Category: Personal Finance

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Personal Finance

CRA Taxes – Late Filing Penalties – Reader Question

Last week I received an email from a reader (Michael) which was quite unusual for 2 reasons – 1) we rarely get emails from readers and 2) it was a good question.  🙂

A friend of my girlfriend hasn’t filed his taxes in 4 years, and we were just wondering what the repercussions will be when he either starts to pay or gets caught not filing them?

This is interesting – I have one friend who didn’t file taxes for over 10 years. He eventually hired an accountant and got caught up but I’m not sure if he had any penalties or not. I was only late with my taxes once which is how I was able to learn about the penalties and interest charges.

If you thinking about buying tax preparation software then consider software programs such as TurboTax or TurboTax Canada (formerly QuickTax).

Late filing penalty

According to the CRA website, the basic penalty for late filing is 5% of any taxes owing plus 1% for each additional month you are late up to 12 months.

The penalty is 5% of your 2008 balance owing, plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months. If we charged a late-filing penalty on your return for 2005, 2006, or 2007 your late-filing penalty for 2008 will be 10% of your 2008 balance owing, plus 2% of your 2008 balance owing for each full month that your return is late, to a maximum of 20 months.

This may not seem like a lot if you are only a month or 2 late but if you were 7 months late like I was then the penalty ends up being 12%.  The time I was late I think I owed something like $600 so the late filing penalty was $72.  As you can see from the description, the penalties are even more severe if you have previous late charges.

Interest charges

As if the penalties aren’t enough – the government also charges interest.  The rate is usually about 5% annually.  $600 owing on a 2008 return filed 7 months late would be about $17.50 which isn’t too bad.

Add it up

My total penalty for the $600 owing – 7 months late would be $89.50 or 15% of the amount owing.   I remember being quite surprised at how much the penalty was since I didn’t realize it got higher by the month.  I had thought that once you are late, it didn’t matter how late you were.  If nothing else – I never filed late again. 🙂

Penalties are only charged on taxes owing

One key thing to remember is that if you don’t owe anything then there will be no penalty for filing late.  Hopefully the reader’s friend is in this situation.  There is recourse for getting taxpayer relief but after skimming the article it doesn’t look like “not getting around to it” is included in the list of circumstances where the penalties and interest might be waived.

Get it done

My suggestions:

  • Make every effort to file your taxes every year on time.
  • If you are late then get it done as quickly as possible since the penalty and interest charges increase every month.
  • If you have a situation where you are way behind in 1 or more tax returns then make it a priority and get it done.  Hire an accountant or tax preparer if you have to.
  • Hire a good tax attorney if you are really in trouble.

Getting caught?

One part of the reader email I didn’t address was about “getting caught”.  I don’t know if the CRA will send you a letter or arrest you or what.  I would assume they already have some idea if you owe money and if it is a high amount they might be giving you a call.  Does anyone have any experience with that sort of thing?

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Personal Finance

7-11 Wireless Cell Phone Speakout Pay As You Go Deal

Nokiea 5130 Cell Phone
Nokia 5130 Cell Phone

My wife and I both have old phones (mine has an elastic which holds the almost dead-battery on [see photo below]) and have been thinking about getting new ones.  We didn’t want to get a contract and haven’t had time to look around for a good deal.  Luckily, staff writer “Henry” took the time to do a rather extensive analysis recently on cell phone deals and concluded that for the light user, the 7-11 deal is the way to go.

The Nokia 5130 is basically the new Four Pillars staff phone since Mr. Cheap, myself and my wife all went out and bought one after reading Henry’s post.  I like my phone so far – I love how it can take pictures although I have no idea how to get the pictures onto my computer. [edit – I figured it out] The drawback of this phone is that unlike my old phone it doesn’t fold up so it is a bit bigger than I am used to.  I still can’t believe 7-11 sells anything other than beef jerkey and over-sized pops but as it turns out – they sell pretty good cell phones as well.

Basically they have 5 phones you can buy.  If you get $100 of airtime then the phones are half price until Sep 30/2009.  For the $100 you get 452 minutes which last for 1 year.  Addition minutes are 20 cents per minute which is pretty good.

On these phones you get voice mail, caller ID, call waiting and 3-way calling.  I was talking to Mr. Cheap the other night and he tells me that there is even a video recorder on the phone.  I can’t imagine how unbelievably crappy the video picture must be, but hey…if Santa Claus shows up and you don’t have time to get your real camera then it will have to do.  The phones range in price from $59 ($29.50 on sale) for the basic Nokia 1661 to $140 ($70 on sale) for the 5130 which has an mp3 player and 2mb camera.

My old phone - note the rubber band holding the battery on as well as the cracked casing. The battery needed replacing as well.
My old phone - note the rubber band holding the battery on as well as the cracked casing (just below the screen). The battery needed replacing as well.

Keeping your minutes active

If you don’t use all of your 452 minutes in the first year then you can keep those minutes active by buying more minutes before the old ones expire.  They can be purchased in blocks of $25 (for 100 minutes) /$50/$75 or $100.   Once you buy more minutes, ALL the minutes on your phone (the old ones and the new ones) now have an expiry date of 365 days from the top-up date.

Downloading pictures/media

The camera in this phone is no substitute for a proper digital camera however it can take reasonable photos in the right conditions (apparently not indoors as you can see from the pics so far) and makes a satisfying “camera taking picture” noise when using it.  If you buy the phone then you will need to go to the Nokia support site in order to download the proper software.  When you get to the page choose your phone (you can move the green thingy below the phones to show more phones).  You have to download the “PC Suite”.

It takes a while to do all the downloads and is a royal PITA in my opinion. In fact I think you could probably download several versions of Window in the time it took to get this Nokia software installed.

Once I figured everything out then it worked really well.  You can select a default download folder so from then on – anytime you connect the phone it will download there.  You can select a subfolder based on the download date or picture date or other options.

The photos shown so far in the post look like crap.  This phone camera does not work very well indoors – which is ok since you’ll probably have your normal camera available.  Here is a photo taken from the phone down at Ashbridges Bay which looks a bit better.  It’s pretty good for taking pictures of people outdoors.

Nokia 5130 beach

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Personal Finance

10 Tips – Back to School Savings For College Students

CollegeMacNCheese
It’s back to school time and most university and college students are probably looking forward to a long winter of tough studies, late night Ramen noodles and figuring out how to cut costs in order to get by on not very much money.

Here are some suggestions from a current student who has done some research in the field and came up with the following tips.

1) Laptop

Are you looking a new laptop? There are a lot of sales going, but you can save by asking for another $50 to $100 off. If you are interested in Macs, be sure to get the free iPod Touch through Apple’s back to school promotion. By the way, do not get the extended warranty plans. Most credit cards give you a free year of extended warranty.

Potential Savings: $50 to $200 for laptop purchase, $80 to $100 for using credit card extended warranty.

2) Beer

Molson non-alcoholic beer costs about $5.99 a dozen. Regular beer costs $24 a dozen. By going non-alcoholic, there is about a 75% savings. There is less calories as well. A suitable solution for many people

Potential Savings: $1.50 for every can of beer.

Potential Annual Savings based on 60 cans of beer: $80.

3) Cell Phone

Retention, retention, retention. Do you have a retention plan? If not, call in to get one. Why pay $50 a month when you can pay $30? Since you get more with a retention plan, there are fewer worries about overage as well. If you do not need to talk a lot, check out 7-Eleven SpeakOut Wireless.

Potential Monthly Savings: $15 to $40.

Potential Annual Savings: $180 to $480.

4) Internet and TV

Big players are giving great promotions to new student customers for internet services and TV services. Be sure to call in and ask to be put on the promotions if you are already a long time customer. TV isn’t always necessary nowadays. You do save quite a bit by not getting the TV channels

Potential Monthly Savings: $10 to $50.

Potential Annual Savings: $120 to $600.

5) Home Phone

If you have a cell phone with a retention plan, it is most likely that you do not need a home phone. Skype can be a good option if you need to call a lot. If you really need a phone, make sure you bundle and call in for the best plan.

Potential Monthly Savings: $10 to $30.

Potential Annual Savings: $120 to $360.

6) Credit Card

Some student credit cards do not have rewards. You should definitely have a credit card with cash back or a good reward program. Looking for the best cash back credit card with no annual fees? Check here for information on best canadian rewards credit cards.

Potential Monthly Cashback: $5 to $10 based on $250 to $500 spending a month.

Potential Annual Cashback: $60 to $120 based on $250 to $500 spending a month.

7) School Supplies

There are some crazy back to school sales right now. 18 cents for a 80 page notebook!!! A fraction of the regular price!!! Stock up. Stock up.

Potential Savings: $1 per notebook and lined paper, Various for other items.

Potential Annual Savings: $20 to $100.

8) Textbooks

Brand new textbooks from the bookstore are very, very expensive. Many courses do not need textbooks to prepare for exams and many textbooks are available in the library. My rule of thumb is that if I need to use a textbook for more than one course, I will get the textbook. Getting the textbooks for courses that are harder and more important is a good idea too. There are so called “international versions” of textbooks that are bought and shipped from outside of North America. These usually cost $30 to $40 each, a far cry from regular textbook price of $90 to $150 each. Buying international versions from Ebay or other resellers would work.

Potential Savings per Textbook: $60 to $120.

Potential Annual Savings based on 10 courses: $600 to $1200.

9) Personal Hygiene Items

There are a lot of personal hygiene back to school packages at various supermarkets and drug marts. I buy a few and stock up on them for the whole year. Some of the best deals out there.

Potential Savings: $10 to $30 per package.

10) Travel Costs

My experience is that aircanada.com and westjet.com offers the best prices for airplane tickets within Canada, but you need to try to catch the various sales. However, international flights tend to be cheaper when booked through a broker rather through the internet in Canada. I usually ask two to three brokers for the same route before making a final decision, because different brokers have access to different systems and different tickets. From past experience, I have saved around $400 per trip. By the way, do not buy various form of travel insurance due to the high mark up and basic common carrier travel accident insurance is free through many credit cards.

Potential Savings: $200 to $600 per international trip.

More information on how to travel cheap.

Conclusions

By trying to save here and there, it is possible to save at least a thousand dollars a year by getting some of the best deals out there and being flexible about things. Most students have a tight budget and any savings is a good idea.  For more savings ideas check out 397 Ways to Save Money book review.

Also check out get your back to school educational finances in order.

Photo Credit: monkeycat

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Personal Finance

Are Canadian Cell Phone Wireless Costs Too High?

high1

It is a common perception that Canada has one of the highest wireless fees in the world. As a result, wireless penetration rate in Canada is only 62%, which is one of lowest in developed countries. Contrary to this common perception, Canadians enjoy one of the lowest wireless fees in the world through wireless retention plans from the Big Three (Bell, Rogers and Telus). I am going to discuss this using an OECD report on developed countries’ cell phone fees.

Methodology for OECP Report

OECD divides cell phone users into three groups: low, medium, and high usage. Voice minutes, text messages (SMS), and multimedia messages (MMS) are considered. The number of services is arbitrarily defined on annual usage. Important usage information is listed in Table 1 and is taken from here.

[table id=12 /]

Low Usage Comparison

Prepaid is fairly expensive in Canada. I will use SpeakOut Wireless in my analysis, since I determined it offers one of the best prepaid cell phone services in Canada.

Costs of SpeakOut Wireless using OECD low usage definitions:

  • Local Voice Minutes: 529 * $.20 = $105.80
  • National Voice Minutes (7% of calls are assumed national): 527 * .07 * $.16 = $5.90
  • SMS (SpeakOut Wireless charges $.04 for incoming and outgoing messages. To simplify things, I assume that for every outgoing text message, there is one incoming text message): 396 * ($.04 + $.04) = $31.68
  • MMS: Not available on SpeakOut Wireless to the best of my knowledge.
  • Fixed Charges (911 fee of $.79 a month): 12 * $.79 = $9.48
  • Total Cost: ($105.80 + $5.90 + $31.68 + $9.48)* 1.13 = 172.73 (5% GST, 8% PST)

OECD is estimation for low usage in Canada is $195.68 and Canada ranks 20th in terms of lowest cost in the 30 countries low usage comparison. My own calculation by using SpeakOut Wireless suggests that OECD’s calculation is representative for Canada. If my calculation is used instead OECD’s calculation, Canada would rank 19th in the low usage comparison. I conclude that Canada needs to have better prepaid options for people with low usage.

Medium Usage and High Usage

Here is where I would disagree with OECD methodology of calculating Canadian wireless fees. OECD used retail wireless plans in Canada, but in reality, most Canadians are able to get wireless retention plans from the Big 3 after a year of contract with any one of them or through retail promotions that occur once or twice a year.

[table id=13 /]

As seen from Table 2, a standard retention plan covers OECD medium usage and high usage definition. Annual total cost of this standard retention plan is $372.22.

Medium Usage Analysis

According to OECD’s medium usage analysis, Canada ranks 27th out of 29 countries in this section. If my calculation is used, Canada would rank 21th out of 29 countries. There is a big difference depending on the methodology used and it could be argued that there need to be better medium usage plans.

High Usage Analysis

According to OECD’s high usage analysis, Canada ranks 19th out of 30 countries in this section. If my calculation is used, Canada would rank 10th out of 30 countries. I believe this is the evidence that Canadian wireless fees are one of lowest in developed countries rather than the highest. Canadian retention plans have more features and are cheaper than US retail and retention plans. I believe that the high usage analysis is the most important and this is the category that most Canadian wireless users fall into.

Conclusions

If OECD introduces an ultra high usage comparison, I assume Canadian wireless cost based on retention plans would be among the top 5 in developed countries.

Canadian long distance can be very expensive, but retention plans usually come with either 100 or 1000 Canadian long distance minutes. In fact, there are Canadian long distance and North American long distance unlimited calling packages from retention departments. Canadian long distance should not be an issue on retentions, but Canadian long distance can be a real issue on regular retail plans.

Retention plans are really great and I use about 1000 to 2000 minutes and 100 text messages a month without any overages. It is possible to use even more minutes and text messages, but it needs to be used within the provisions of the retention plan like 6pm unlimited early evenings, unlimited network calling, unlimited incoming, or unlimited calling to 5 numbers. If you do not have a retention plan right now, do call in and ask for the retention department. It is very likely that you will be given a retention plan by just asking nicely.

Photo Credit: nutmeg15

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Personal Finance

Sony A350 DLSR Camera Review – Why A DLSR Camera?

Sony-DLSR-Camera-A350

As I discussed previously on a post about our Canon 200sx camera, our only camera up until about a year ago was an aging Canon PowerShot – a great camera in the day but now it was very slow and took very average shots unless the lighting was really good.  Three years ago, our first child was born which meant a huge increase in camera use.  At first the camera worked fine for us because he wasn’t mobile, but as my son started to crawl, walk and eventually run – the camera became somewhat useless because my son would not stay in one place for the several required seconds for indoor shots.  Outdoors (no flash) the camera performed better but it was still too slow.

Our solution was to buy a Sony A350 dlsr camera.  One of the big benefits of a dlsr camera over the regular point and shoot is the speed.  The dlsr is much, much faster.  If you aren’t using a flash then the difference isn’t huge since the point and shoot will probably operate with a reasonable speed but the dlsr is still noticeably faster.  Indoor shots however is a different story – our old camera would take forever and a day to take the shot whereas the dlsr still works at lightning speed.
As we found out after buying a new point and shoot – a good portion of the speed difference was because of the age of the old camera rather than the fact that it wasn’t dlsr.  However the dlsr is still significantly faster than our point and shoot (Canon 200sx).

While speed may have been our main motivator – another great feature of the dlsr is the ability to interchange lenses.  My wife has a pretty good Minolta lense from an old film camera that works great on our new DLSR.

Photography as a hobby

The dlsr we bought can be set to “automatic” which is how I like it.  It can also be set manually – my wife is a bit of a shutterbug and would like to learn more about photography so having a more advanced camera is a good tool for that.  This camera has room for expansion since you can buy different lenses and flashes for different purposes.

Picture quality

When comparing shots from our Canon and the Sony – for a lot of situations, the DLSR is definitely superior.  Inside shots in particular are almost always better with the DLSR.  The point and shoot gives a good challenge with outside shots with good lighting but the Soney (dlsr) still wins out.  The image stabilization feature is quite excellent.

Which DLSR camera to choose?

Since I’m not a camera expert, I can’t really comment on this other than to say that I really like our Sony A350.  It’s easy to use and takes great pictures.  For some better discussion on the differences between various DLSR cameras you should check out Consumer Reports.

Summary

We’re quite happy with our Sony A350 dlsr camera.  I will say however that for most situations we tend to use our smaller Canon 200sx.  We would like to use it more but with two young kids it’s hard to justify another piece of luggage when we go out somewhere.
If you have an older point and shoot and you want to upgrade but keep the same portability, I would strongly suggest just buying a new point and shoot rather than going to the DLSR since the DLSR is much bigger and a lot more expensive.  You will probably be very happy with the newer point and shoot.
If you want to really upgrade and take the best photos you can and are willing to cart around a much larger camera then the DLSR is a good choice.
If speed is a consideration then although the newer point and shoots are fast – the DLSR will be significantly faster.

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Personal Finance

Movie Review: Sunshine Cleaning

200px-Sunshine_cleaningOver the weekend I watched, and enjoyed, “Sunshine Cleaning“.  It’s a new movie by the producers of “Little Miss Sunshine” (and also staring Alan Arkin, the heroin snorting grandfather from “Little Miss”).  It touches on a number of personal finances issues, such as entrepreneurship, career satisfaction and the impact of money within a family.

Like “Little Miss Sunshine”, the film examines failure from within a family (where each member has failed).  Two sisters, Rose and Norah, have been unable to get their lives on track (and gone through a series of unengaging jobs).  Their father views himself as a “businessman” but moves from one hairbrained scheme to the next, losing money as quickly as he makes it (and promises his family more than he is capable of delivering).  One of the sisters has a son, Oscar, who is incapable of functioning in public school (going through a series of misbehaviours, culminating with licking objects around the classroom and his teacher’s leg).

On the advice of a married man Rose is having an affair with, the two sisters start a company cleaning up “biohazardous waste” (that is, messy dead bodies).  In spite of the unconventional nature of the enterprise, it engages the entire family and each is able to finally transcend their failures and enact change within their lives.

Throughout the movie Rose repeats self-help mantras to herself  “You are strong. You are powerful. You can do anything. You are a winner.”  In spite of her forced positive attitude, her life is clearly not what she expected it to be graduating from high school as the head cheerleader.  Finally at the end of one of these pump herself up sessions, she looks in the mirror and admits “I’m a fucking loser”.  She gives up on the “magic of positive thought” and finally takes responsibility for changing her own life.

My generation has a complex relationship with work.  While my father was content with a steady paycheck and keeping food on the table for his family (and was willing to trudge off to the factory every day to provide that), my generation *tries* to get fulfillment, esteem and self-actualization from our work (we’re higher up on Maslow’s Hierarchy of Needs).  We’re not always successful, but we try.

An easy critism of this approach to life is that we can’t all go off and be painters and novelists.  Someone has to keep the water running if society is going to continue to function.  I think Rose’s journey in this movie is an excellent example of someone who finds work that is personally fullfilling, while is still being a service to her community.  At a baby shower friends she was embarrased to see during her previous careers ask her apprehensively if she likes cleaning up bodies.  As Rose discusses how fulfilling it is for her, she becomes noticably prouder and more confident about herself.  She leaves half-way through the shower when she realizes that she doesn’t have anything to prove to her friends: she’s proven everything that matters to herself.

From a purely narrative perspective, I found elements of this movie frustrating.  A number of storylines ended without resolution, but perhaps this was intentional:  this isn’t a neat easy drama, it’s messy like life.  The themes are fresh and interesting, the acting and characters are engaging and the story is compelling.

If you can handle a bit of colourful language and dark humour, I recommend grabbing “Sunshine Cleaning” on your next trip to the video store.

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Personal Finance

Carnival of Financial Planning – Edition #104 – August 28, 2009

Welcome to the August 28, 2009 Edition #104 of the Carnival of Financial Planning.

The Carnival of Financial Planning takes a long-term view of personal financial planning for individuals and families. We focus on efficient and sustainable personal financial planning practices that can lead to lifetime financial security.

This edition is arranged by subject heading, so that you can browse efficiently.

Budgeting

oneadvice presents Credit Crunch: Luxuries We Won’t Say No To… posted at One Advice, saying, “Credit Crunch = Doom & gloom for frivolous spending. But there are those little luxuries which we refuse to say no to, even when money is tight…”

Dorian Wales presents The Personal Financier: Personal Finance Management: Budget vs. Net Worth posted at The Personal Financier, saying, “While it may be recommended to manage both a budget and net-worth sometimes focus leads to better results.”

Wise_Bread presents Beyond Budgeting Pocketsmith Helps You Forecast posted at Wisebread.

Susan Savering presents Personal Living Expenses posted at Family Financial Planners, saying, “When you don’t understand how much you spend and how much you save and invest, you do not have a financial plan. This dramatically increases your family’s long-term financial risk.”

KCLau presents Thoughtless Spending posted at KCLau’s Money Tips, saying, “I was surfing the web recently and an article in Yahoo finance caught my attention. The article emphasizes the need to curb spending on the miscellaneous things in daily life.”

Economics

Banker Saver presents TARP Bailout Funds: How Have Banks Used Taxpayers’ Money? posted at Banker Saver, saying, “On TARP funds and the bailout program for banks.”

Curt presents Bernanke is Crazy to Think That the Economy is on the Verge of Recovery posted at PennyJobs.com.

Super Saver presents Expecting Another Bubble posted at My Wealth Builder, saying, “Low interest rates are bound to create another bubble. Hopefully, by expecting one, I can protect our savings better that during the housing and financial crash.”

Roshawn Watson presents The Rich Get Poorer posted at Watson Inc, saying, “The implications of this recent recession have been far-reaching enough to put a big dent in American and world wealth. Both the magnitude of wealth and the number of millionaires decreased profoundly in 2008.”

Dorian Wales presents On Causality and Correlation in Economics posted at The Personal Financier, saying, “Causality is perhaps the most fundamental element of empirical evidence available to economists. However, it is also the source of many misconceptions due to its elusive nature.”

Estate Planning

Jeff Rose presents Taking Care of an Elderly Parent posted at Jeff Rose, saying, “Find of what you need to do when you have to become the parent of your parents.”

Financial Planning

Big Larry presents Is Your Attitude Impacting Your Finances? posted at Out of Debt Christian, saying, “Has the daily dose of bad economic news, political rancor and untimely celebrity deaths gotten you down? Be careful — your bad mood can translate to some poor financial decisions too.”

Dividend Tree presents Building Core Competency for Long Term Survival posted at Dividend Tree, saying, “whether it is running a business or individuals’ investment portfolio, it is important to build a core competency for long term sustainability. In my case, I focus on good quality companies that consistently pay or have potential to pay growing dividends over time.”

Patrick @ Cash Money Life presents Beyond The Latte Factor posted at Cash Money Life, saying, “5 small changes anyone can do that will have a large affect on their financial situation.”

The Smarter Wallet presents How To Build Good Credit and Clean Up Bad Credit posted at The Smarter Wallet, saying, “Here’s how to work on cleaning up your bad credit.”

Patrick @ Military Money presents Money Management Tips for the New Recruits and Recent Graduates posted at Military Finance Network, saying, “Basic money management tips for people going out into the “real world” for the first time. This article applies to new military recruits and recent college graduates.”

Bellar presents Start Your Step to Implement Personal Finances posted at Personal Finance Management & Financial Services — MyFinancialCorner.com.

The Smarter Wallet presents Credit Monitoring Services To Check Your Credit Report posted at The Smarter Wallet, saying, “What you need to know about monitoring your credit.”

Four Pillars presents Make Home Affordable Refinance Program Changes Eligibility Requirements For Easier Refinancing posted at Quest For Four Pillars, saying, “Making Home Affordable refinance program eases requirements.”

KCLau presents I achieved financial freedom at 38 posted at KCLau’s Money Tips, saying, “This post is contributed by WaiYin, a reader whom I admire very much because she achieved financial freedom at age 38! Here, she shares how she did it.”

Patrick @ Military Money presents How Much Life Insurance Do Military Members Need? posted at Military Finance Network, saying, “Military members may have different life insurance needs than civilians. Here is information regarding how much life insurance military members should buy, and some resources for finding the best life insurance deals.”

Susan Savering presents Personal Investment Strategy posted at Family Financial Planner, saying, “When pursuing optimal financial planning and investing strategies and controlling your costs and capital gains taxes, you also need to establish a time-efficient system to monitor, adjust, and adhere to your financial plan.”

Big Cajun Man presents Mid-Year Personal Finance Check Up posted at Canadian Personal Finance Blog, saying, “Mid year is a good time to go over your plan for the year to see how well you are doing, so do it now!”

Financing a Home

Doug Boude presents Buying a New Home is EASY! posted at Doug Boude (rhymes with ‘loud’), saying, “My wife and I will be completing the process of purchasing a new home tomorrow. I summarized our experience, with tips and ideas, to help encourage others to invest in their own home as well.”

Tallahassee Real Estate presents Consider Paying Home Mortgage Discount Points posted at Tallahassee Real Estate Blog, saying, “When it comes to comparing interest rates for a mortgage loan, home buyers often have the option of choosing a loan with a lower interest rate by paying discount points. Simply put, discount points are fees charged by the lender to reduce (discount) the interest rate charged to the borrower. Paying points may seem attractive, because a lower interest rate means smaller monthly payments. But is paying points always a good idea?”

Alex Fotopoulos presents When is it Smart to Refinance a Mortgage? posted at My Trader’s Journal, saying, “Some key points to consider when refinancing your home.”

Financing Education

Buck Weber presents Does a Financial Education Matter? posted at The Buck List, saying, “With so many opportunities to learn how to get it right, why do so many of us screw up our finances so badly?”

Praveen presents Students Beware! Colleges, Tuition, Loans, and Debt – Will Education Follow the Housing Bust? posted at My Simple Trading System, saying, “Tips for students to avoid excessive loans and debt”

Income

nissim ziv presents Finding a Job: How to find a job Online posted at Job Interview Guide, saying, “This article provides a beginner guide for finding a job and the basic information on how to find a job online using social media sites, online job search engines and other job portals.”

Tyler Tervooren presents Create Your Own Green Collar Career posted at Frugally Green, saying, “Sick of your daily grind? Looking to start something new? It doesn’t matter if you’re an entrepreneur or an employee. Take the skills you already have, mix in your passion for the environment, add a little creativity and you’ve got a leg up on your new pursuit.”

FMF presents Outsourcing Chores Could Be a Good Investment posted at Free Money Finance, saying, “Time equals money. Sometimes it’s a good deal to spend money to gain time.”

Praveen presents Easy Ways to Generate Cash posted at My Simple Trading System, saying, “Easy ways to generate extra cash”

Investing

Dividend Growth Investor presents 13 dividend stocks to enter on dips posted at Dividend Growth Investor.

Dan at Everydayfinance presents Option Hedge Strategy: 2 by 1 Put Spread is Cheap and Effective posted at Everyday Finance, saying, “This article provides a low-cost way to hedge the recent rapid runup in the stock market by using a ratio spread, which can return over 2000% with a nominal cash outlay.”

Praveen presents India Fund (IFN) Trade Example posted at My Simple Trading System, saying, “An example of how having a trading system gives you an edge, and let’s you take advantage of market moves outside of your control.”

Dividend Tree presents What is your preference – Aristocrats or Achievers? | Dividend Tree posted at Dividend Tree, saying, “The key question here is; are we willing to invest in companies that have still not completed 25 years of dividend growth? All dividend aristocrats were at that stage at some point in time.”

The Skilled Investor presents Personal Investing posted at Personal Investment Manager, saying, “Investors more easily understand investment costs that are directly measurable, such as fees deducted on investment statements. However, many investors ignore or are unaware of the opportunity costs of their sub-optimal investment behaviors. Opportunity costs are usually much more difficult to measure directly, but these investment costs can be even higher than more visible investment fees.”

Jae Jun presents Warren Buffett Stock Pick Portfolio | Old School Value posted at Old School Value, saying, “A look at the intrinsic value and stock holdings of Berkshire Hathaway run by Warren Buffett. Graphs and fair value estimates included.”

Silicon Valley Blogger presents Online Discount Brokers: SmartMoney Broker Survey posted at The Digerati Life, saying, “I list some great online discount brokers for your investment needs. The list is based on Smart Money’s broker survey.”

Investing Toolkit presents Why Should I Start Investing? posted at Investing Toolkit, saying, “Why we should start investing as soon as we can.”

20smoney presents Could You Retire Off Investing In China? posted at 20s Money, saying, “A look at why we should definitely consider investing in China as a long term investment.”

Jimmy Atkinson presents Talking ETFs, China, and Intellectual Property With Claymore’s Christian Magoon posted at ETF Database.

Zach Scheidt presents Lululemon Athletica – Alarming Trends posted at ZachStocks, saying, “Lululemon Athletica (LULU) has rebounded nicely from the March low. While the niche apparel company has a strong product line and has expanded the number of stores, its same store sales figures along with inventory levels raise concern.”

Aussie Investor presents Shares To Buy Now And For The Long Term posted at Australian Investing, saying, “With investors the world over having suffered through the global financial crisis, some are now wondering how best to restore the health of their share portfolios. This article discusses some of the factors I consider when looking for the best shares to invest in. By maintaining this disciplined approach investors should end up with a portfolio of good investments to see them through these troubled financial times.”

Retirement Savior presents The Best Long Term ETFs and Mutual Funds posted at Retirement Savior, saying, “The high-growth days of the US are over. Look overseas and to other continents for your investment gains.”

Dividends4Life presents Two Dividend Stocks Rewarding Patient Investors posted at Dividends Value, saying, “Life isn’t linear and neither is investing. There are always bumps in the road and before we reach the next level sometimes we must toil longer than we like at the current level. Case in point, 2 companies’ investors have waited six quarters for a dividend increase and this past week their patience was rewarded.”

Zach Scheidt presents FDIC Backs off Slightly – PE Firms to Buy Troubled Banks posted at ZachStocks, saying, “The FDIC approved guidelines for private equity firms to purchase failed banks. While the proposal was controversial when issued last month, the balance appears to be in place to offer PE firms an opportunity for profit, while still encouraging a more stable financial environment”

Frank Vertin presents Best Index Fund posted at Best Index Fund, saying, “Buying an S&P 500 index fund through an investment counselor can substantially increase your initial purchasing costs and and drive up your annual management expense fees. Unfortunately, the vast majority of individual investors buy mutual funds and ETFs through brokers and investment advisers. Rarely do financial advisors recommend that you buy index funds with low fees. This is because low cost, no load mutual funds do not pay them as well as loaded, high fee mutual funds.”

Investing School presents What the Heck is an Asset? posted at Investing School, saying, “We always use the term but what is it really? Here’s a brief explanation.”

Tomas Escent presents Quant Finance posted at Nerds on Wall Street, saying, “Think of this book as sort of a Hitchhiker’s Guide to Wired Markets. There are no robots parking cars for six million years, but there are robots trading millions of shares in six milliseconds, so maybe that’s close enough.”ABC presents Different Types of Stock Market Indexes posted at ABCs of Investing, saying, “How different types of stock market indexes work.”

Tushar Mathur presents Can’t Control the Markets? Try controlling the Costs posted at Everything Finance, saying, “As 2008 proved, the financial markets are prone to unpredictable periods of turbulence. That can make investing feel a bit like a roller-coaster ride. The disappointing results that many mutual funds posted in 2008 and at the outset of 2009 may have left you feeling concerned over your financial future. You’re not alone.”ABC presents Investment Real Return posted at ABCs of Investing, saying, “A simple explanation of investment real return.”

Larry Russell presents Best No Load Mutual Fund posted at No Load Mutual Funds, saying, “Taken as a whole, the vast body of investment research studies show that there really are better approaches to buying and owning mutual funds and ETFs. You do not need to frantically chase fund performance. Performance chasing simply does not work.”

Managing Debt

Ray @ Financial Highway presents Dealing with Collection Agencies- Tips on Handling Collection Agencies posted at Financial Highway, saying, “Sometimes bad things happen to good people and find ourselves fighting with collection agencies. Here are some tips on how to deal with Collection Agencies.”

CreditCardAssist presents Credit Card Reform – How It Will Help You posted at Credit Card Assist, saying, “How the new reform legislation will benefit consumers and use of their credit cards after the new law takes effect.”

MoneyNing presents AnnualCreditReport.com For Free Credit Reports posted at Money Ning, saying, “AnnualCreditReport.com should be the only way to get a free credit report.”

Master Your Card presents Getting Your (Actually) Free Credit Report from SmartCredit.com posted at Master Your Card, saying, “A handy method for getting a free credit report once you’ve used up your three free reports from the government.”

The Dough Roller presents List of Low Interest Credit Cards posted at The Dough Roller, saying, “while credit card companies have a reputation of charging exorbitant interest rates, the truth is that many cards come with modest, single-digit APRs.”

Roshawn Watson presents Outrageous Law Transfers Parents’ Debt To YOU posted at Watson Inc, saying, “With few exceptions, such as a divorce decree, you are not legally liable for debts you have not personally signed for or agreed to pay. There is an inherent sense of fairness to this principle: your finances cannot be obligated to pay for something without your consent (except perhaps to the taxman or to your dependents). However, an archaic law in Pennsylvania is being enforced to make adult children to pay for their parents’ debts.”

Miscellaneous

MoneyNing presents How to Get Out of a Rut and Out of a Slump posted at Money Ning, saying, “Ever in a rut? Here’s how to get out.”

Four Pillars presents 2009 Cash For Clunkers Program – Trade In Your Old Junker For Money posted at Quest For Four Pillars, saying, “A comprehensive look at the new Cash for Clunkers trade-in program.”

No Load Bonds presents Bond Index Funds posted at Bond Index Fund, saying, “Simply put, if you pay higher bond mutual fund fees, then these bond management expenses tend just to be a deadweight loss to you. The best bond fund buying strategy is to pick only very low-cost no load bond funds.”

Retirement Planning

PT presents 403(b) Rollover to a Traditional IRA posted at Prime Time Money, saying, “My 403b Rollover”

Jeff Rose presents Can You Rollover Your 401k to a Roth IRA? posted at Jeff Rose.

Top Stock Index Funds presents Stock Index Funds posted at Top 10 Index Fund, saying, “Buy these top 10 very low cost no load S&P 500 index mutual funds directly. You do not have to pay the heavy added expenses of buying through a stock broker, financial adviser, investment adviser, or investment counselor.”

Barry presents Retirement Planning: Can You Make Do With Less? posted at Associate Money.

Lisa Moren Bromma presents Reinvent Your IRA posted at Wise Women Investor, saying, “Reinvent your IRA and learn to take control of your financial future by learning about the benefits of a self-directed retirement plan.”

Jeff Rose presents Using a Roth IRA to Maximize Your Wealth posted at Jeff Rose.

Super Saver presents A Gift of Retirement Funds posted at My Wealth Builder, saying, “A relatively small lump sum investment of $10,000 can lead to a significant sized nest egg at retirement.”

Risk Management and Insurance

Patrick @ Military Money presents COBRA Benefits Subsidy in the 2009 Economic Stimulus Recovery Act posted at Military Finance Network, saying, “The 2009 Economic Stimulus Plan includes additional COBRA and unemployment benefits.”

Savings

jim presents Wachovia Bank CD Rates posted at Blueprint for Financial Prosperity.

Tom Drake presents How Much Do You Need To Retire? The Rule Of 20 | MapleMoney posted at MapleMoney, saying, “While the 4% rule has become a standard quick calculation for retirement planning, there is a new rule that is similar, The Rule of 20.”

FMF presents Do You Shop Less to Save Money? posted at Free Money Finance, saying, “A simple way to potentially save a bundle.”

Taxes

Jeff Rose presents IRS is My Hero: The Heroes Earnings Assistance and Relief Tax Act (the HEART or Heroes Act) posted at Jeff Rose.

That concludes this edition. Submit your blog article to the next edition of Carnival of Financial Planning using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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Personal Finance

Back To School Cell Phone Deals

7-Eleven SpeakOut Wireless is one of the best pay as you go deals available in Canada. You pay $100 + tax and it is 20 cents a minute and 4 cents a text message incoming and outgoing. The airtime expires in 365 days. Here is the catch: they charge you 79 cent a month for 911 fees. The number of regular minutes that you have is slight lower than officially advertised. Here is how you would calculate the effective minutes: (125 – 12*.99)/.25 = 452 minutes a year. So it is slightly less than advertised 500 minutes a year. SpeakOut Wireless has one of the cheaper Canadian and US long distance rate of 16 cents a minute for this plan.

SpeakOut Wireless’ definition of long distance is different than other Canadian wireless carriers. If you are outside of your local calling area, all outgoing and incoming calls are considered long distance. However, SpeakOut Wireless’ local calling area is much larger than most Canadian wireless carriers. All numbers covered with the same area code is considered in the same local calling area. The entire southern Ontario with the area code of 519, 226, 416, 647, 905, and 289 is considered as one local calling area. SpeakOut Wireless’ local calling area and long distance policies are superior to its competitors in most cases. The local calling chart is available here.  Canadian area code map can be found here.

7-Eleven SpeakOut Wireless’ Back to School promotion is 50% off any SpeakOut Wireless phone. 7-Eleven SpeakOut Wireless recently released the Nokia 5130 XpressMusic for $139.99. With the 50% discount, Nokia 5130 XpressMusic would cost $70, a decent deal for a mp3 phone with a basic camera. Rogers sells the same phone for $99.99. The bad part is that 7-Eleven SpeakOut Wireless’ Nokia 5130 XpressMusic is locked, which means you cannot use this phone in US, Europe, or Asia with a local SIM card. It might be eventually possible to unlock this phone in the future. An unlocked Nokia 5130 XpressMusic in Hong Kong costs $164.99 CAD (1180 HKD). So the Nokia 5130 XpressMusic seems to be competitively priced from 7-Eleven SpeakOut Wireless.

The first year cost of this solution is ($100 + 70$) * 1.13 = $192.10 (5% GST, 8% PST)

Medium Usage without Contract

Virgin Mobile Canada has a monthly prepaid plan that is pretty good with no contract. You pay $20 a month for 200 minutes and 10% bonus credit with automatic topup by credit card.  So basically it is 10 cents a minute with an extra credit for add-ons.  Prepaid monthly plans come with call display, voicemail, minutes tracker, and no contracts.

Virgin Mobile’s Back to School promotion is a $50 dollar activation credit for Prepaid Phones. The activation credit can be used for the add-ons in combination with 10% bonus top up credit. There are some basic mp3 phones from Virgin Mobile like Samsung R610 for $79.99, Samsung Link for $99.99, and LG Rumour2 for $129.99.

In the first year, there should be a total of $74 of additional credit on the account from $50 activation credit and $2 a month top up bonus credit. Additional credit on Virgin Mobile prepaid account can be used for add-ons. Add-ons can be found here.

The biggest downside to Virgin Mobile prepaid is that 30 cents a minute is charged for Canadian and US long distance.

The first year cost of this solution with the purchase of Samsung R610 is ($79.99 +$20*12)*1.13 = $361.59. (5% GST, 8% PST).

Medium to Heavy Usage with Contract

If you need a regular monthly plan that is more comprehensive, you should get a 2 year or 3 contract with one of the big names. When searching for a plan and a phone, ask if any promotional or epp plan is available. It is usually around $45 a month after add-ons and taxes.  After a year or a year and half, you can call customer retention department and ask for a retention or loyalty plan, which offers two to three times the value of a regular plan at a slightly lower price for $30 to $35 including tax.

Bell, Rogers, and Telus have released their back to school student plans. Even though, these plans are better than retail plans, they are not as good as the retention plans or some epp plans.

$25 Plan Comparison

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$35 Plan Comparison

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$50 Smartphone Comparison

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These student plans are very expensive and are not ideal unless the cost of a part of the plan can be waived. One way of saving money on retail plan is to only get the Call Display without Voicemail. Fido, Koodo, Virgin Mobile and Solo Mobile are slightly more competitively priced if some of the features listed above are not needed.

Some basic examples:

The annual cost of a $30 retention plan is $30*12*1.13 = $406.80.

The annual cost of a $55 smartphone retention plan is $55*12*1.13 = $745.80.

The annual cost of a $40 retail plan is $40*12*1.13 = $542.40.

The annual cost of a $75 smartphone retail plan is $75*12*1.13 = $1017.

These costs are estimations and do not include the subsidized cost of a phone or contract break up fees. In conclusion, cell phone contracts can be very expensive, but if landline fees (approximately $25 a month) can be saved, the real cost of cell phone portability is not as high as it seems. Cell phones plan need to be customized to the individual’s needs and circumstances. Last, but not not least, you should always ask if there are any promotions since the salespeople are instructed not to tell their customers about some of the special promotions unless asked.

Going Over the Border to the US

US roaming minutes from Canadian providers can be really expensive. Customer retention departments at Bell and Telus have been known to give out some decent US roaming solutions. Rogers and Fido do have some US roaming plans and there is a possibility that customer service or retentions can give a discount off the retail price.

Tmobile pay as you go is the best in the US if more minutes are needed. Tmobile uses GSM so it is compatible with unlocked GSM phones by using a Tmobile SIM card. Unfortunately, Rogers and Fido lock most of their phones. For Tmobile pay as you go, the airtime is $100 US + tax upfront and there are 1000 minutes a year. This is equivalent to $8.34 US + tax a month for 83 minutes a month. Your usage is very flexible and instead of minutes, you can use it on text messages. In the US, pay as you go does not charge long distance on top of regular minutes. So feel free to call from one state to another. The only limitation with Tmobile pay as you go is the  $0.60 a minute to call from US to Canada.

Phone Cards

The most popular and reliable phone card in Canada is CiCi. There are no connecting fees and customer service can be reached if needed. It comes in denominations as low as $5. It expires in 6 months.

The phone card I use is called Link Calling Card. It comes in $5 and $10 denominations. The exact cost per minute is not specified and customer service cannot be reached from personal experience. However, I find that Link Calling Card provides at least twice as many minutes as a CiCi card if not more in some cases. Link Calling Card expires in 8 weeks. For people who use their phone cards often, I recommend trying $5 Link Calling Card if possible. Link Calling Card is available at many convenience stores.

Conclusion

The Canadian cell phone costs are higher than most developed countries. 7 Eleven SpeakOut Wireless is a decent solution for people with light usage and Virgin Mobile Monthly Prepaid is a decent solution for people with medium usage. Retention plans are the ultimate goal for people with high usage or data needs. Find the plan that fits your needs and read the contract carefully before signing anything.