Spring Cleaning For Your Finances

Each spring we perform tasks that are overlooked during our daily and weekly cleaning rituals. The tasks may seem tedious and time consuming, but they are necessary for the maintenance of our homes. 

Spring is also a good time to 'clean your financial house'. You can start by reviewing your utility and telephone statements.

• Review the billing structure for your utilities. Your electricity may be more expensive during peak times, so avoid using the dishwasher and doing laundry during this time.
• If your cell plan seems high you should contact your provider and request a better plan, only keeping the features you utilize.
• If you no longer use your landline consider cancelling the service.
• Track your TV habits - you may be paying for channels you don't view.
• If you see a promotional offer from another service provider ask your current provider to match the offer. 

If you are prepared to 'clean a little deeper' start by analyzing your bank statements.

• If your bank fees appear high either change your monthly package, or plan your purchases so you can reduce the number of bank transactions in a month.
• Reassess your spending habits. Small purchases such as a daily coffee can add up.

Spring cleaning is good for our house and good for our finances!

Charlie Peet

Menu Planning – Saving Time & Money

How many days a week do you stand in front of the fridge at 6pm wondering what you are going to make for dinner? And when this happens, how many of you decide to order in? Most people are nodding their head right about now. With a small change in your routine you will have more time to spend with your family in the evening, and your budget will benefit.

1.   Plan your weekly meals before you go shopping. 

a.  This will prevent food waste, as you are only buying what is required for that week. Without a plan we often purchase perishable items that we think we will use during the week but end up throwing away. 
b.  This will prevent overstocking. When you try to put a plan in place while shopping, it is easy to forget what is already in the cupboard.

2.   Look through flyers and coupons.

a.  Saving money on groceries can be as easy as planning a few meals based on what is on sale that week.
b.  Most stores will price match, so you can benefit from coupons without having to spend extra time driving to multiple stores.

3.   Family participation.

a.  Kids love to cook, so spending time in the kitchen together gives you the opportunity to spend valuable time with your children. Cooking won’t seem like such a chore.
b.  If you have older children make them responsible for planning one meal a week. This is a good habit for them to develop, so when they live on their own they don’t resort to eating out every night.
c.  If you are a single person you can meal plan with a friend. Spend the day together shopping and cooking. You then have a week’s worth of prepared meals to enjoy at home.

4.   Make extra for leftovers.

a.  It is nice to have a night out of the kitchen. When cooking your meals make enough so that you can have leftovers one night of the week. The gives you a break from the kitchen without having to break the budget by eating out.

~ Charlie Peet ~

2014 Financial Health – Attaining Your New Year’s Resolution

For many of us January 1st signifies a fresh start. We begin the New Year full of excitement and optimism. If good financial health is one of your New Year’s Resolutions, let the three R’s be your guide.

Review – Reassess – Renew

1.  Review not only your financial failures from the past year, but also your successes – you can learn from both. 

a.  Were the goals that you set for yourself realistic and attainable?
b.  Did you map out an action plan, specifying the steps required to obtain your goal?
c.  If you successfully achieved a past financial goal, analyze the situation and duplicate it. Whatever you were doing had positive results, so apply those same behaviors to your new financial goals. 

i. At the time of this accomplishment were you receiving emotional support and guidance from a family member or a friend?
ii. Did you attach a reward to the success of achieving the goal?
iii. Were you budgeting at the time? 

2. Reassess your goals. Take an inventory of your current financial situation, and make a list of your short and long term financial goals. Create specific, measurable, and realistic financial goals, and detail how you are going to achieve them.

a. Itemize all of your liabilities and assets. With this list you can form a realistic plan to pay down your debts, and create a higher net worth.
b. Make a comprehensive action plan with a timeline.
c. Make a list of potential obstacles, and alternative solutions. If you anticipate the obstacle, you can avoid a potential setback.

3. Renew your goals, and renew your belief in yourself. With your new focused action plan, and some patience, a financially fit future is possible. Remember that setbacks are a normal part of the process. When this happens, focus on the positive progress you have made up until this point, and commit to getting back on track.

~ Charlie Peet ~

Lower Your Debt, Not Your Credit Score

The holiday shopping season can impact your finances, as well as your credit score. There is plenty of information available for consumers on how to create and maintain an effective budget during the Christmas season. It is equally important for consumers to seek knowledge about how to preserve their credit score, which can be particularly vulnerable during the holiday season with department stores aggressively offering incentives for you to apply for their credit card.

Many retail stores will offer a discount on your purchase if you apply for their store credit card, while others may offer a reduced interest rate or a promotional gift. This may appear to be a simple, irrelevant decision; 20% off your first purchase, or no interest for 6 months, is worth the 10 minutes it takes to fill out the application - right? Before making that decision, you must carefully consider the pros and cons, and how it will impact your financial plan.

Pros:

1. Helps build or re-establish credit. Retail stores are known to be more lenient than major credit cards in their credit granting.
2. Receive ongoing discount offers if you pay for your purchases with the retail store card.
3. Acquire points to redeem for trips, cash-back, or other promotional items.

Cons:

1. Multiple credit applications in a short period of time will lower your credit score; and opening too many store cards too quickly will also hurt your credit score.
2. Retail store cards typically charge higher interest rates. If you don’t plan to pay the balance within 30 days you will face some hefty interest charges.
3. Retail stores typically issue cards with lower credit limits. This will negatively impact your total debt service ratio if you plan on carrying a balance.

Should you apply?

1. Consider your 12 month plan. If in the next year you intend to apply for a loan or a mortgage, then submitting an application for a store credit card is not the right decision at this time. 
2. If you normally pay your card off every month, and you regularly frequent the store, you could benefit from the store discounts.

Managing your credit score during the holidays could be as easy as not applying for credit that you don't need.

~ Charlie Peet ~

Definition of 'Total Debt Service Ratio - TDS'

A debt service measure that financial lenders use as a rule of thumb to give a preliminary assessment of whether a potential borrower is already in too much debt. More specifically, this ratio shows the proportion of gross income that is already spent on housing-related and other similar payments.
Receiving a ratio of less than 40% means that the potential borrower has an acceptable level of debt.

Celebrating a Debt-Free Christmas

Christmas is less than one month away! It is easy to get caught up in the season of giving, but with a few simple steps you can avoid a debt hangover.

1. Make a plan.

Write down the names of everyone you plan to purchase an item for, along with a list of present options.

2. Set a spending limit.

Keep in mind that the person you are purchasing a gift for would not want you to buy something that is out of your price range. Try not to get caught up in the commercialism of the holiday season.

3. Buy smart.

Research alternative brand names – they may be comparable in quality with a much cheaper price tag.

4. Flyers and coupons.

Between flyers, coupons, and online deals you should be able to find some of your gift items for a good price. Keep in mind that most stores will price match.

5. Homemade gifts.

Your neighbors, friends, children’s teachers etc. will appreciate the thoughtfulness of a homemade gift or baked item.

6. Budget for next year.

In January begin putting aside money each month for the following Christmas. Building a gift budget into your savings plan can help relieve debt stress in the holiday season.

Remember that Christmas is about enjoying time with family and friends. Instead of creating debt to follow you into your future, create happy memories that will stay with you forever.

~Charlie Peet~

Getting Reacquainted With Your Financial Reality

Feeling defeated after taking inventory of your current financial situation is normal. It is difficult to separate ‘your wants’ from ‘your needs’; and it is common for family members to disagree when performing this exercise together. You may choose to create your own list before sitting down to compare with your significant other. You will get the greatest results, and rewards, if you are completely honest with yourself during this process.

Your needs are items such as shelter, food, clothing, transportation, utilities and other essential services. Review these items to see if there are cheaper alternatives. Clothing is a necessity, but designer clothing is a luxury. Eating at home or packing a lunch is a cheaper option than eating at a restaurant. Every category should be reviewed for savings.

The line between your wants and your needs becomes fuzzy. You may need a telephone, but all of the extra features are an extra cost that is not necessary. Those who are extremely focused on having no more debts will attack this list very aggressively. Cable and internet are examples of items that we could live without, but many of us would not sacrifice.

The reality is, if you have high unsecured debt with a low income, and you are only affording the minimum monthly payment, you may never be debt free. Many people believe that bankruptcy is their only option, but most often there are several viable alternatives.

If you are feeling overwhelmed with your financial situation you should seek information from a local professional in the debt industry. Clients leave my office feeling empowered with factual information about how each of their debt relief options will affect them. They also leave with restored hope that they have the ability to change their financial direction.

~Charlie Peet~

Identify Your Spending Habits

After gathering all of your debt details you may feel overwhelmed. Don’t give up! You are on the right path to becoming financially fit. Your next step in this process is to establish a monthly budget.

Everyone hates to hear the ‘B’ word, but a budget is necessary to figure out how much of your money is left at the end of each month, without using any form of credit. Once you see your financial details organized on paper it becomes easier to separate the spending categories. There are many free online products available to help you track your monthly income and expenses. One of the more popular financial tools is mint.com.  This tool helps you keep track of your financial life. It is important to see where your money is being spent so you can reduce your discretionary spending. Many of your spending habits have become a part of your routine. With discipline and determination you can break these costly habits to create a more profitable future.

Be patient with yourself. It is difficult to change your normal spending habits, especially if you have been spending above your means. If you are trying to break a routine, such as your daily designer coffee purchase, make sure you reward yourself once in a while so you don’t go into complete withdrawal.

Reward with restraint. You don’t want to fall back into your old spending habits.

~Charlie Peet~

---

Discretionary Spending

"Money spent by consumers on things other than necessary things such as food, clothes, and fuel."

Planning to Be Debt Free

Making the decision to be debt free is your first step towards financial freedom. You also need to make a plan on how you are going to achieve your desired results. Begin this process by putting all of your cards away, and stop using credit. Your next step is to take an inventory of your debt. Assess your current financial situation as it stands today. You can do this by making a list of all of your debts. For each debt, list the outstanding balance, the minimum monthly payment, your interest rate, and your credit limit. You will include debts such as:

Unsecured Debt

• Credit Cards
• Lines of Credit
• Overdrafts
• Payday Loans
• Cash Advances
• Outstanding Income Tax
• Student Loans
• Outstanding Unpaid Bills
• Family Loans

Secured Debt

• Mortgage
• Vehicle Loan/Lease

With this list in place you can determine how much your debt is costing you to service each month. There are many debt calculators available online that is free to use. You can formulate a strategy on your own, or with the assistance of my office. It is important to keep your plan realistic and achievable.

~ Charlie Peet ~

The Journey Begins

November is Financial Literacy month in Canada and I have decided to kick it off with a new blog. I have been assisting people of the Okanagan with debt consulting, budgeting, and credit building services since 2002. I feel a great sense of accomplishment when I witness my clients move towards financial freedom. Every person is capable of obtaining financial success, regardless of income level. With a commitment from all household participants to alter previous spending habits, a willingness to incorporate new behaviours, as well as guidance from my office you can begin your journey to become "Forever Debt Free."

~ Charlie Peet ~