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October 23rd, 2013 by admin
Janine, a young 20-something student at the University of Alberta is pursuing a career/major in Accounting. She is passionate about financial literacy and includes tips on her blog, My Pennies, My Thoughts, that chronicles her life through her early-to-mid-twenties. The blog documents how she plans to accomplish financial freedom as well as the musings of her own triumphs and of course all the little bumps along the way. Read more at : http://mypenniesmythoughts.com/
How To: Move Out of Your Parent’s House
This is dumb for two reasons. First, I’m not sure why people feel so entitled that their parents should basically fund their down payment. If you’re living at home rent free while working full time so that you can save up for a down payment, it’s not really you saving up for it. In reality it’s your parents money your using for your down payment because you would have paid them at least a portion had you been paying rent to them. How is that fair to your parents?
Our generation is entitled, and that’s how a lot of older generations view us. Moving out, building a budget and making a plan to save up for a down payment while paying for your own living expenses is the adult thing to do. I don’t understand why so many 20-somethings think they shouldn’t have living expenses.
The second reason this particular statement is a stupid reason for not moving out is the interest on a mortgage. If you don’t want to pay $700 a month for rent because you are “paying someone else’s mortgage” think about the $9,000 per year (or $750 a month) you are blowing on interest ($300,000 mortgage at 3%). This doesn’t even scratch the surface of the other cost owner’s incur (read condo fees, maintenance, home insurance).
So now that we have established moving out is a good idea, here’s how you can do it.
Step 1: Set a date
Whether you are moving out all by yourself or in with friends/significant others setting a date gives you a timeline to work with. Because I live in Canada I wasn’t thrilled with the idea of moving in the middle of winter and I didn’t want to do it part way through the semester so I chose the beginning of the school year!
Step 2: Build a budget
Know how much you are willing to pay for rent and figure out your utilities and grocery bills. Then add on an extra under dollars or so because it always costs more than you think it will. For tips on building a budget as a student click HERE.
Step 3: Live like you’ve already moved out
This was one of the best things I’ve ever done. I worked full-time for eight months before moving out and each month I would stash away “rent payments” for two reasons. The first was to get myself used to having bills to pay and the second was that so when I returned to school I’d have money to supplement my income.
Step 4: Acquire pieces slowly
Whether it’s before or after you’ve moved out I would advise buying things slowly. Obviously you need the basics: a bed, dishes, and table. But you don’t need to furnish your entire home in one go. We live in an era where everyone has to have everything right now and that just isn’t the case. Saving up for a nice couch or bookshelves instead of buying the first thing you lay eyes on will not only teach you patience but you’ll probably be able to do some research on the most budget-friendly option and you will be able to find the sectional of your dreams! Heck, the condo is still an on-going work-in-progress!
Step 5: Get help moving
Recruit family and friends to help out with moving. I had such a fantastic group of people help me move my things out of my parents, I didn’t have to rent a moving truck which I’m sure saved me a lot of money.
While moving out of your parents may seem incredibly intimidating know that everything will always work out. It always does, and if you’re focused you will always get by. The lessons I’ve learned this past year are invaluable and I wouldn’t trade them for the world.
Readers, what are your tips to students or new grads wanting to move out of their parents?
September 17th, 2013 by admin
With the new school year in full swing, students – and parents footing the bill – are starting to see the expenses pile up. The increasing cost of tuition, textbooks, rent and school supplies is making some question whether getting a degree is an affordable option.
According to the Canadian Federation of Students, the average university student in Canada graduates with a debt load of $37,000.
With all the tempting loans and credit available to students, it’s easy to get into trouble very quickly.
Student loans and lines of credit are great tools to help pay for tuition, textbooks and the necessary expenses associated with school. But with income levels low and expenses high, it’s easy to misuse loans for a spring break getaway, nights out, rent or general day-to-day expenses. With this mentality, many graduates find themselves overwhelmed with debt.
Following these five rules will help students make the most out of their post-secondary years, without the crushing debt load to match.
Spend less than you earn
Simply put, spending less than you earn is the key to getting you on the road to riches. Unfortunately, a CGA Canada report found that Canadians today owe $1.53 for every dollar they earn. Evaluate all your purchases and make sure you can truly afford what you buy. Don’t waste cash on frivolous items or expensive things you really don’t need.
Make a budget to find out exactly how much cash you have to spend, how much you have to cut back or how much more you need to earn to maintain your expenses. Save up for the things that make up the well-rounded student experience – like a spring break getaway or a weekend trip with a sports club – instead of spending your loan. Increase your income by working a summer or part-time job, applying for scholarships (there’s $70 million available in scholarships, bursaries and grants nationwide) or doing a co-op degree.
Sacrifice a little
Living away from home and driving are huge expenses. A survey conducted by RateSupermarket.ca found that a university student can save $45,000 on living expenses over the course of four years and the college student can save $11,000 over two years by living at home.
It may not be the ideal situation for you (or the parents for that matter) but if it’s feasible, it may be beneficial to postpone moving out. Save even more by taking advantage of a transit pass that is likely covered by your tuition. It’s easy to spend $5,000 a year on driving and that doesn’t even include buying the car. While these sacrifices may cramp your style, we are talking about saving tens of thousands of dollars here – it may just be worth it.
Invest in education
Education is definitely worth the investment – even if it means going into debt. It may seem like a huge expense now but the skills and credentials will up your future earning potential exponentially throughout your life. Consider this: according to MoneySense’s Guide to Retiring Wealthy, the median annual wage of Canadians with bachelor degrees is $18,500 a year higher than the wage earned by high school grads. This will most likely amount to an extra $650,000 in income over a 35-year career. Just be sure to plan ahead – switching from major to major or taking unnecessary courses can prolong your degree and drive up your expenses. Sitting down with a career counselor will help you choose the right classes.
Manage debt wisely
Every dollar you spend on credit or a loan today is one dollar less you have to spend in the future. Avoid racking up your credit card and only use your student loan for school related expenses. If you are short at the end of the month, either up your earnings or reduce your spending. Make a scheduled plan to have your student loans paid off five to seven years post-graduation. Anything more than that may interfere with your financial goals of buying a home or starting a family in your 30s.
No one cares as much about your finances as you do. There are plenty of resources to help you gain the financial literacy skills to create success for you while you’re in school and post-graduation. For more information on how to survive university without going broke, download My Money $ My Future – Post Secondary Edition – your free financial guide to get you through school, without going completely broke.
September 16th, 2013 by admin
Government student loans
You may need to consider taking on a student loan to fund your education. You may qualify for a government loan or a loan from a private lending institution, like your bank. On the government level, the student loan program has been streamlined so that most provincial programs are integrated with the federal programs. Now, an application at the provincial level automatically becomes an application at the federal level. The application is also automatically assessed for any government educational grants that you may be eligible for.
In Alberta, the maximum loan is $6,650.00 per semester to a cumulative maximum of $60,000. Higher limits are established for post graduate studies. The loan is intended to supplement your own resources (your income, savings, contribution from parents), which will be taken into account to determine your loan eligibility.
While you’re at school, the government will pay the interest on the loan. Once you graduate, transfer to part time studies, drop out or take time off, the government gives you a six month grace period before you have to start making your payments, both principal and interest. If you miss a payment, it could affect your credit rating.
Only borrow what you need!
The less you borrow, the less interest you pay — the less you have to pay back. If you don’t finish your degree, are unsatisfied with the education or switch majors halfway through, the loan must be paid back. If you have difficulty paying back the loan due to illness, disability or you have difficulty finding a job, you may qualify for a Repayment Assistance Plan offered by the government. You may be eligible for help in the form of interest relief and debt reduction, depending on your income level and employment status.
Although interest paid on student loans is deductible for tax purposes, manage your debt wisely and only borrow what you need.
Student lines of credit
Most banks and some other financial institutions offer student loans in the form of a student line of credit. The big difference between this and a government loan is that you start paying the interest right away on any funds used, so make sure to include the cost in your budget.
In most cases, you will need a co-signer, someone who will guarantee to pay the loan if you do not. There are no Repayment Assistance Plans if you cannot pay back the loan.
Based on an interest rate of 3% and a 10 year repayment period, here is an example of what your loan payment might be depending on the balance of your loan.
Student loan amount
|Monthly payment amount||Total interest paid over 10 years||
Total amount paid
September 16th, 2013 by admin
Your first step in researching how you can pay for school is to talk with your family. Find out if there is money set aside for your education in the form of an RESP (see below) or if your parents are willing to contribute to your education. If yes, find out exactly how much, when you can access the money, and how much you can access at a time. Show them your estimated expenses prepared at the beginning of this book to start the conversation. If your parents can’t provide for the full cost of education, you will need additional sources of funding, so read on. This can be a delicate subject for those who may not want to depend on their parents for support or who feel that their parents are unable to assist.
Registered Educational Savings Program (RESP)
Your parents or family members may have contributed to your education through an RESP. These are registered programs to assist young people to attend post-secondary education. Although the contributions are not tax deductible, any earnings on these contributions are not taxed until they are paid out.
Again, find out if you have an RESP by talking to your family.
A four month summer holiday can be a great time to earn the bulk of your income. In addition to summer jobs, many students work part time during the year. School year earnings for students can range from $5,000 to $7,000. Students in part time jobs can work up to 18 hours per week. What you need to consider is how you will balance your time between attending class, studying for exams, working and maintaining a social life. Be careful not to burn yourself out or sacrifice your grades with this option. See more in the ‘Making Money’ section on page 20.
Scholarships, grants, and bursaries
Every year across the country, $70 million is set aside for students in the form of scholarships, grants, and bursaries. This is really the best form of funding as the financial rewards are non-taxable and you don’t have to pay them back. Research all the awards and apply to all those you think you qualify for. Stop by your school’s Student Union or Financial Aid offices for local awards or search online. Remember, there is no cap on how many scholarships you can apply for.
Here are a few great sites to get you started:
• www.AUCC.ca (Association of Universities and Colleges across Canada)
Apprenticeship programs/ Co-operative education
In these programs, you alternate between studying and applying your new skills at work. These are great programs to take advantage of as you earn a paycheque for at least part of the year and you graduate with work-related experience, valuable networks and a potential permanent position. Check with your school to find out what opportunities are available. Many large corporations have a set number of these positions at certain times of year, usually coinciding with school terms.
Government student loans
Once you have exhausted the options above, you may need to consider taking on a student loan to fund your education. You may qualify for a government loan or a loan from a private lending institution, like your bank. On the government level, the student loan program has been streamlined so that most provincial programs are integrated with the federal programs. Now, an application at the provincial level automatically becomes an application at the federal level. The application is also automatically assessed for any government educational grants that you may be eligible for.
According to the book More Money for Beer and Textbooks, by Kyle Prevost and Justin Bouchard, $7 million goes unclaimed in Canada each year in the form of scholarships, bursaries and grants. Many awards don’t require painstaking work – an application, a short essay or references may do the trick. You can earn thousands of dollars tax-free toward your education if you only apply yourself.
You don’t need to be a top level student or have extraordinary achievements – there are awards out there to be won on the basis of your ethnicity, income level, special circumstance, participation in sports or clubs, involvement in the community, artistic pursuit or a special field of interest. The reality is most students don’t see themselves as ‘scholarship worthy’ and don’t even bother applying, which is why so many awards go unclaimed. The best advice is to APPLY, APPLY, APPLY to any award that may reflect your situation. In some cases, you may be the lone applicant, making you a shoe-in for the award.
May 7th, 2012 by admin
If you do not have one already, credit organizations will soon be trying to offer you a student credit card. Used properly, credit cards can boost your credit rating and make managing your finances simpler by reducing a multitude of payments, some of which can be made automatically to a single payment per month.
The bad news is that credit cards can be really expensive and these costs can sneak up on you and overwhelm you before you know it. Credit cards come with many fees, some up front, some hidden in fine print agreements that can create unexpected problems for you.
The worst aspects of credit cards only appear if you are late on your payments. Interest fees and interest charges can pile on quickly, especially when the attractive interest rate you were offered to get you to sign up suddenly increases (as per the fine print agreement).
Credit cards can weaken your resolve and lead to overspending. If you have a credit card, you should never ask yourself if you can afford the monthly payment for all of your purchases. Instead, as with everything you buy, you should ask yourself if you really need it and if so, if you can afford to pay for it when the bill comes due at the end of the month.
Keeping track of payments tip: only have 1 credit card!
Payments can be easily tracked online and downloaded. Personal finance software or spreadsheets can help you track and manage both your spending and payments, helping you keep track of your budget.
Tips for Credit Card Management
- Shop for credit carefully– check interest charged and annual fees and apply for the credit card that suits your budget.
- Pay off the entire monthly balance to avoid interest charges, or make the biggest payment possible you can, over and above the minimum monthly payment.
- Remember bargains are not really bargains if you end up paying interest on your credit card.
- The dollar you spend today on credit is one dollar you won’t have in the future. It’s important to understand whether the purchase is a “want” or a “need.”
- Keep your credit card receipts and review your credit card statements monthly to make sure there are no errors.
- Set a monthly limit for each credit card – once you reach your limit, put your credit card away to avoid over-spending.
- Remember the monthly budget for your credit card spending is a maximum spending limit, not a minimum.
April 10th, 2012 by admin
Have you ever walked into a store to buy a sweater, only to leave with that sweater, a pair of jeans, a belt and accessories? Many of us have a problem with impulse buying and purchasing items we don’t really need.
If you’re an impulse buyer, here are a few tips to help you resist:
- Avoid or limit trips to malls and online buying sites
- Pay cash for items – it’s harder to part with than swiping a credit or debit card
- Leave your credit card at home
- If you see an item you really want – sleep on it. Do you feel you still can’t live without it the next day?
- Keep in mind your latte factor – and that small items really add up
Before I buy:
Don’t just blindly buy an item – really give some thought to your next purchase. Ask yourself the following:
- Do I really need it?
- If I don’t need it, do I really, really want it?
- Will this item make me happier?
- Am I sure I will use this item often?
- If I buy this item now, will I have enough money for stuff I might need or want later this week, or later this month?
- Will buying this item interfere with paying off debt?
- Do I have the money for this item now, or can I wait to buy it so I can
- save for it?
- Can I get it cheaper somewhere else?
- Do I have an item, or can I buy a cheaper item, similar to this one?
If you think about these questions and answer them honestly, you’ll get a good idea of whether or not you should buy the item. If you said yes to questions 1, 2, 3, 4, 5, 7, and no to 6, 8 and 9, chances are this is a good purchase for you.