment loans, credit card debt, debt, starting over starting now, Vaughan bankruptcy trusteeA balanced budget is to financial health what a balanced diet is to physical health. Where does the money go? Do you feel like you have a hole in your pocket? Is your spending out of control? Statistics Canada reports that Canadian household debt hit a record high during the third quarter of 2014, as it grew at a faster pace than disposable income. The total amount of credit market debt, which includes mortgages, non-mortgage loans and consumer credit, held by Canadian households increased to 162.6% of disposable income during the quarter. That means Canadians owed about $1.63 for every dollar of disposable income in the third quarter. No wonder we’re scrambling. According to Equifax Canada:

  • Debt levels are climbing fast to a record $1.422-trillion in the fourth quarter of 2014.
  • Installment loans, largely made up of car loans, were the fastest growing segment of debt, up 11% year over year.
  • Credit card debt rose 5.9% from a year ago.

Many of us don’t realize the importance of a balanced budget and as a result we live beyond our means and get into financial hot water. A balanced budget is to financial health what a balanced diet is to physical health. Everyone should have a budget. It’s an important money management tool that will show you exactly how much money you receive, how much you spend, what you spend it on and how much you save. It will help you to establish spending limits, reduce spending and allow you to live within your means.

If you’re suffocating under a mountain of debt, contact Ira Smith Trustee & Receiver Inc., your Vaughan bankruptcy trustee, today. One of the most important things when we are consulting with a consumer debtor is for them to have a balanced budget. We will work with you so that Starting Over, Starting Now you can live a financially healthy life. Watch for our next blog – A Balanced Budget is to Financial Health What a Balanced Diet is to Physical Health – Part 2 – when we’ll be discussing a case from our files and how important a balanced budget is when working with a trustee.

I and my colleagues wish you a healthy, happy and balanced New Year.

 

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SECURED CREDIT CARD

credit score, bad credit, credit history, financial history, licensed trustee, avoid bankruptcy, bankruptcy alternatives, debt consolidation, credit counselling, consumer proposals, starting over starting now, credit scores, financial health, line of credit, rebuilding creditA secured credit card functions in the same manner as a regular credit card. The only exception being that the card is secured by the amount of deposited funds that remain safeguarded in the institution where the individual acquires the card. The card looks like a regular credit card and acts like a traditional credit card. Purchases are limited by the amount of funds backing the card. The majority of institutions require a minimum secure balance of $500. However, individuals or businesses may deposit more if desired.

Who Uses a Secured Credit Card?

The card might be used by anyone with a past or current history of bad credit. When first starting out, many young people or students have no line of credit. The card might serve as a means of establishing a credit history. Someone recently moving to Canada, having recently undergone bankruptcy or having difficulty obtaining a conventional credit card may also look into acquiring a secured card.

Newlyweds starting a life together often look for ways of establishing credit. Anyone having endured a divorce or the death of a spouse may also need to start over and rebuilding credit. Entrepreneurs having difficulty getting financial backing or searching for a means of creating a financial history might also be interested in securing a card.

Benefits of a Secured Credit Card

Getting approved for a secured card is practically guaranteed. Having a card eliminates the need to withdraw and carry cash. However, in case someone needs cash for an emergency, the card enables users to get cash advances. Numerous other conveniences of having a credit card include using the card for making reservations, purchases or services rendered.

A secured credit card offers an ideal way to establish or improve credit scores, which are typically required when needing to apply for loans. By making monthly payments for goods or services, in the same way that one would if having a traditional credit card, you can learn how to create and stick to a budget.

Many secured credit cards don’t carry the same fees that are required by traditional cards so using them is not only convenient but less expensive.

Ensuring Good Credit

After applying for and acquiring the credit card, maintaining good credit means:

i. Paying off the balance monthly

ii. Paying more than the minimal monthly amount required

iii. Making payments on time

Get a Secured Credit Card Today

Regardless of your current financial situation we can help. To find out more about secured credit cards, and even to apply for a secured credit card, click on this link for the application form. If you are experiencing financial problems, contact Ira Smith Trustee & Receiver Inc. We are a licensed trustee and will listen to your issues and provide compassionate, professional assistance to assist you to avoid bankruptcy.

We will explore alternatives to bankruptcy, such as debt consolidation, credit counselling and consumer proposals. Starting Over, Starting Now, we will assist you to regain your financial health.

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REDUCE DEBT: 5 NEW YEAR’S RESOLUTIONS TO REDUCE DEBT IN 2014

REDUCE DEBT: 5 NEW YEAR’S RESOLUTIONS TO REDUCE DEBT IN 2014Reduce debt now to have a Happy New Year! This is the time of year that we vow to take charge of our lives and get healthy, lose weight, join a gym, find love, get a new job…. I’d like you to expand your thinking to include your “financial health” and reduce debt. According to RBC, Canadians are getting deeper in debt – non-mortgage debt in Canada jumped 21% in the past year alone to $15,920 per capita. Don’t become a statistic. Here are 5 New Year’s Resolutions to reduce debt in 2014.

1) I will live within my means: With interest rates low, you may be lured into taking advantage of what you perceive as a great deal. Borrowing, even with low interest rates, is only a good deal if you can afford to make the payments. There are many multimillion dollar houses in foreclosure and many repossessed luxury cars. Buy what you can afford. You can reduce debt this way.

2) I will create a budget and stick to it: A budget can be your best friend. RBC reports that Canadians’ total debt burdens, including mortgages, now stand at 163% of household income, or $1.63 owed for every $1 earned. This is a recipe for financial disaster. A budget will show you what your income is and what you can really afford. You may have to go a strict spending diet in order to get your finances back under control and reduce debt.

3) I will not max out my credit cards: It’s easy for spending to get out of control when you’re using credit cards. Spending takes on a whole new meaning when you actually use money to pay for things. If you want to buy something, pay for it with cash. Keep those credit cards out of sight for day to day spending and use them for emergencies only. This will allow you to reduce debt.

4) I will monitor my credit report. As we discussed in a recent blog – YOUR CREDIT RATING CAN BE RUINED EVEN IF YOU DON’T DO ANYTHING WRONG – it’s very important that you monitor your credit report and take immediate action if there are any errors. Don’t wait until your credit rating is ruined and you no longer have the ability to borrow.

5) I will start an emergency fund: I know that you’re going to say that you can’t afford to save; but telling you that you can’t afford not to save. Do you really need the expensive lattes and cappuccinos every day? Sell the stuff sitting in your garage or basement collecting dust. One man’s junk is another man’s treasure. See if you can negotiate a better deal on your cable TV package or cell phone plan. Can you cut out a few restaurant dinners and cook at home instead? All of these little things will help you establish your emergency fund while you reduce debt. And, remember, this money is for emergencies, not an all inclusive get away to Mexico.

If you’re experiencing serious debt issues, take control of your life and contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now there is a way out of debt. Let us show you how. Let’s all make 2014 a great year and a year where you reduce debt!

Call a Trustee Now!