Or more accurately – “How to get ripped off a little bit less by your phone provider when traveling to the US”.
I’m going to be traveling to the United States in the near future and one of the things I’ve been researching is data charges for my iPhone in the US. I need to use my iPhone when traveling, but I was quite worried about the mysterious data roaming charges and the various associated horror stories that I’ve heard of.
Just to clarify, if you have a “smart” phone like an iPhone or Blackberry – there are separate charges for voice calls (ie normal phone calls) and “data” usage. “Data” refers to the amount of information that you download from the internet through emails or web surfing. A short text email will have a small amount of data, whereas an email with several photos attached will use a lot more data. Text messages are in another charge category altogether.
In my case, I need to check emails, monitor my web sites and use my Skype application to phone home, since we aren’t taking the kids with us (thanks Mom!). If I use the phone in the US, I will be paying a rather high fee of $30 per MB of data. My average data usage in Toronto is about 500 MB per month or 17 MB per day. I don’t plan on using the phone as much as I normally do, but I anticipate using 5 MB of data per day. At $30 per MB of data, three days at 5 MB per day would cost $450, which is quite excessive.
I decided to give my friendly Rogers call centre a ring and see what the deal was with US data plans. I felt a bit of trepidation, since the last time I dealt with Rogers about the phone, they made up a bunch of stuff and then denied it later. I was worried they would sell me a data plan and I would still end up with some ridiculous bill after my trip because they just pretended to add the data plan to my account.
The roaming data plan I bought
After a number of phone calls, I decided to buy a data plan which costs $10 for one month. With this plan, my data charge is $1 per each MB of data that I use. Since I roughly estimated I’ll use 15 MB data on my trip, the total charge will be $25. I’m fine with that.
I can check my usage from my phone via my Rogers account, so I should be able to monitor my data costs as well.
Use WIFI to save roaming charges
If you can tap into a WIFI network when using your smart phone in the US, there will be no data charges. The hotel I’m staying has WIFI, so I’m hoping to use this as much as possible. If you are visiting relatives in the US that have WIFI or can find free WIFI spots, this could save you some money.
If you are going to be traveling outside Canada – consider the following tips:
Find out what international roaming packages are available for your needs – data, voice, and text messaging (which I just learned how to do).
Look at your regular usage and try to estimate your usage while traveling.
If you use Rogers – phone several times with your questions (see next section of article).
Use WIFI wherever possible.
Use a Skype app for voice calls – then you only have to worry about data and possibly text packages.Don’t do this! As I found out, Skype uses a lot of data – a long distance plan will be far cheaper.
The journey to the answer
One of the fun things about calling Rogers is that you can call several times, ask the same question and get a different answer each time. It might be an interesting game to see how many times you have to call before getting an answer that you heard before.
I ended up calling four times about roaming data plans and it was clear that three of the four reps had no idea about any of the data plans and were just reading (incorrectly) from various web pages. Or perhaps they were just making it all up.
Rep #1 told me that I could pay $25 and get a 10 MB roaming data plan which would last for one month. This plan included alerts if you approach and reach the 10 MB level. This sounded good to me, but I wanted to think about it.
Rep #2 agreed that I could buy a 10 MB roaming data plan, but it costs $30, not $25. She did offer that if I bought it online, I would save 5%. Unfortunately, when I went online, I could not find any kind of data roaming plan like this.
Rep #3 said the first two reps were mistaken and the 10 MB roaming plan was a summer offer which expired. When I told her I had just been told about the plans an hour prior, she then said it was only available to business accounts. This rep then told me about the roaming data plan which I ended up buying. She seemed to know what she was talking about, except for the little white lie about the summer offer/business account.
Rep #4 – I called again to ask a different question, but asked to confirm the roaming data plan which I had signed up for. He confirmed it was set up, but he thought the $10 monthly charge included 10 MB and only cost $1/MB in excess of 10 MB. When I questioned him, he reread the web page and agreed that my initial understanding was correct.
I would like to clarify that I use several Rogers services (internet, cable and iPhone) and they are all excellent. It’s just the call centre that can be a bit frustrating at times. I don’t mind if a rep doesn’t know the answer to a question, but I wish they wouldn’t just make stuff up.
Anyone have any more tips for travelers? Any roaming charges horror stories out there? Any fans of Rogers out there?
Real estate values have been holding up in Canada reasonably well, but the American real estate market is down 33% from the peak in 2006 as measured by the Case-Shiller index.
Most people view falling real estate values negatively and would prefer to see their houses increase in value. The net worth of an average person is largely influenced by their debt (including mortgage) and their house value. If their house value go up and their debt level goes down, net worth goes up and they feel good about themselves.
But what about the person or family that wants to upgrade from a starter house to a larger, more expensive family house? Do they also benefit from rising real estate values? Sure, their starter house is worth more, but the more expensive house they want to buy probably increased by an even larger dollar amount, which means they might not be as well off compared to if real estate values had fallen.
In the investing world, it is said that an investor in the accumulation phase should be happy when markets fall so that they can buy more stocks on sale. They shouldn’t desire higher markets until they get close to retirement.
When you upgrade from a starter house to a family house, you are accumulating more real estate for your portfolio and should therefore want lower, not higher prices at that time.
Don’t believe me?
Let’s look at a couple of scenarios:
Martin bought a two bedroom condo several years ago and has seen the value drop by 25%. Now that he is married and has a young daughter, he would like to upgrade to a three-bedroom single family house.
He’s not happy about losing money on the condo, but he understands that three-bedroom houses are also cheaper after the market dropped.
I’m going to make a number of assumptions to simplify the calculation. These assumptions are not true, but the errors are not significant to the analysis.
A three-bedroom single family detached house in Martin’s city is always worth twice as much as a two-bedroom condo in the same location.
No transaction or insurance fees of any type.
Martin has an interest-only mortgage and makes no payments to principal.
I’ll run two scenarios – one scenario involves the real estate market dropping 25% from the time he bought his condo, so both the condo and three-bedroom house drop 25%. The second scenario involves the market increasing by 25% from the time he bought his condo and both the condo and house go up by similar amounts. Then I’ll compare and see which scenario is better for Martin assuming he sells the condo and buys the house.
Real estate market drops 25%
Initial condo value = $160,000
Initial down payment = $50,000
Current condo value = $120,000
Current Mortgage = $110,000
Cash remaining after sale = $10,000
He buys a three-bedroom house for $240,000 (twice what the condo is worth). After using the $10,000 left over from the condo sale as a down payment, Martin is left with a $230,000 mortgage.
Real estate market increases 25%
Initial condo value = $160,000
Initial down payment = $50,000
Current condo value = $200,000
Current Mortgage = $110,000
Cash remaining after sale = $90,000
He buys the same three-bedroom house for $400,000 (twice what the condo is worth). After using the $90,000 left over from the condo sale as a down payment, Martin is left with a $310,000 mortgage.
Which scenario is better?
When the market dropped, Martin ended up with a mortgage of $230,000. In the scenario where the market rose, his mortgage was $330,000. Clearly, from a debt and monthly payments point of view, Martin benefited from the dropping real estate market.
However, it should be noted that in the rising market scenario, Martin has $90,000 of home equity which is $80,000 more than in the dropping market scenario.
Which is better – higher debt and more equity or less debt and less equity?
In my opinion, the scenario which provides less debt is the more desirable scenario. The home owner will have smaller monthly payments which will allow them to build wealth quicker by paying down the mortgage sooner or using the difference to invest.
If he was planning to sell the house in the near future, then he might be better off with more equity and more debt.
I was reading an interesting forum thread recently about emergency funds. Some people are for them, others are not. Three years ago, I went from being a firm non-believer in emergency funds (if you have debt) to having an emergency fund myself, even though I still have debts.
I’m well aware that it is not financially logical for someone like me to have an emergency fund, but I like to have one anyway.
Why I didn’t have an emergency fund before
I had long term debt (mortgage) – This means that the “cash pile insurance fee“, will go on indefinitely. If there is a 2.5% spread between the mortgage rate and the interest earned on the emergency fund, it will be an annual cost for at least 10 years or more. That’s a significant amount of money.
No TFSA – Prior to 2009, any interest earned on the emergency fund was taxed at over 40% marginal tax rate. This meant that the “cash pile insurance fee” was even larger – maybe 3% or more, which was unacceptable to me.
HELOC (Home equity line of credit) – Contrary to what some fear mongers say, banks won’t pull your HELOC if your finances are in decent shape. I’ve known lots of people who have divorced, been laid off etc and nobody has ever lost any credit.
Why I now have an emergency fund
Layoffs – About three years ago, there were several rounds of layoffs at my company. Screw the math – having several months worth of expenses in the bank makes those days a lot easier to handle.
TFSA – Interest earned in my TFSA emergency fund is tax-sheltered. This isn’t a huge benefit with the current low interest rates, but it helps.
Short term mortgage – My long term debt has been turned in to short-term debt. Whatever “cash pile fee” I have to pay, will disappear next year when my mortgage is paid off.
Wife – My wife has been out of the workforce for six years – it is getting more and more unlikely that she will ever work full time at the salary she used to. I think we are a single income family, and having an emergency fund helps psychologically with that as well.
Bottom line is that there is no one right answer when it comes to emergency funds and it’s not just about the math.
Do you have an emergency fund? Are they a waste of money?
I’ve been negligent with my portfolio rebalancing this year and have way too much cash in my accounts. Although I don’t think I can time the markets, I am loathe to buy equities after they have gone up a lot.
Today – I finally pulled the trigger on some ETFs for my couch potato portfolio. The markets have been in a slump lately and today was just a great time to do some buying.
XIU (iShares Canadian large cap ETF) at $17.70
VEA (Vanguard Europe & Asia equity index ETF) at $34.12
VTI (Vanguard US equity index ETF) at $62.37
These ETFs are all lower than the beginning of the year and well off their recent highs.
I still have a lot more cash to get rid of, so I’m hoping the markets will fall even further.
On with the links
The Wealthy Canadian wrote about opening an RESP account for his little boy. He also said some nice words about my book. 🙂
In Japan, they have subway employees who’s job it is to push people into the trains. I had heard of this, but I just couldn’t believe this YouTube video – they really know how to jam people into subway cars in Japan.
Michael’s post reminded me of a post I did called Do you really “earn” your investment income. It’s easy to think you are making money in an up market, but you have to compare your performance to that of a passive strategy. Even if you can beat the market, is it worthwhile to do so unless you have a large portfolio?
One of the many challenges of owning your own home is the decision between a variable rate mortgage or locking in for a longer term. Currently, the variable rates (2.2%) are significantly lower than the 5-year fixed rates (3.8%), so going variable is very tempting.
But what if interest rates shoot up? Then the fixed option might end up being cheaper. It’s a tough decision without a crystal ball available.
When my wife & I renewed our mortgage almost four years ago, we decided to get a 5-year fixed rate mortgage with an interest rate of 5.19%. We chose a fixed-rate mortgage so we wouldn’t have to worry about increasing interest rates. At the time, our budget was a bit tight and the last thing we needed was higher mortgage payments.
Of course, interest rates continued to decline after we locked in. While I wasn’t too annoyed since we locked in for a good reason, it was still a bit aggravating to think about how much money we could have saved with a variable mortgage.
Luckily, I came up with a face-saving method to lower the amount of interest we were going to pay by making use of our line of credit, as well as our fixed mortgage prepayment option.
Our home equity line of credit (HELOC)
Along with our fixed mortgage, we also have a home equity line of credit (HELOC) which has an interest rate equal to the prime rate (currently 3.0%).
When I first got the mortgage, I was using the HELOC to borrow money for my Smith Maneuver attempt, which involves borrowing money to invest in the stock market. When I ended the Smith Maneuver in the Fall of 2009, this freed up my HELOC and I could use it for other purposes.
The mortgage prepayment option
Our fixed mortgage has a generous annual prepayment option, which is equal to 20% of the original mortgage value. In our case, that annual prepayment amount was $40,800. This means that we could make lump sum payments against our mortgage principle at any time totalling up to $40,800 per year.
We’ve never come close to using the maximum prepayment amount, since it’s just too much money. But it occurred to me that this large prepayment feature could be used in conjunction with our HELOC to lower our effective interest rate.
The solution – use the HELOC to pay off the fixed mortgage
Every August, when a new “prepayment” year started, we made a $40,800 withdrawal from our HELOC and paid down the fixed mortgage by $40,800.
In the first year, this resulted in converting $40,800 of our 5.19% mortgage to the 3.0% HELOC for a saving of $893 in interest.
In the second year, we moved another $40,800 and saved $1,786. We saved $2,679 in interest over two years.
In our case, our mortgage wasn’t big enough to continue the huge annual pre-payments. We will be doing our last prepayment this August for about $20,000 and that will be the end of our fixed rate mortgage.
However, we will still be saving each year by having all the mortgage in the HELOC instead of the higher fixed mortgage.
Savings are not guaranteed
The way I’ve described this method, makes it sound like easy money right? Not so fast. The only reason we’re saving so much money is because the interest rate on the HELOC is significantly lower than our fixed mortgage rate.
If the HELOC interest rate rises, the interest costs will be higher on the HELOC and our savings will go down. Worst case scenario is that the prime rate goes over 5.19%, at which point we will end up paying a higher interest rate on the HELOC than on the fixed mortgage.
I’m not predicting that interest rates will stay low forever, but I do think that it will take a while for the prime rate to surpass 5.19%.
Why not just break the mortgage?
If you are stuck in a high interest mortgage, there is always the option of breaking the mortgage and getting a lower rate. The problem is that the banks will charge you a fee to make up the lost profit on the terminated mortgage. Ellen Roseman recently wrote an excellent article on these fees called How to reduce the pain when you break a mortgage. Here is another article I wrote which analyzes if it is worthwhile to refinance your mortgage (hint – it probably isn’t).
Don’t forget to pay off the HELOC
One of the biggest risks of this plan is forgetting to pay off the HELOC balance once the fixed rate mortgage is gone. Unlike a fixed rate mortgage which has a defined amortization period and requires principle payments along with interest every month, most HELOCs only require a payment large enough to cover the interest.
It is very easy to just make the minimum interest payment each month and enjoy the extra cash in your pocket.
Once your fixed-rate mortgage has been completely converted to the HELOC, you should make total monthly payments equal or larger than the amount you used to pay on your fixed-rate mortgage. This will ensure the HELOC balance will get paid off in a reasonable amount of time.
A new bike rental service called BIXI opened up recently in Toronto serving the downtown core. The same company also offers this service in Montreal where it started.
The idea is that there are racks of rental bikes in different areas which are available for rental. You get a bike out from one area and can return it to the same spot or a different rental spot.
Memberships can be bought which range from one day ($5) to one year ($95). With the membership you can use the bike for up to 30 minutes at a time without any extra charge as long as the membership is still valid.
I think it’s a neat idea, but I’m not sure how popular it will be.
Regular riders (like myself) – They have their own bikes.
Tourists – Maybe, as long as they don’t have too much to carry.
Shoppers – No, it’s too hard to ride a bike with shopping bags.
Commuters – This would seem to be the most likely, although it really depends on how far away they live. Someone living in a downtown condo might choose to ride rather than walk for 20-30 minutes. Renting a bike could be easier than lugging it up to their small condo and trying to store it in their living room. Another possibility is that people commuting from Union Station to their office might prefer a bike to the subway or streetcar.
Can you think of anyone else who might use this service? Keep in mind that there are a ton of transit and taxi opportunities available in the downtown area.
Brad Hurley from Montreal has used the service and thinks it’s great.
Despite the fact that Montreal has one of the the highest levels of bike ownership per capita in North America, Bixi has been an incredible success here. When you go downtown you see Bixis everywhere — some of them are tourists, of course, but a lot of them are locals, including many hundreds of commuters in suits.
Bixi is a combination of the terms “bicycle” and “taxi,” and it’s really meant to replace short trips that you might otherwise take by taxi. I don’t know how many people really use it as a taxi replacement; I think it’s just a convenient form of transportation.
The network here in Montreal is great, there are smartphone apps that let you see how many bikes are available at each station in your vicinity (and the stations themselves will give you that information), the bikes are easy to use, and the system just works.
The other thing to note is that some people have gotten rid of their bikes once the Bixi system was established, because many people have no room in their apartments for a bike and if they leave it locked out on the street it’s likely to get stolen or vandalized. Bixi avoids all that — there have been a few cases of vandalism but a lot less than you might expect.
Has anyone here used it? Would it work in your city? Please let me know what you think in the comments.
Here are some other articles about BIXI in Toronto and Montreal:
I recently booked a hotel room in downtown Toronto. It was for my wife and I to have a short getaway, while my Mom looked after the kids. It wasn’t the most frugal thing we’ve ever done, but it was well worth the money.
A friend of mine told me to try PriceLine – it’s a travel site where you can bid for things like hotel rooms and hopefully get a discount off the regular rate. It sounded like a neat idea, so I used it to book our hotel room.
Set up an account
If you don’t already have an account, go to priceline.com and sign up. In order to put in a valid bid, you must be signed into your account and have a credit card registered in “my profile”.
How it works
The hotels have a “floor” price for any available rooms. If your bid is below the lowest floor price, it will get rejected.
If your bid is rejected, you can’t bid again within 24 hours, unless you change two factors – normally you would change the price (upward), you can also change the location. Now, obviously if you want downtown Toronto, you don’t want to end up somewhere else.
In order to get the best price, closest to the floor price, you want to be able to bid many times, slowly increasing the price as you go. The problem is that Priceline limits your bidding to prevent you from doing this.
Their rule is that you have to change either the location or star rating if you want to bid again within 24 hours.
It’s very important to know that if your bid is accepted – your credit card will be charged right away and it will be non-refundable.
You should start checking about 4-6 weeks prior to your desired dates. It doesn’t hurt to start earlier, but it’s less likely that hotels will be willing to reduce their rates.
The simple time-consuming strategy
The simplest way to use Priceline is to pick your area and start putting in bids. The problem is that you can only put in one bid per day, so it might take a while before you get an accepted bid.
The complicated, quicker and riskier strategy
First step is to figure out an area. For bidding purposes, large cities are divided up into different areas. For example in Toronto, there are two “downtown” areas. The specific boundaries of each area are shown on the Priceline site. I wanted a hotel in “Downtown Toronto South”.
For more information about possible hotels and successful bids – check out these Priceline forums.
Here is the Toronto/Ottawa hotels list – This shows all the Toronto/Ottawa hotels participating in Priceline as determined by successful bookings by forum members.
Here are some tricks to increase the number of bids we can enter in one session. What we are trying to do is to keep bidding slightly higher bids in order to minimize the price we end up paying. These tips are more effective in larger cities where you can set up different area combinations.
Change the number of stars
Tip – If you are looking for a 4-star end hotel downtown – you can create a new location combination by including an area that you don’t want, but it doesn’t have 4-star hotels. This new area combination allows you to rebid on your desired area, but there is no chance of getting a hotel room in the undesired location.
For example, I might bid $85 on Toronto downtown south – 4-star. It gets rejected.
I want to bid again and increase the price to $90, but I can’t rebid within 24 hours unless I change something else – I can choose a different star rating or I can include a different location that doesn’t offer 4-star hotels.
To determine which areas don’t have 4-stars, select one location and see if the 4-star location is highlighted. For example, Brampton does not have any 4-star hotels that are participating in Priceline. By including Brampton in the area search (along with Toronto downtown south), I can now bid again. Because Brampton does not have any 4-star hotels on Priceline, there is no chance I’ll end up in Brampton.
Keep track of your bid combinations so you aren’t wasting bids.
Try a new credit card
This will allow you to start over with the various combinations necessary to make more bids.
Case study – downtown Toronto
Let’s take some of the lessons from this post and apply them.
Step 1 Determine the area
Toronto Downtown South
Step 2 – Check for possible hotels
From the forums, I can see that the following 4 star hotels are possibilities in the Downtown Toronto South area:
Hyatt Regency Toronto
Intercontinental Toronto Centre
Le Meridien King Edward
Sheraton Centre Toronto
Westin Harbour Castle
The Fairmont Royal York (a possible hotel; not reported yet)
Step 3 Research the market price
Now I’m going to check out a few of the hotels for March 25th and see what quotes I can get. First I got a quote from the hotel website, then I checked on Expedia. The dollar figures are the website price, followed by Expedia.ca.
Hilton Toronto – $119/$119
Hyatt Regency Toronto- $279/$279
Intercontinental Toronto Centre – $219/$259
Le Meridien King Edward – $269/$269
Renaissance Toronto – $209/$169
Sheraton Centre Toronto – $229/$249
Westin Harbour Castle – $269/$269
The Fairmont Royal York (a possible hotel; not reported yet) – No vacancy
Thompson Toronto – $179/$179
I found it interesting that the average Expedia price was slightly higher than the prices quoted on the hotel websites. Not sure if this research proves that Expedia is useless, but that’s what I’m thinking.
From the price list, I can see one big problem – the Hilton is offering rooms for $119, which is a lot cheaper than anywhere else. Since it is a four star hotel, it’s likely that any bid will get filled from there first, if any rooms are available. This might negate the whole point of having a group of available hotels.
Step 4 – Set your opening bid
I’ve heard that 50% of regular price is a good goal for your eventual winning bid. With that in mind I’m going to bid $40 which is less than half of the cheapest hotel ($119). I don’t think this is realistic, but it’s good idea to do some lowball bids in order to get familiar with the bidding process.
Step 5 – Plan your bid combinations
The more bids you have available, the better price you can get since you can use a smaller increment when increasing your bid.
First I need to figure out which Toronto locations do not have all four hotel star categories. I can use those locations to create extra bids.
Select “bid now” for hotels.
I’ll fill in the info.
Now I .need to check all the areas for the star availability. Please note – there is nothing wrong with determining a new location combination each time you make a bid, but if you are planning to minimize your price by using small price increments, it’s easier to figure out the locations first.
If I select the first Toronto location “Brampton” – I can see that both the 4-star and 3.5-star selections are greyed out, which means there are no 4-star or 3.5-star hotels in that area.
I can use the lack of a 4-star option with the Brampton location to get one extra bid for my desired Toronto downtown south location.
So far I’ve determined that I can use the following area combinations to get extra bids:
Bid #1 Location = Toronto downtown south. 4-star.
Bid #2 Location = Toronto downtown south & Brampton – Remember, I’m requiring a 4-star hotel and Brampton doesn’t have any 4-star hotels in Priceline, so there is no way I can end up with a room in Brampton. This is really just another bid for Toronto downtown south.
After going through the list, I can see that the following areas don’t have 4-star availability:
Toronto Airport West
Make a bid
I decided to bid $40 just to get started.
With taxes and service fees, the total will be $52.65 US.
When you get to the “We’re Ready To Get Your Hotel Room” screen – at this point, select the credit card (which you’ve already entered), enter the security code (three digit number on back of card) and then press the “buy” button. This is the last chance you have to cancel the transaction.
Then you get to look at William Shatner for a minute or two, while your bid is being considered.
Not surprisingly, my $40 bid was not accepted.
Now you can bid again, but you have to change either the area, the star level or check-in/check-out dates. Priceline also suggests increasing your price.
Make another bid
Ok, now I’m going to bid $50 and I’m going to include Brampton in the area list which will allow me to place another bid.
This was rejected.
I’m going to keep increasing my bids slowly and change the area combination each time.
So far I’ve used: Toronto downtown south and then Toronto downtown south + Brampton for the areas on my two bids.
Here are my next area combinations and bid prices:
Downtown South Toronto, $40, rejected
Downtown South Toronto, Brampton, $50, rejected
Downtown South Toronto, Burlington, $55, rejected
Downtown South Toronto, Brampton, Burlington, $60, rejected
Downtown South Toronto, Don Valley, $65, rejected
Downtown South Toronto, Don Valley, Brampton, $70, rejected
At this point I’m over 50% of the price of the cheapest hotel – Hilton $119. Which leads me to think that they might know they are the cheapest hotel in their Priceline group and don’t have to mark down their price very much, if at all. If that is the case, I am probably wasting my time with any bids under $100.
Downtown South Toronto, Don Valley, Brampton, Burlington, $75, rejected
Downtown South Toronto, Don Valley, Brampton, Burlington, Mississauga, $80, rejected
More Hilton thoughts – Now I’m wondering if the Hilton is even in this group. Perhaps they got downgraded from four stars and the forum list wasn’t updated?
Downtown South Toronto, Mississauga, Oakville, $85
Downtown South Toronto, Mississauga, Oakville, Scarborough $90
If case you are wondering why I’m not just doing single pairs (ie Downtown South Toronto plus one new list item in sequence), it’s much easier to add an area to the previous bid, then it is to start a brand new bid, which you have to do, in order to remove an area from the bid.
Downtown South Toronto, Mississauga, Oakville, Scarborough, Toronto East $95 – Success!!
Here is where I made my big mistake – on the list of available areas in Toronto, there is a Toronto Airport East and a Toronto East. Unfortunately, I selected Toronto Airport East (which has 4-star hotels) instead of just Toronto East and just bought a $95 room which I have no intention of using. F***! The total cost with fees came to $116. I wouldn’t have minded going to a different area if the hotel was anywhere else, but it’s right at the airport and there isn’t much around there. Oops.
Ok, let’s try this one again:
Downtown South Toronto, Mississauga, Oakville, Scarborough, Toronto East $95 – Success!!
Yup – I ended up at the Toronto Hilton which is what I originally thought might happen.
How much money did I save?
If I book a room at the Hilton directly, the cost is $119 plus taxes for a total of $135.
Priceline total cost was $116. So I saved a whopping $19 on this room. As I suspected, I think the Toronto Hilton doesn’t give much of a discount on their rooms, because they are in a group with much more expensive hotels.
How much money did I save really?
Unfortunately, because of my $116 mistake, I didn’t end up saving anything. My total cost was $232 for a room that I could have gotten from the hotel website for $135. A difference of $97.
Was it worth it?
One downtown hotel room – $116
One airport hotel room (unused) – $116
One fantastic Keg dinner – $162
Breakfast from room service – $64
Getting away from the kids for a night – priceless!
If there is one thing I hate doing, it’s preparing my tax return. Figuring out deductions and finding receipts is just not my cup of tea. One year, I filed my taxes several months past the tax filing deadline and received a quick education on the CRA penalties for late filers who owe money.
I’ve managed to get myself organized and filed my tax return on time for the last several years.
Here are my suggestions to help get your taxes filed on time:
Get organized. Set up a good filing system for your tax information and make it a priority to follow it. It’s so much easier to tackle your tax return, when you know where all the paperwork and receipts are.
Print off all electronic receipts and file them. This one has been a problem for me. I’ll file an electronic (email) donation receipt somewhere and then I can’t find it come tax time. Print everything off and put it in the appropriate tax folder.
Good tax software. This makes taxes almost fun. I’ve used TurboTax in the past and recommend it. It has an interview style where the software will ask you questions based on your entered information and will make recommendations about deductions and forms to fill out. Read this article which covers a number of different tax software programs.
Hire an accountant. Most people can fill out a regular personal tax return without professional help. If you can’t seem to make the tax deadline each year however, hiring an accountant can help motivate you to get your taxes finished. Think of it as hiring a personal trainer for your taxes. A regular non-business tax return will cost about $100 with a certified accountant.
Less late is better. If you have missed the tax-filing deadline, try to file your taxes as quickly as possible since the CRA penalty charges increase every month.
File even if you are broke. If you owe money for your taxes and don’t have the funds to pay, file the tax return anyway and work out a payment program with the CRA.
Stop owing taxes. Do you owe taxes every year? One way to avoid penalties for late filing is to not owe the money in the first place. Increase your payroll withholding tax by giving your employer a CRA TD1 form. Make an extra RRSP contribution in the first 60 days of the current year. Consider making some tax instalment payments to the CRA.
How much is the late-filing penalty?
Here are the rules to calculate the CRA penalties and interest charges if you owe money at tax time and miss the filing deadline. I used my own late-filing experience as an example.
As soon as you miss the filing deadline of April 30th, a 5% penalty on your balance owing is charged. After that, a 1% penalty on the balance is charged for every full month you are late, up to 12 months.
In my case, I owed $600 and didn’t pay the balance until early December of that year. My penalty was 5% ($30) plus 7% ($42) which was 1% for each month from May until November, for a total penalty of $72.
What about interest charges?
As if the penalties aren’t enough – the government also charges interest. The rate is currently 5% annually. The interest I had to pay on my 7 months late $600 tax bill was $17.50.
Add it up
My total penalty for the $600 taxes owing and 7 months late was $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 learned my lesson and never filed late again.
Are you a repeat offender?
If you paid a late-filing penalty in any of the three previous tax years, the penalty for the current tax filing year will be double. In that case the late penalty is 10% and the monthly penalty is 2% and it will accrue to a maximum of 20 months..
Penalties are only charged on taxes owing
One key thing to remember is that if you don’t owe any taxes, there will be no penalty for filing late. The penalties only apply to taxes owing.
Nobody likes paying taxes or filing their tax return, but I can tell you from personal experience that paying late-filing penalties is even worse. Even if you don’t owe any money at tax time, you should make every effort to meet the deadline. Delaying your tax filing will only make it harder.