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DEBT REDUCTION PROGRAM: MY TOP 10 STEPS ANYONE CAN START IMMEDIATELY TO STOP BEING IN DEBT VIDEO

Debt Reduction Program: Introduction

My top 10 debt reduction program steps is for anyone to start immediately to reduce or eliminate debt in order to regain control of your life. By following these steps, there is no need for you to seek out a debt settlement company. I am giving you a foolproof program for free. Debt settlement companies would charge you thousands of dollars for this information!

1. Debt Reduction Program: Say No To Debt

When you have determined, “I’ve had it”, take your charge cards out of your wallet. Then follow your budget (which means you have one) as well as swear NO MORE DEBT. No ifs or buts … no more debt, NO MATTER WHAT. Either lock the charge cards away, or even better, cut them in half and send them back to each issuer. Ask that they no longer send you any and that your account should be capped at its current balance.

2. Debt Reduction Program: Take Your Head Out of the Sand

Determine your revenue, your monthly costs, and your financial debt total amounts. Acknowledge your past errors with money and progress. Today is a brand-new day as well as you are no more living in denial about your financial resources.

Every financial choice from now on should be based upon a plan. A plan that is based upon realities. Facts from your budget as well as financial goals.

3. Debt Reduction Program: Develop a Monthly Budget (with your spouse or partner if you are not single)

If you are to do just one of these ten practices, please do this one. Living by a written budget is the ESSENTIAL trick to living a financially secure life. When you prepare a monthly budget plan, there was no other way in refuting that you were investing $400+ in totally optional spending on non-essential items; $20 there and $50 here that were amounting to $100’s every month … WASTED!

Your written spending plan provides you with a strategy to spending cash on what you “need” as well as “want” and NOT losing it away. Do you recognize the ordinary person making $50,000/ year will have over $2 MILLION go through their fingertips??? Don’t YOU want to have a plan for those $$$?

4. Debt Reduction Program: Cash not credit

Yes, using cash can be bothersome and a hassle but it is IMPOSSIBLE to spend greater than you have and go over budget. It also hurts a lot more to use cash money then simply swiping plastic.

Those adorable shoes do not look so cute when you think of handing over the last bill in your pocket. It would most likely be easier to live without the most up to date digital gadget when you think of taking all that cash out of your wallet. At that point, your current phone, while not the latest model, looks pretty useful all of a sudden!

Try it. After a few months you will see how your costs reduce. Your behaviour will transform so significantly that you will be shocked how much money you have used unnecessarily in the past.

5. Debt Reduction Program: Priorities

Your financial decisions mirror what you as well as your household regard as a top priority in your life. This will be noticeable in your month-to-month budget plan.

Establish your family’s top priorities. Make certain your regular monthly budget mirrors these top priorities. With a proper budget, you may begin to seem like “inadequate me, I don’t really go out to dinner.” Remember your family has various top priorities and you are compromising one meager dish at your favorite restaurant to have a lifetime of financial safety and security. This definitely puts things in perspective when you are in a moment of weakness.3bestaward

6. Debt Reduction Program: Remove Temptation

Do not set foot in your preferred non-essential shop. If the lure is not there, you will not spend money on things you do not need. Attempt to restrict on your own to only food store. Shop with a checklist as well as stay with the checklist.

If you have difficulty with internet shopping, unsubscribe from store e-mails that promote sales and new products. You are as well concentrated and functioning also hard on your financial goaks to have a slip up on something that was not in the budget plan.

7. Debt Reduction Program: Free Entertainment

Sometimes this financial debt elimination phase is going to seem like it has drawn out all the “enjoyable” things in your life. Just because you are on a tight budget does not mean you shouldn’t enjoy your new life.

Choose cost-free or cheap entertainment. Activities such as walking, barbecue in the park, borrow publications & flicks from the library (yes, they still exist!), free concerts in the park, playing cards and other games, volunteering your time, digital photography, checking out a museum or historical site on a “cost-free entry day.” The possibilities are unlimited, be innovative!

8. Debt Reduction Program: Decrease Food Expenses

Food can be one of the highest costs in your budget plan (2nd to housing). Great news, there are MANY ways to lower the cost of food.

Grocery Store: Have a listing. Use “Budget Friendly Recipes” to make a dish strategy to stay clear of food waste. Do not acquire or dramatically decrease the buying of already prepared foods (anything pre-cut, pre-cooked, pre-prepared).

Dining establishments: Avoid them as long as possible. Cooking a meal in the house will certainly ALWAYS be less costly than eating at a restaurant (unless somebody else is picking up the tab). When you do eat at dining establishments use vouchers, Groupons, happy hour price cuts, as well as basically anything to lower the price.

9. Debt Reduction Program: Team Work

I could not stress enough how crucial it is, to collaborate with your spouse or partner with your financial resources. You are in this with each other. When one of you is having a harsh day, the other needs to urge and remind you why you are sacrificing, why you got on this trip.

One of you might take on the role as the captain, pushing your “team” to the absolute limitations to pay off financial obligations. It might be the spouse or partner who is the MVP, that continuously gets you through the battles and the “bad days”.

10. Debt Reduction Program: Develop Goals

When your financial priorities are established, it will be simple to jot down goals. I recommend composing one or two short-term financial objectives. Your financial goals may be something like:

  • Having a debt free Christmas in 2017 and after
  • Pay off credit card debt by July 2018
  • Eliminating our home equity line of credit balance by February 2019
  • Having a cash reserve of $2,500 in case of an emergency
  • Reward ourselves by taking at least 2 vacations in 2020 because of what we have accomplished so far

Now that you have your objectives developed, this is where you need to circle back to make sure that it is accounted for in your written budget. Your objectives will certainly aid you to stay focused and also provide you inspiration to continue your financial trip.

Debt Reduction Program: What if you haven’t started to reduce debt early enough?

Are you too deep in debt? Is the monthly interest charge on your credit cards more than your monthly amount available to pay down the credit card debt? Being threatened with lawsuits or being sued?

Then you need to consult with a licensed insolvency trustee for some surgery. All of the 10 points listed above will be part of your financial rehabilitation. However, you need to have the time clock stopped now to give you breathing room.

A licensed insolvency trustee can develop such a plan for you and get you the relief you deserve and need. The Ira Smith Team has much experience in handling debt problems like yours. We have helped many people and companies return to financial health and live a stress-free life.

Contact the Ira Smith Team today for your free consultation. We will develop a practical plan for you to get out of debt and regain control over your life, Starting Over, Starting Now!image

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SAVING FOR RETIREMENT IN CANADA: THERE’S NO EQUALITY OF THE SEXES

saving for retirmentSaving for retirement in Canada: Introduction

Ladies, I’m sorry to say that there’s no equality of the sexes when it comes to saving for retirement in Canada. The truth is that women need to save more for retirement than men. That may sound like an unfair, sexist comment but it’s a financial reality and here are four reasons why.

Saving for retirement in Canada: Why do women need to save more than men for retirement?

  1. Women outlive men on average by four years according to Statistics Canada. This means that women have to fund an extra four years of retirement Typically the older we get the more healthcare costs we incur including the high costs of some prescription drugs and in some cases, assisted living.
  2. Women earn less than men. As shocking as it seems, a woman working full-time in Canada makes 73.5 cents for every dollar a man makes, according to updated Statistics Canada income data produced for The Globe and Mail in 2016.
  3. In addition they report that these numbers are even lower for Indigenous and women of colour. On a global scale, the gender pay gap in Canada is more than twice the global average, according to research firm Catalyst Canadam. The Canadian pay gap is on average $8,000, while globally it’s at $4,000.
  4. Many women take time out of the workforce. Women on average work 28 years in their lifetime as compared to men who work 38, according to Diane Garnick, Chief Income Strategist at TIAA. Typically it’s women who take time out to raise kids or take care of elderly parents. These 10 fewer years of income really impacts retirement savings and pensions..
  5. Women get less in pensions than men. Lower earnings coupled with less time in the workforce many times equates with less pension.3bestaward

Saving for retirement in Canada: Unfortunately your dream of retirement may be just that – a dream

Many seniors saddled with so much debt that they’ve been forced to put off retirement or continue to work at least part-time. Are you a senior who is drowning in debt? Call Ira Smith Trustee & Receiver Inc. for a lifeline. We can help you get out of debt, get back on track and looking forward to retirement Starting Over, Starting Now.

 

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MANULIFE BANK HOMEOWNER DEBT SURVEY SHOCKING SECRETS REVEALED FINALLY

Manulife Bank homeowner debt survey: Introduction

Nearly 75% of Canadian property owners would certainly have problem paying their home mortgage each month states a Manulife Bank homeowner debt survey. This is the case if their monthly payment boosted by just 10%,

ALSO READ: CANADIANS CASHING IN RRSPs BEFORE RETIREMENT IS NOT A SOLUTION

Manulife Bank homeowner debt survey: The survey

The financial institution surveyed 2,098 home owners. They were between the ages of 20 to 69. They had family incomes of $50,000 or greater. It was an online survey conducted in February 2017.

Since these kinds of surveys typically aren’t randomized, experts claim the internet surveys do not have a margin of error. They state that the study however highlights simply exactly how limited the spending plans are for lots of Canadians.

Manulife Bank homeowner debt survey: The results

Manulife’s study claimed:

  1. 14% of participants would not stand up to any type of rise in their regular monthly payments;
  2. 38% of those surveyed claimed they might endure a repayment increase of between 1% to 5% before having a problem; and
  3. 20% stated they might tolerate an increase of between 6% to 10% before feeling the pinch.

Manulife Bank homeowner debt survey: Almost 75% could not handle a small rate increase

This poll indicates 72% of house owners surveyed could not endure an increase of 10% from their existing record low rates. Let me be clear. We are only talking about a 10% increase; not an increase to 10%. So, if you have a mortgage with a 3% rate of interest, 72% of those surveyed could not make ends meet with an increase in their mortgage interest rate to 3.3%!

That’s an unsafe area to be, with rate of interest readied to increase eventually.

“What these people don’t realize is that we’re at record low-interest rates today,” said Rick Lunny, president and CEO of Manulife.

Manulife Bank homeowner debt survey: Many homeowners have less than $5,000 in savings for an emergency

Overall, almost one-quarter (24%) of Canadian house owners surveyed claimed they have not been able to generate enough funds to pay an unforeseen expense in the past year. And, most are not healthy to weather any kind of economic tornado. About 50% of those questioned had $5,000 or less in reserve to manage an economic emergency. One fifth of them have absolutely nothing saved for a rainy day.

One quarter of millennials questioned had no savings. The same was true for 1 in 6 boomers.3bestaward

ALSO READ: MANULIFE DEBT SURVEY: ARE YOU PART OF THE MAJORITY OF CANADIANS SCARED ABOUT RETIREMENT?

Manulife Bank homeowner debt survey: If the main income earner lost his/her job, it would take no more than 3 months to be in mortgage default

The study discovered that 45% of millennial house owners– those aged between 20 to 35– would certainly have one of the most problems making their mortgage payments within 3 months, if the main income-earner in their family were to suddenly end up being out of work.

Millennials were additionally the ones that typically had the highest amount of per head home related financial debt, at $223,000. Gen X-ers (those aged 36 to 52) had about $202,000 owing. The boomers (ages 53 to 70) had $180,000.

ALSO READ: AVERAGE HOUSEHOLD DEBT IN CANADA: CANADIANS LOVE TO MAKE IT CONTINUALLY RISE!

Manulife Bank homeowner debt survey: Manulife CEO states millennials not ready for a financial emergency

Lunny claimed many millennials are not ready to manage an economic emergency because of a poor or no financial education and rising debt. They have seen their home loan related financial debt increase greater than any other generation, per the study.

The study revealed a couple of various other distinctions between the generations. Practically half, (45%), of millennial home owners stated they got funding from their family when acquiring their very first residence. This compares to 37% of Generation X’ers and 31% of baby boomers.

Manulife Bank homeowner debt survey: What should you do if you have too much debt?

Could you handle all your debt obligations if on your next mortgage renewal, you had a mortgage rate increase of only 1%? Do you not have any money put away for a financial emergency? Do you worry how you are going to pay your other bills on time?

The Ira Smith Team is here to get you back on track to debt free living Starting Over, Starting Now. We can solve your problems with immediate action and the right plan for moving forward. All it takes is one phone call to book your free, no obligation consultation. Call us now.manulife bank homeowner debt survey 7

 

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MANAGING YOUR PERSONAL FINANCES IS RISKY BUSINESS

managing your personal financesManaging your personal finances: Introduction

Managing your personal finances may seem like a good idea in theory but according to Eric Kirzner, a professor of finance at the Rotman School of Management in Toronto, “Going solo on your financial future probably isn’t worth the risk”. Never-the-less many Canadians are under the mistaken impression that managing their personal finances is a DIY project.

Managing your personal finances: How knowledgeable are Canadians about personal finance?

According to a recent survey by Tangerine:

  • Only 50% of Canadians surveyed consider themselves knowledgeable when it comes to personal finances
  • 39% consider their personal finance knowledge satisfactory, saying they only have enough knowledge to get by
  • 12% say they have limited or no knowledge

Managing your personal finances: Why aren’t more Canadians hiring financial planners?

There are a lot of misconceptions about financial planning – it’s only for the rich or young, or that it’s too expensive. And, many Canadians think that financial planning is only about budgeting or retirement planning.

Managing your personal finances: What is a financial plan?

A financial plan is a roadmap that shows you where you are today and helps you define your financial goals and aims for the future. And it provides you with the tools, information and structure to help your realize your financial goals and aims. A study by the Financial Planning Standards Board reports that 69% of Canadians still don’t have a comprehensive written financial plan to meet their life goals.

Managing your personal finances: What are the benefits of financial planning?

A study conducted on behalf of the Financial Planning Standards Council has shown that:

  • People who engaged in comprehensive financial planning have higher levels of financial and emotional well-being
  • Individuals with a financial plan have a better handle on their cash flow, have a plan to pay down debt and are more ready for emergencies
  • They have a better understanding of their investments, they know what to do to retire comfortably and have greater peace of mind3bestaward

Managing your personal finances: Why do I need a financial plan?

According to the Government of Canada a good financial plan will help you understand what your choices are today and in the future, reduce uncertainty about the future and help you make good decisions. A financial plan will answer these types of questions:

Managing your personal finances: What if I managed to accumulate too much debt?

Managing your personal finances may compromise your financial future. Always consult with a professional for financial services advice. If you’re seeking advice about debt, consult with Ira Smith Trustee & Receiver Inc. Our expertise in insolvency and financial restructuring can help you overcome your financial difficulties Starting Over, Starting Now. We’re just a phone call away.

 

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RETAIL BANKRUPTCY WATCH LIST: WHAT THIS 102 YEAR OLD TEACHES US ABOUT RETAILING

Retail bankruptcy watch list: Introduction

Metro Vancouver’s high rental fees and salaries for skilled retail staff aided the demise of the 102-year-old shoe-store chain Ingledew’s. Ingledew’s is the latest retailer in Canada to become bankrupt. One of the most compelling of all the retail bankruptcy issues today, is the constant customer practice of identifying the product in bricks-and-mortar shops and then after buying online from other stores. There are others on the retail bankruptcy watch list for the same reasons.

Retail bankruptcy watch list: And what about the future of our malls?

“I worry that the shopping mall that we understand so well today, in as several as five to 10 years, will be totally different,” he informed Business in Vancouver. He predicts a slew of stores having a hard time and landlords clambering to find new methods to attract consumers.

Ingledew stated that costs and debt rose because of:

  • the amount of money it took to open these gorgeous new shops;
  • the lease rates paid to mall property owners for rent; and,
  • the wages paid to get and retain excellent people to be knowledgeable, treat the consumer well and properly represent the company.

He further stated that the costs were far overtaking any type of gains being seen in sales in stores.

These pressures, particularly the fad of buyers dealing with physical shops as display rooms, has Ingledew being afraid that there will be an earthquake of adjustment can be found in the retail industry in the next years.

Retail bankruptcy watch list: It is a North American issue

North American merchants are shutting greater than 3,600 stores this year to stanch losses. Retailers are also declaring bankruptcy at a staggering rate. Wal-Mart is now consuming their shed market share, according to Moody’s expert Charlie O’Shea.

He and a green bay bankruptcy lawyer debated at length with Ingledew and they agreed, nonetheless, that retail is quickly developing and stated the ultra-competitive shoe retail industry specifically is undertaking significant change.

Oxford Properties, for instance, wishes to increase the measure of area dedicated to food and drink sales in its shopping centers– to around 20% from 9%. Other shopping centers are increasingly having art exhibitions, Lego demos and various other demonstrations and events to draw consumers.

In the United States, there are frustrating earnings reports from JC Penney, Macy’s, as well as Nordstrom, against a backdrop of overall distress in the retail market marked by sliding sales and traffic. Retailers are shutting shops and companies filing for Chapter 11 in 2017 in the first 4 months of 2017 are at a rate not seen since the last recession.

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Retail bankruptcy watch list: Wal-Mart is investing online

However, it is not just Amazon that is the beneficiary of the distress in the brick and mortar retail environment. There is one major traditional retailer that is crushing it. Wal-Mart recently reported that e-commerce sales rose by 63% in its latest quarter, compared to 29% growth the previous quarter. The firm stated most of these sales were natural via Wal*Mart.com.

“We delivered a solid first quarter and we’re encouraged by the start to the year,” WalMart CEO Doug McMillon said. “We’re moving faster to combine our digital and physical assets to make shopping simple and easy for customers. Our plan is gaining traction.”

Wal-Mart’s $3 billion procurement of the online merchant Jet.com additionally aided the firm boost shopping sales. Wal-Mart also got the Shoes.com domain and is utilizing it to advertise shoes from its Shoebuy.com Inc. subsidiary, which Wal-Mart got in January, simply a few weeks before Shoes.com ceased operating.

Retail bankruptcy watch list: Walmart’s growth is not just online

But Wal-Mart’s development isn’t all online. The firm stated sales at US stores open at the very least for a year, or same-store sales, grew by 1.4%, defeating analyst expectations of 1.3% and also marking the 10th consecutive quarter of same-store sales growth.

Retail bankruptcy watch list: What does your future look like?

Are you unhappy about the direction your debts are taking you? Is shopping putting you into financial ruin? Do you or your company not have enough cash flow to make it through another season? Is the stress of too much debt affecting your health and life?

Call us now for a free consultation. The Ira Smith Team can help you sort through all the issues. We will create a plan to get you back on the road to financial health. Many times, we can avoid bankruptcy, using one of the various bankruptcy alternatives. Call us today so we can help you get your life back, Starting Over, Starting Now.retail bankruptcy watch list 11

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AUTO LOAN DEBT: PEOPLE SEEM TO WANT THIS TOO

auto loan debt 0

Auto loan debt: Introduction

Cars can mean many things to us including freedom, status, power, sex appeal or basic transportation. It also seems to mean auto loan debt. Fueled by low-interest rates, 2016 saw Canadian passenger car sales hit a record high for the third straight year. It appears that 2017 is continuing the 2016 trend; not just for car sales, but also for Canadians’ willingness to take on auto loan debt.

But, can you afford that car you’re driving? Or will it put you into debt beyond your means to repay? And in the wonderful world of debt, car debt may be bad debt. So, if you have wanted to start taking on auto loan debt but were afraid to get started, this blog may help you decide what to do.

Auto loan debt: Why may car debt be bad debt?

According to DesRosier Automotive Consultants about 85% of car purchases are by Canadians are purchasing passenger cars with debt. “In Canada, automakers are selling about 41% of vehicles with loans of at least six years or leases of at least five years”, said Mark Buzzell, chief executive officer of Ford Canada.

  • A new car will lose 60% of its total value over the first five years of its life (CARFAX)
  • Longer-dated loans significantly increase the chance that an owner ends up owing more than their car is worth (Financial Consumer Agency of Canada)
  • The share of Canadians trading in vehicles with negative equity rose to 30% in 2015, and on average they were underwater by about $6,700 (J.D. Power)

auto loan debt

Auto loan debt: What can be done to prevent Canadians from buying cars they can’t afford?

Ford Motor Co. is seeking to limit the growth in long-term auto loans and leases in Canada. Ford wishes to slow down consumers trying to stretch out payments for as long as eight years to afford a car. However, regardless of what Ford’s doing, low-interest rates and longer amortization makes buying cars we can’t really afford an attractive proposition. People are looking merely at the monthly payments to figure out how large and fancy a vehicle to buy. They are not considering their true needs and affordability.

Some say that auto debt is so high, we are in an auto loan debt bubble. The rating agency Moody’s obviously thinks Canada is in one when it downgraded its rating of Canada’s six largest banks.

As of February 2017, sales of luxury cars accounted for nearly 60% of Canadian vehicle sales. This is five times their normal share, according to a March 13 Scotiabank report. The reality is that we need to exercise common sense and financial restraint when purchasing any big-ticket item. And let’s not forget about using a budget to help live within our means.

Auto loan debt: What to do if you have too much debt

Are you now in debt because you purchased or leased a car you couldn’t afford? The Ira Smith Team is here to get you back on track to debt free living Starting Over, Starting Now. We can solve your problems with immediate action and the right plan for moving forward. All it takes is one phone call to book your free, no obligation consultation. Call us now.

 

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MOODY’S DOWNGRADES CANADIAN BANKS: IS NO FRIEND TO THE CANADIAN ECONOMY

Moody’s downgrades Canadian banks: Introduction

Sales of brand-new cars and trucks in Canada struck an all-time high earlier this year. It’s been a constant wonderful market in the car business since interest rates have remained so low. With so many people buying new vehicles financed by debt, that is what has led to Moody’s downgrades Canadian banks.

Exactly what’s great for Canada’s auto dealerships isn’t so excellent for Canada’s most significant financial institutions. Fears stay and are growing about the overheated Canadian real estate market.

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Moody’s downgrades Canadian banks: Moody`s concerned over Canadian consumer debt

Credit monitoring company Moody’s fears Canadians have as well too much automobile and credit card debt and home mortgage and home equity loans. Moody’s states those variables have the financial institutions prone to losses.

As you include more consumer debt in the Canadian economy, it ends up being riskier. Moody`s fears that the Canadian banks will be less able to soak up any more shocks to the economy. Simply put, there’s a high danger of funding defaults that would harm the Canadian financial institutions. That’s why the reduction in the debt ranking.

Moody’s downgrades Canadian banks: Don`t worry, they are still extremely highly ranked

The financial institutions affected are all the large ones: Toronto-Dominion, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank as well as the National Bank of Canada. Every one of those huge 6 had their standard credit score ranking devalued by one notch. Still excellent, yet lower to where they’ve been.

The large 6 financial institutions in Canada are still extremely highly ranked establishments. On an international basis, they would certainly stay in the leading 10 percent. This is not a dangerous situation yet; it is a warning for one sector of Canada’s population.

Moody’s downgrades Canadian banks: The Canadian government can`t do anything more

Moody`s states the federal government has done exactly what they could to cool the hot real estate markets. To reduced credit danger further there are only just 2 points that would help: (i) a more powerful Canadian economic climate; or (ii) much less loaning and borrowing.

Moody’s downgrades Canadian banks: What to do if you have too much debt

Packing up on too much financial debt is never ever a great suggestion. Are you bewildered by financial debt? Call Ira Smith Trustee & Receiver Inc. today so we can give you a clear road map on how you can navigate through your financial debt. Our licensed professionals will help you reduce your debt and allow you to reduce stress and regain control and peace of mind. Starting Over, Starting Now you could be on your way to debt free living.

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ECONOMIC INDICATORS: WHAT DO THEY ACTUALLY INDICATE?

economic indicatorsEconomic indicators: Introduction

Statistics Canada in March reported that the country’s average household debt-to-income ratio hit a record-high 167.3%. Economic indicators like this drive the Canadian news cycle. It puts fear into the public but doesn’t seem to concern esteemed economists. Are these economic indicators painting an exact picture of the financial state of Canadians or creating unnecessary fear?

Economic indicators: What is the debt-to-income ratio?

Debt-to-income ratio provides a snapshot of what the average Canadian family owes, versus household income. Statistics Canada determines the total value of Canadian household debt and then divides this number by the total amount of disposable income. A debt-to-income ratio of 167.3% means that households owe $167 for each dollar they generate in disposable income. If you look at this economic indicator alone you can’t help but believe that Canadians are living way beyond their means. The conclusion reached is that Canadians are walking a financial tightrope.

Economic indicators: Does the debt-to-income ratio have any value as an economic indicator?

This is true for many Canadians. However, the reality is that debt-to-income ratio doesn’t paint an exact picture of the financial state of Canadians. Although it compares debt with disposable income, not all debt creation is equal. Debt can be long-term debt like a mortgage while other debt can be for a short-term. Therefore comparing disposable income with debt can’t be exact. Debt-to-income ratio doesn’t tell the story. It is only one small piece of detailed financial situations.

The debt-to-income ratio in Canada is definitely a concern. It is also increasing, confirms Carl Lamoureux, Senior Manager, Credit Risk at National Bank of Canada. “But sometimes the media focuses on controversial measurements, without looking at the asset side of the equation for a wider view of what is going on.”3bestaward

From an individual consumer perspective, calculations such as your Total Debt Servicing (TDS) ratio may be more beneficial. “When you are looking for a new loan, credit bureau information comes first and your debt-to-income ratio is only one of the things they look at,” explains Lamoureux. “Each part of a credit score provides insight into a predictability of something happening in the future, and your TDS is a solid indicator of your borrowing capacity.”

Benjamin Tal, deputy chief economist at CIBC World Markets Inc. has an even stronger opinion about debt-to-income ratio. “It’s probably the most useless economic indicator out there. You’re comparing two different things. That doesn’t make much sense. I’m not asking you to pay off your mortgage in one day or in one year.”

Are you concerned about the amount of debt that you’re carrying?

Although the debt-to-income ratio doesn’t tell the story, it is a stress indicator. What financial shape would you be in if:

  • you lost your job?
  • interest rates began to rise?
  • the hot housing market began to cool?

If any of these scenarios would spell financial disaster for you, now is the time to seek out the advice of a professional trustee. Contact Ira Smith Trustee & Receiver Inc. Our commitment to you is to bring value added solutions that fit your unique issues and circumstances. Clients appreciate our knowledge and our ingenuity, the value we deliver, and our speed in responding and taking action.

Make an appointment for a free, no obligation consultation today. You’ll be on your way to conquering debt Starting Over, Starting Now.

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GUIDE TO THE DIFFERENCE BETWEEN DEBT SETTLEMENT AND CONSUMER PROPOSAL

Difference between debt settlement and consumer proposal: Introduction

In last week’s vlog, “DEBT SETTLEMENT VS CONSUMER PROPOSAL CANADA: NEW CANADIAN GOVERNMENT REPORT EXPOSES DEBT SETTLEMENT COMPANIES HARMING CONSUMERS”, we reported on the recently released report by the Superintendent of Bankruptcy (OSB). The report is titled: “Review of Licensed Insolvency Trustee business practices to the administration of consumer insolvencies”. We gave an overview summary of the findings. In this vlog, we wish to get into some of the specifics of the OSB’s findings. The difference between such a settlement and consumer proposal when using a debt settlement company.

Difference between debt settlement and consumer proposal: Forced to pay money they can least afford

Cases handled by a Licensed Insolvency Trustee (LIT) that were referred by these types of settlement companies generally wound up paying much more for their insolvency case.

The debt consolidation companies called for a debtor to authorize a costly contract for speaking with the debt management company before being presented to a “picked LIT”. The people normally comprehended that the only function of the LIT as being restricted to the filing of the consumer proposal created by the settlement company!

In cases evaluated by the OSB, the consulting charge section of the contract contained a large amount for the debt consolidation company’s “help”. It was in the range of $2,400 to $4,200. For smaller consumer proposals, the OSB found that the consulting charge typically varied from 20% to 40% of the amount of the proposal.

Therefore, my read of this leads me to believe that certain LITs cooperated with such settlement companies to force insolvent debtors to pay thousands of dollars more than they otherwise needed to. These people could not afford this and did not deserve to be treated this way.

Debt specialist charges were purported to cover the expense of advising, conferences, recommendations as well as prep work of the consumer proposal. In all situations, the costs paid to the debt management company were IN ADDITION to the fees established under the Bankruptcy and Insolvency Act (Canada) charged by those LITs.

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Difference between debt settlement and consumer proposal: If that isn’t horrendous enough, the debt management company sold them a larger bill of goods!

OSB’s study discovered that debtors were often marketed more products by the debt settlement companies. As a result, there were billings for extra recurring costs throughout the life of their consumer proposal!

The products the debt management companies pushed on these vulnerable people included:

  • loans charging a high rate of interest;
  • brand-new credit score tools;
  • a proposal insurance policy; and
  • “credit score restoring” loans.

All products carried either high-interest rates or high price tags.

Difference between debt settlement and consumer proposal: Forced to pay more than they should have

A technique identified throughout the OSB’s review entailed advertising and marketing “proposal insurance coverage”. This was normally billed as a month-to-month expenditure at a price of around 10% of the worth of the consumer proposal. This financing had recurring repayments supposedly for “credit rating fixing”.

In one instance, a debtor with a $31,900 consumer proposal signed up for proposal insurance coverage, structured as a loan. That base cost was about $6,300. Various extra fees, the month-to-month management cost as well as a 15% interest rate, the insurance coverage priced out at $9,150.

So, with the debt management company’s management fee of $2,300, the consumer proposal that the creditors voted to accept in the amount of $31,900 cost the insolvent individual $43,350!!! In my view, being merely associated with this type of behaviour is against the BIA, OSB Directives and the Canadian Association of Insolvency and Restructuring Professionals code of conduct for its members. As a LIT, I would never be associated with such disgraceful behaviour.

Difference between debt settlement and consumer proposal: Consumer proposals are like a 5-year interest-free loan, so why would you borrow to pay it off early?

An additional pattern observed in consumer proposals submitted by LITs dealing with debt management companies was the intro of “price cut terms”. This arrangement is for enticing the debtors to borrow money under arrangements made by the debt settlement company.

Incorporation of a discount rate provision provokes a debtor to become part of a brand-new as well as expensive loan scheme. To capitalize on a 25% discount rate condition in a $10,000 proposal, a debtor would finance $7,500. With paying $1,400 in compulsory charges, this brought the lending overall to $8,900. At a promoted rate of interest of 22.99 %, with a payment timetable of $214 over 84 months, the borrower would certainly pay $10,475 in charges as well as a rate of interest, for an overall of $17,975.

A consumer proposal is like an interest-free loan. The same debtor with the same beginning consumer proposal of $10,000, would only pay that amount if they went directly to the LIT first. The debtor would have had a maximum of 60 months to complete making the payments with no interest charges at all. A savings of $7,975 and lower monthly payments.

As you can see, involving the debt settlement company increased the cost for an insolvent person dramatically for no value.

Difference between debt settlement and consumer proposal: Other findings

Other findings by the OSB include:

  • the LIT files did not contain any obvious evidence of debt settlement company certification or experience in credit counselling or the counselling of insolvent debtors;
  • consumers who filed with a LIT through the debt settlement company did not have a good understanding of the insolvency process, the options that were available to them or the other charges they were paying to the debt settlement company
  • the consumers were not aware that they could have avoided charges such as paying a debt consultant to prepare the consumer proposal
  • that the documentation made ready for the consumer proposal filing by the debt settlement company and used by the LITs contained many errors
  • Statements of Affairs, as well as Income and Expense Forms submitted, were incorrect in different ways
  • Debt settlement company fees were not disclosed
  • Real estate was always undervalued compared to LIT files where there was no involvement of a debt settlement company

Difference between debt settlement and consumer proposal: What you can do

The OSB is considering its next steps. The OSB is requesting comments. We have already provided ours. Our recommendation was that all LITs who cooperated with debt settlement companies as we have described here should be brought up on disciplinary charges by the OSB. If you agree that this way of doing business on vulnerable and unsuspecting consumers who are truly looking for professional help must stop, please click here to offer your own comments to the OSB.

In the meantime, if you have too much debt, please DO NOT be fooled by the debt settlement companies. Stay far away from them. Instead, contact a LIT directly.

We are debt professionals who will evaluate your situation and recommend which debt relief options are right for you. We will do so in a free consultation. A consumer proposal is one option; there are others as well.

Contact Ira Smith Trustee & Receiver Inc. today for a free consultation. There is no need for you to pay fees to a debt settlement company when you can get the same information from us for free.

You’ll be in good hands and Starting Over, Starting Now you can be well on your way to living a debt free life.

difference between debt settlement and consumer proposal

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FREE PERSONAL FINANCE APPS: HOW TO USE THEM TO ROCK, SET YOUR BUDGET & SAVE YOU MONEY

free personal finance apps 0Free personal finance apps: Introduction

In these challenging times it’s even more important to stay on top of things financially. Sticking to your budget, saving money and getting organized should be top of everyone’s mind. I know it’s difficult but there are some free personal finance apps that can help. Everyone is looking for the best personal finance app and the ones I noted below are good.

Our favourite 3 free personal finance apps to help you save money

Flipp: Flipp combines all the flyers in your area (when you register you input your postal code) and allows you to search by item, showing you the best deals. For added convenience, shop at a store that allows price matching (Superstore, Wal-Mart, No Frills and others). Use Flipp at the cash (instead of paper flyers) to get the lowest prices. Flipp is not just for groceries; it’s good for just about everything including electronics, home and garden and pet needs.

GasBuddy: GasBuddy lets you comparison shop for the best gas prices in your area. When you register you input your postal code. With the prices at the pumps, who doesn’t want to save a few bucks painlessly?

Canada Post’s epost: Did you know that Canadians are paying between $495 million and $734 million a year to receive paper bills or statements from communications and banking companies? This is according to a report by the Public Interest Advocacy Centre.

It makes good sense to get all of your bills online. You can contact each of the companies that you do business with individually or get all of your bills online and in one place with Canada Post’s epost. It will also store your statements for up to seven years. So, if you ever get audited by the CRA, you’ll have proof of your expenses.

Of all the free personal finance apps, Wally is our favourite to help you get organized, budget and Control your money seamlessly

Wally: Wally allows you to enter your expenses and organizes them into categories. It has a handy feature called InstaScan that captures relevant details from a photo of your receipt. It then populates your budget with the information. If you want to see where you’re spending money, Wally can show that to you using GPS. Another plus for Wally is that you’re not sharing your financial information with a third-party.

I think Wally is one of the best, if not the best personal finance app for 2017. It is a great best budget app for iPhone or android.

Free personal finance apps: What to do if you have too much debt and can’t get on a budget

If you’re experiencing serious financial issues, I’m afraid that there isn’t an app to magically save you. There is help available in the form of a professional trustee. Ira Smith Trustee & Receiver Inc. is an insolvency and financial restructuring practice for people and companies in the Greater Toronto Area (GTA) facing financial crisis. Our specialty is serving people and the private company entrepreneurial market, regardless of size. We offer a high quality and cost-effective service. The fact remains that if you do not earn enough it will be difficult to save enough, try this site out for size, modernize your income sources with what is available on the internet. Give us a call today and Starting Over, Starting Now you can put your financial problems behind you.

Call a Trustee Now!