Author: Mike Holman

Categories
RESP

QESI – Quebec RESP Grants For Educational Saving

I’ve written extensively about RESP accounts which are educational savings accounts available to all Canadians.  Quebec has decided to do one better and offers a special Quebec educational savings grant which is available on top of the normal federal RESP CESG grants.

RESP Book
Buy The RESP Book on Amazon

The grants work in a similar fashion to the federal RESP grants except they are half as much.  This means that the RESP is that more valuable to a Quebec resident since the basic grant will be 30% of contributions instead of the 20% that residents of all the other provinces get.

Both federal RESP grants and QESI grants are paid in the same account so any contributions discussed below refer to your normal RESP contributions.  You don’t have to set up separate accounts or have separate contributions.

Here are the QESI Quebec RESP grant rules

  • The grant amount per year is 10% of the first $2500 contributed per beneficiary.
  • Max $250 grants credit per tax year per beneficiary
  • The lifetime maximum grant amount per beneficiary is $3600.
  • There is a $250 grant carry forward (as of 2008) so you can actually contribute $5000 and get $500 QESI grant if you have enough room.

Timing of QESI grant payments

QESI grant payments only get paid once a year.  If you make any contributions in a calendar year, your financial institution will send that contribution information to the government by the end of March of the following year.  The financial institution should receive the grant money within 90 days and will deposit the grant into your account.

Keep in mind that even if the institution sends the information earlier in the year (ie January) – that won’t necessarily speed up the process.  The QESI process is new, so it is very possible that there will be delays both on the government side and the financial institution side.

This means there can be a long time between the contribution and grant.

For example if someone contributes $1,000 to a Quebec RESP in April of 2012, their financial institution will send that information in March of 2013 and will put the grant in the account up to 90 days later which will be in June of 2013.  So if you contribute early in a  calendar year, it’s possible that the grant won’t be paid for up to 18 months later.

Supplemental increase for lower income families

If the net family income is $42,707 or less, then extra grants of 10% of net contributions will be paid up to a maximum of $50 per beneficiary per tax year.
If your net family income is between $42,707 and $85,414 then you will get extra grants of 5% of net contributions up to a maximum of $25 per beneficiary per tax year .

The supplemental QESI grant is payable only to an RESP that is either an individual plan or a family plan where all the beneficiaries are siblings.

Grant room or accumulated rights (as the Quebec government likes to call them)

Every eligible child begins to receive QESI room at birth, or on Feb. 21, 2007, whichever is later.

The Quebec government has termed grant room for the QESI basic amount as “accumulated rights”.  I think something got lost in the translation of those terms.  🙂

These grant rights accumulate at a rate of $250 per year.

As of 2008, any QESI rights accumulated during previous years can be added to the basic amount up to a maximum of $500 a year.

The supplementary QESI credit cannot be carried forward if not used.  The carry forward only applies to the basic QESI grant.

Eligibility for QESI grants

Basically the same as federal government CESG.

Beneficiary Eligibility Critieria

Every child up to and including age 17 is eligible to receive the QESI grant, provided the child:

  • is a Quebec resident as of Dec. 31st of the taxation year being applied for;
  • has a valid social insurance number (SIN);
  • is named as a beneficiary to an RESP where the QESI is offered;
  • meets the CESG 16/17 year-old rules;
  • has a contribution made to an RESP in their name; and
    has available grant room.

You shouldn’t need to apply for this grant – the financial institution should do it for you.  It should be noted (as Steph pointed out in the comments) that not all financial institutions offer this grant.   It is important for you to research which ones do before opening up an account.

Here is the link to the Revenu Quebec page that lists the companies that are or that will eventually become compliant:

http://www.revenu.gouv.qc.ca/en/citoyen/credits/credits/iqee/fournisseurs_reee.aspx

Make sure to ask at which step of the process they are… (already compliant or in the process of) before, so that you won’t be disappointed in the end !

Categories
FrontPageOnly

Zero Percent Balance Credit Cards

Credit has been used to make purchases for centuries, however it wasn’t until the  the 1970’s that the charge cards we know today became available and popular among the public sector.  At that time, consumers were charged an annual fee for the privilege of having credit.  In addition to paying an annual fee, most lenders offered a standard interest rate in the high teens for everyone regardless of credit worthiness.  Over the years we have seen many changes within the industry with more on the way in upcoming months.  One of those changes involves the introduction of zero percent interest credit cards.  Here we will learn more about the zero percent credit card.

What Are Zero Percent Balance Credit Cards?

Credit cards are a multi-billion dollar per year industry for the banks that issue credit to consumers.  Banks make their money on the interest they charge to consumer who use credit.  As the credit card industry became more competitive, many banks began introducing zero percent credit cards to lure consumers from credit cards that charge a higher interest rate.  The strategy works well and many consumers can benefit from using zero percent interest credit cards properly.  Most zero percent balance credit cards are issued for a temporary period that expires within a few months.  Once the introductory period has expired, the terms and conditions of the credit card will change based on the original contract.

How Can Zero Percent Balance Credit Cards Be Used?

Most consumers find zero percent credit cards tempting in that they have an opportunity to either transfer higher interest balances to a new card with no interest or make new purchases without having to pay interest during the introductory period.  When used correctly, zero percent credit cards can be a great tool to reduce your debt or purchase a big ticket item without paying high interest fees in the first few months after the purchase.

The Dangers Of Zero Percent Balance Credit Cards.

As many consumers already know, the credit card industry is undergoing many changes as a result of new rules and regulations.  The number of credit cards offering zero percent interest has dropped considerably in the past two years, however there are still offers available for those with excellent credit.  It is important for consumers considering zero percent credit cards to carefully read the terms of the credit card contract before applying.  While there are many benefits to using a zero percent interest credit card, there are not without negative consequences.  The biggest danger of zero percent credit cards is dealing with the higher interest rate once the introductory period has expired.  Consumers who make purchases and fail to pay off the balance during the introductory period often face a much higher interest rate for the remainder of their contract.  The same theory applies to those who transfer a large balance from a higher interest credit card.  Unless you are certain you can pay off the balance of your card, either purchases or transferred balances, you may end up paying more after balance transfer fees and future interest is applied.

Zero percent credit cards can offer consumers a great way to save money if used properly.  As with all credit card contracts, it is important to read and understand the terms and conditions before using any new credit card.

Categories
Personal Finance

Best Stock Picks For 2010 Competition Q1 Update – I Demand A Recount!

At the beginning of the year I entered in a stock picking competition with some other bloggers.  As I outlined in my original 2010 stock pick post I bet the house on the price of gold falling.  Well, it hasn’t fallen and as was pointed out in the comments of the original post, I didn’t even really pick the right investment instruments to reflect my bet.

Oh well – it’s just for fun.  🙂  (At least I’m ahead of Frugal Trader).

1. Dividend Growth Investor: +9.58%

2. Wild Investor: +9.30%

3. My Trader’s Journal: +5.78%

4. WhereDoesAllMyMoneyGo: +5.24%

5. The Financial Blogger: +2.87%

6. ZachStocks: +2.55%

7. Four Pillars: -1.01%

8. Intelligent Speculator: -1.27%

9. Million Dollar Journey: -11.83%

Categories
Personal Finance

Time Is a Valuable Commodity

Jay is a new writer here at Four Pillars – read his introduction post here.

Time is a valuable commodity.  Every day, I spend 8 hours preparing myself to spend the remaining 16 ones as richly and as fully as possible – and make no mistake, I do spend time. For as Benjamin Franklin once said: Time is Money.

Today we’re going to look at how I divvy up my time and help you visualize a bit better how I live and what my priorities are.

  • Sleep – I need at least 8 hours a day to be fully functioning
  • Exercise – I currently get about four and a half hours of soccer in a week, plus an hour of Ultimate Frisbee. I wish it were more, but it is what it is.
  • Social life – I am by no means a social butterfly, but I do enjoy spending time with my friends and I make that a priority on the weekends.

Now that you’re armed with this knowledge, here’s a look at my schedule which is in Google docs.  You don’t need a Google account or anything – just click on the link and my schedule spreadsheet will appear.

Thoughts on my schedule

My first thought when I looked at my schedule: I spend way too much time in transit. I was tracking how I spent my time this week, and I spent close to 20 hours in transit just getting to work and back. To put that into perspective, I work 30 hours a week.

To me, that seems a little disproportionate.

The simple solution would seem to be to work more hours so that I get more bang for my transit (time) buck, but it’s not quite that simple.

Right now, my only viable source for increasing my income is through gaining additional tutoring clients, or doing more freelance journalism.

Here’s the problem: most, if not all, of my potential tutoring clients live downtown. This would be fine, except that it takes me about an hour and a half to get downtown, and I charge $20 an hour. Right now this doesn’t affect me too much, because I meet my clients in a coffee shop near where I work, and therefore I’m not losing any additional time in transit. However, if I (hopefully) find a job closer to where I live. I’m now only getting paid $20 for 4 hours of time (3 hours transit, 1 hour tutoring).

Just to clarify, that would amount to a measly 5 bucks an hour. For a little perspective, the McDonalds down the road pays at least 8 an hour. In theory, I would make $12 more by working at McDonalds that I would tutoring one client.

I did the math, and I break even with McDonalds at 2 clients, and only start to become more profitable than McDonalds after 3 clients. Now I may not have grand ambitions at this point, but I would hope to be shooting for a little more than slightly-more-profitable-than-a-McDonalds-job.

On the plus side, I’ve found that having friends come over and help me cook on Sunday has really helped me economize on my time and money. Cooking every day is very tedious, and I find it much more enjoyable when I know I’m only doing it once a week, and that I’m also spending the time with my friends.

In a future post, I’ll look a lot more in depth into the actual costs and benefits of cooking only once a week. However, next week will be my budget report where I let you know how fiscally responsible I was in the month of March.

Categories
Announcements

Carnival of Personal Finance – Blogthority.com Relaunch Edition! Make More Money Blogging

Welcome to Blogthority.com relaunch edition of the Carnival of Personal Finance. Blogthority.com is a blog dedicated to helping you earn more money from your blog without spending any extra time on it. It will also cover various blog maintenance, technical and design issues from time to time.
The site was started by Pinyo from Moolanomy.com and I took it over last year and just relaunched it last week. Please feel free to check it out and subscribe. Please read the introduction post for more information about the direction of the blog.

One of the key factors when talking about personal finance is income. In my opinion, more income is better. Cutting costs is certainly a valid way to improve your finances but it is limited. Once you pick the “low hanging fruit” then it becomes harder and harder to save the next dollar.
Making more income is also limited because you only have so many hours in a day. However if you can earn more money then it is possible to save more money and pay off debts without cutting your standard of living.
For those of you who are bloggers and want to make a bit more money from your blog then subscribe to Blogthority.com. My goal is to write about strategies to increase your blog income without you having to spend more time on your blog.

Now, on with the carnival!

Editor’s picks These are the best of the best!

One of the keys to increasing your blog income is knowing where the income comes from. A hint – it comes from your search engine visitors.


There are plenty of ways to make more money by blogging – Here are four different approaches you can try.


Sometimes selling your blog or business is how you make the most money – what is your exit strategy?


Promotion (or advertising) is good or any business. For blogs – writing a great guest post is king.

  • D4L from Dividends Value presents Increasing Dividend Yield Part IV: Bonds, and says, “This is the fourth installment in a multi-part series that looks at various options used by income investors to boost their yield while waiting for dividend growth to lift their portfolio’s overall yield-on-cost. Last week we looked at Preferred Stock. This week we are looking at Bonds.”
  • Bob from Christian Personal Finance presents 7 Tips to Involve Your Spouse in the Finances, and says, “Keeping your spouse involved in the management of finances can be a tough thing to do. In most situations, there is a nerd (as Dave Ramsey often puts it) in the family who likes doing the numbers stuff. But, this is a dangerous approach to family finances…”
  • Tom from MapleMoney presents What is Financial Literacy?, and says, “As a collective whole, we don’t save money because there are too many opportunities to spend it.”
  • FMF from Free Money Finance presents Plan on Budgeting Surprises, and says, “Many budgets are doomed to failure because of the challenge of planning for unplanned spending. Here are some of the items you either did not put in your budget or they shouldn’t be in your spending. “The Wise Squirrel from Squirrelers presents The New Rich – Frugal is Cool.
  • Silicon Valley Blogger from The Digerati Life presents Online Bill Pay Account From FNBO Direct: Review, and says, “This is a review of the FNBO Direct Online Bill Pay Account.”
  • Mr. Credit Card from Ask Mr. Credit Card presents Jobs and Credit Ratings.
  • Jason from One Money Design presents Should You Lease or Buy a Car: Which Saves More Money?, and says, “Should you lease or buy a car? In order to make a decision, you need to understand the pros and cons of each option and consider which one saves the most money.”


Time is money – Learn how to grow your blog efficiently.

Categories
FrontPageOnly

Some Hurried Links

Find out the best high yield savings account.
Wealth and Socioeconomic Class | Million Dollar Journey
How do you say “bubble” in Chinese? | Canadian Capitalist
Discretionary Investment Management : WhereDoesAllMyMoneyGo.com
Time Management Tips
Intelligent Speculator | Top Stock Picks: Dividend ETF’s
Michael James on Money: Misalignment of Interests on Wall Street
The Bad Credit Remortgage
A Short Guide to Retirement Plan Terminology
TurboTax – Prepare Taxes Online – Free eFile
PocketSmith Personal Finance Software Review

Carnivals

Carnival of Personal Finance
Economy and your finances carnival March 28th 2010

Categories
Investing

Rules For Converting Your RRSP To A RRIF

My parents are in the process of getting their RRSP accounts converted to RRIFs (Registered Retirement Income Fund) since they are turning 71 this year.  After answering a few of their questions I thought I would do a post covering some of the basic rules and strategies of converting a RRSP account to a RRIF account.

For the majority of readers who are nowhere near the age of 71 I suggest you read this anyways.  If you have any of your money in RRSPs then one day you probably will have a RRIF and it makes sense to understand all the rules since a RRIF account is basically the sequel to your RRSP account.  There are a lot of similarities between a RRSP account and a RRIF account.  The main difference between the two is that the RRSP account is used to accumulate money via contributions whereas the RRIF account disperses money via withdrawals.

Rules for converting RRSP to RRIF

  • You have until Dec 31 of the year when you turn 71 to convert the account to a RRIF.
  • Some institutions will do it automatically so even if you don’t do anything – you will be the proud owner of a RRIF account on Jan 1 of the year you turn 72.
  • You can convert your RRSP to a RRIF anytime you want before the deadline.  One reason someone might convert early (ie at age 55) is so they can set up regular withdrawals from the account which most institutions won’t allow for RRSP accounts.
  • Mandatory or minimum payments – these start in the year after you set up your RRIF account.  There is a set minimum percentage amount determined by the government that you have to withdraw each year.  The percentage withdrawal amount increases as you get older.
  • There is no maximum withdrawal amount except for the amount of money you have in the account.
  • All withdrawals from a RRIF count as taxable income (including the mandatory withdrawal).
  • A RRIF account can hold the same investments as an RRSP account.  Most financial institutions that offer RRSP accounts also offer RRIF accounts so you shouldn’t have to switch institutions.
  • Money in a RRIF account is still “registered” so you don’t pay any tax on any income and there is no capital gains/losses.  Same as your RRSP.
  • You can’t make any contributions to a RRIF account.
  • You don’t have to spend all of your RRIF withdrawals.  You can save the money.
  • You don’t need to sell the actual investments in your RRIF to complete a withdrawal.  Most institutions will allow you to transfer your investments “in kind” to an non-registered account or TFSA account.
  • You can have more than one RRIF account.
  • Some people create a small RRIF account at age 65 in order to make annual $2,000 withdrawals which will qualify for the pension credit.
  • You can make multiple transfers to the same RRIF acount from your RRSP account.

What to do with your new RRIF account?

One of the main differences between a RRIF and an RRSP is that you have to make at least one withdrawal per year from your RRIF account starting in the year you turn 72.  To make that happen you have to set up some sort of payment method for your RRIF account.

Some RRIF payment options:

The government rules say that you have to withdraw the mandatory amount from your RRIF by Dec 31 of that year.  How you get your payment is up to you.  You should check with your financial institution but here are some options that you will probably have available to you:

  • Payment frequency – Do you want 1 lump sum payment at the beginning of the year?  Or 1 payment on Dec 31?  Would you like 12 monthly payments or some other option such as weekly payment?  Just ask.
  • Payment form – You can get the money as a cheque or EFTed to your bank account.  You can also get it transferred to an open or TFSA account in the same institution.
  • Withholding tax – Unlike a RRSP where there are set minimum percentages for the withholding tax depending on the withdrawal amount, there is no minimum withholding tax on the mandatory withdrawal amount, so you can elect to not have any withholding taxes taken from the withdrawals.  If you take more than the mandatory amount then there are minimums, which is the same as a RRSP withdrawal.  In either case you can (and probably should) ask the company to withhold a higher percentage.  The amount withheld will create a tax credit on your next tax return but you could still owe more money on it especially if you have other income sources.

More than one RRIF account

If you have more than one RRIF account, the mandatory amount has to be taken out of each account.

What if I don’t want a RRIF account?

No problem – just use the money in your RRSP to purchase an annuity before the end of the year you turn 71 and you will be good to go.

Categories
Personal Finance

Determining My Financial Budget

Jay is a new writer here at Four Pillars – read his introduction post here.

Today we’re going to figure out my financial budget by breaking down all the money that I earn and then try to see if I can explain where it all goes.

Net Income

After taxes, I earn roughly $1000 a month currently as a telemarketer. They tell me I would earn more if was better at my job. I feel like I need a better job to be better at. Whatever the case may be, it hasn’t really been close to enough money for me, and so I’ve started tutoring English as a second language on the side. I’ve got one student who generates $80 a month, and I’m hopefully expanding my clientele soon.

Net Monthly Income = $1080

Fixed Expenses

My current basic fixed monthly costs are as follows:

  • Rent – $350. I live with my uncle, but he doesn’t believe in free rides.
  • Bus Passes – $111. A 1-zone monthly pass costs $73, and two packs of 10 bus fare add-ons cost $19 each, or $38 total. I’ve already cut this down from the previous cost of $136* for a 3-zone pass.
  • Student Loan repayment – $150. It doesn’t matter to the government that I’m going to go back to school in the fall, they want my money now.
  • Food – $80. Basically $20 a week, and I’m not entirely sure I can keep within this limit
  • Cell – $37. I have a Koodo phone plan that totals at $37, ($25 Talk and Text plan with the added $12 “essentials” pack)
  • Tithe – $108. I am a Christian, and I tithe 10% of my income. Incidentally, my parents are missionaries in Japan, so I support them instead of giving to a local church
  • Debt – $50. I owe my brother about $700, and this is the payment arrangements we’ve come up with

Total fixed costs – $886.

Now, I’m no math genius, but if I take my total net income and take away my total fixed costs, I’m left with $194.

$194 a month

Here’s what I have to do on $194 a month

  • 1. Replace things that run out every few months (toiletries, laundry soap, clothes etc.)
  • 2. Have some semblance of a social life.
  • 3. Save up for my short-term, and long-term goals.

Right now, I’m probably spending close to $100 a month on the social life, and the rest is going into replacing stuff and savings. I’ll have more precise numbers at the end of the month, when I balance the books for March and give my report to the blog.

Quick Thoughts

Obviously, the biggest problem I have here is that I’m not earning enough money. I’m hoping to find a new job to either supplement my current income, or replace it entirely if the new job pays well enough. Unfortunately, I haven’t had much luck finding additional income so I’m stuck at the moment.

Another issue I’m having is the amount of time I am spending/wasting in transit. I’ll be taking a closer look at my calendar next Monday, and perhaps you will see some of the problems I am facing.

Housekeeping

Just to give an outline of how the next few posts are going to look for me, my next post will be on my time management. I will probably be linking to my Google Calendar and explaining from there.

The post following that will introduce the budget spreadsheet that I will be using, and some of the financial goals that I have for the month of April.

The first Monday of every month will be my budget report to the blog going over the previous month’s budget.

As always, questions and comments are welcome, I really hope you guys have some good tips for making/saving money over the next few months, because I would love to try implementing some of them. I may never make my own laundry soap – My brother tried doing that once when we were living together. It was great, except that he used the frying pan to make it, and all our food had a faint soapy taste for the next week. Needless to say, I was not happy – but I would like to put into practice some of your ideas, so speak up!

Remember, I’m Four Pillar’s very own financial guinea pig, and I subscribe to the tri-financial principle of budgeting: I’m willing to try just about anything.

* for those who are interested, I have to travel 3 transit zones to get to work. I work from 6pm-12am. After 6:30pm, all transit is considered 1 zone, meaning my return trip was essentially a 1 zone trip. By using a 1-zone pass with a fare add-on on the way to work, and just the pass on the way back home, I save $25 dollars a month.