Financial Freedom

-The borrower is a slave to the lender

Proverbs 22:7

If you own one, pick up your bible and read Proverbs 22:7. if you're not a Christian you can Google it. The best way to have financial freedom is to be debt free. When you're debt free, you will be in control of your earnings.

I want to ask that you spend today or tomorrow to look at all your credit cards, loans and lines of credit. Add up all you owe, who you owe and list how much you're paying in interest  on a monthly basis. Once you are fully aware of how much debt you have and the amount of interest rate, it will be easier for you to understand that your income gets deposited into the bank by the company that you work for. Then the money passed through your hand back to the bank, mortgage companies, and credit card companies.

My goal is to help you get out of debt and stay out of debt because debt is a big burden that won't let you get ahead or achieve your financial goals. Can you imagine what you can do with all the money that is spent on the interest rate?

I want you to start imagining a life without debt and a life with emergency funds, liquid cash in your chequing account, investment properties, kid's education funds and a retirement plan. A debt free life is not far away from you, all it takes is self-discipline.

Self-discipline is easier said than done but it can be achieved when you realized or pay attention to how much you owe and how much you're spending. And the truth is, you might just need guidance on how to stay on track or get out of your current situation so that they can start afresh.

Don't become servants to your lender, don't just work and pay bills, say no to living from pay cheque to pay cheque. If you find yourself in this situation, seek help before it's too late.

Feel free to call me on 7809018060 or email: margamortgages@gmail.com

Make sure you subscribe to my blog to get updates on personal finance.

Overspending

Have you ever walked into a grocery store to pick up cookies for your kids or to get one item that was left out of your previous grocery list? You only planned to  spend a few bucks, but instead of buying one item, you left the store with 3 bags of groceries that you didn't plan for. Then you sit in your car, pondering why you have 3 bags of groceries instead of one box of cookies.

Do you go grocery shopping because your coupons are about to expire? Maybe you are a compulsive spender who keeps your spending habits a secret from your partner for months to avoid conflict.

You've probably repeated this phrase to yourself multiple times' I'll never spend like that again". Sorry to be the bearer of bad news, but the truth is that most of the time, you will do it again. I would know since I have been down that path before and I know that it always happens again.

One of the reasons why you might overspend more than once is that budgeting is not that easy and it takes a lot of willpower to say no to all the clever advertisements and sales that you may see in the stores.

Here are two common reasons for people overspending and ruining their monthly budget:

• Sales, Bargains, and Promotions                                                           An obsession with bargains is a big problem for many people. You will buy things that you don't need if you focus on sales or promotional items. I like telling my clients to stop and think before they buy things that are within their budget for the month. You can definitely take advantage of good bargains but it is not a bargain if you have to put the cost on a credit card. Buying a sales item with a credit card means you can't afford it and you will likely be paying more for the sales item with the cost of an interest rate on the credit card. If your child needs a pair of shoes for school and you didn't plan to buy a shoe, then it will make sense to buy the shoe that you found on sale. But you see a pair of jeans that you don't really need and choose to buy it because it is 50% off, that means you are buying the jeans for no reason. Keep in mind that bargains are used by retailers as an incentive to get you to spend more than you anticipated.

• Spending based on emotions                                                                                 If you go shopping because are upset about something, or if spending money is a form of therapy for you then you might be an emotional spender. An emotional spender isn't necessarily looking for bargains but shops because it makes them feel good. If you are someone who buys expensive things just to be accepted as part of a group, you will be challenged with keeping to a budget.Material possessions do not define who they are. People will love and accept you if you are genuine.

A finance coach can help you structure your monthly spending, create a budget and holds you  accountable for your spending habit.

Please feel free to email me at margmortgages@gmail.com if you have any question(s). You can also leave a comment below and subscribe to the blog for future updates.

Why You Need A Finance Coach

A finance coach is a money coach who is an expert on personal finance. A finance coach is very knowledgeable about savings, credit, debt, budgeting and spending habit. A Finance coach will work with you to improve your money management skill.

Why do you need a finance coach?

A finance coach will take a look at your overall financial health and help you accumulate wealth, reduce debt, plan for your retirement or manage your credit situation.  A coach will use a holistic approach to help manage and design the right financial plan for you. This will include your current life stage, work-life balance and other life challenges that could impact your finances. The coach will listen to you and help you make the right financial decisions.  Financial freedom is a mental, emotional and an educational process.

What will a financial coach do for you?

• Work with you for 3-6 months to create an achievable budget
• Spend the time to know you and all aspects of your personal finance
• Coach you through savings, credit management, freedom from debt and wealth development
• Design and help you execute a strategy to get out of debt
• Hold your hands through your financial journey
• Help you track your expenses and balance your chequebook

A financial planner works for the bank while a finance coach works for you. A finance coach will look at you personal life goals and help you match those goals with your financial strategies. Because you are paying a finance coach for the service, you will be in the driver's seat.

Feel free to email me at margmortgages@gmail.com or call 780 901 8060

Financial Freedom

Debt, in my opinion, is a form of slavery. When you owe a bank money you become a slave to the bank because most of your earnings will go towards the payment of your debt.

If you owe the bank $10,000 on a credit card with an annual interest rate of 19.99% ( this is technically 20% per year). This is a form of slavery.

If you pay a minimum 2% of a monthly balance that is $200, it will take you over 9 years to pay off a $10,000 credit card, and you will pay $11,660.67 in  interest. By the end of this 9-year term. your total payment would add up to $21,660.67. You have paid double the amount that was initially  charged to your credit card. Can you imagine if you currently owe $50,000 or more in credit card fees? How much will you have to pay back, and how long will it take you to pay back what you owe to the bank or credit card company?

This is why I say debt is a form of financial slavery. You can work 8 hours a day, 38 hours a week and still not be able to save a single cent if you're in debt.

How People Get Into Debt

1.      Accepting Credit You Don't Need

If a bank approves a $20,000 credit card for someone who makes less than $10,000 a year, how will the person pay all of it back?

Sometimes, you will walk into a bank to pay a utility bill and you will be told that you have been pre-approved for a $10,000 line of credit and income verification is not need. No income verification can compel people to accept the line of credit because there is no hassle of proving income. You can easily get into debt if you don't say no to offers from banks and credit card companies.  

1.      Spending Money You Don't Have

You can get easily into debt by spending money without a plan. If you are a person who likes to buy things on sale, you have to take some time to reevaluate your purchases.

My advice is only to buy what you need when you need it. This way, you will be able to keep to your budgeting routine. Cultivate the habit of using your debit card for purchases. If you happen to have a points credit card or one with a  cash back reward, you can use your it for purchases as long as you have enough funds in you chequing account to pay it off immediately. You can also pay it off before your card's days grace period. A grace period is the amount of time that you have before your card's interest rate kicks in. Different cards have a different grace period length.

How to stay out of debt

If you are already in debt, don't be discouraged  because you're not alone. According to an article done by The Globe and Mail on March 11^th, 2016, Canadian households are spending $1.65 for every one dollar earned.

It is sometimes difficult to admit that your debt is more than you can handle. The realization that you might not be able to pay back what you owe can also be overwhelming but you can do something about it now by putting a plan in place. 

Start by adding up all your debt, who you owe and the terms of your loan such as interest rate.

Then look into the possibility of getting a consolidation loan to pay off everything at once. Make sure that all credit cards except one are cancelled.

If you want to go for a vacation that will cost your family $3000, it is advisable to save $250 per month for 1 years or $125 per month for 2 years. If you put the vacation of a credit card and you pay a minimum payment of 2% which is $60 per month, with  18% in annual interest, it will take you 8 years to make the payment and you will pay almost $6000 back to the bank. Always save for your upcoming expenditures.

If you're having trouble doing this by yourself, Please go to my blog for more information or contact me directly via email.

Signs that you are in trouble with debt

·         New bills arrive when the old bills aren't paid yet

·         You always have late fees or over-limit charges on your utility or credit card statement

·         You are getting NSF charges from the bank

1-TAKE ACTION

2-MAKE A PLAN

3-BECOME DEBT FREE

Self-awareness is key and the earlier you do something about it, the better it will get. I have helped many people and I can help you too.

Feel free to email me at margmortgages@gmail.com or call 780 901 8060 for 30 minutes free consultation.

Saving and Spending Money

Based on today’s economy it is very challenging to keep up with bills, food and the basic cost of living. If it’s difficult to keep up with bills, how can you set aside money for your savings?

The advice I’ve been giving clients is to learn how to budget. Budgeting will help you prioritize what you really need compared to what you want. This will help you achieve your saving goals.

Start with a budget

A budget gives you a visual of your monthly income, monthly expenses, and money left over after your expenses. Using a budget can help you plan how much you need to save on a monthly basis.

Most people don’t bother using a budget to plan their monthly spending or saving.  I come across many people on a daily basis that feels crippled by debt. Some people are in debt because of poor spending habits, while others sink into debt because of the higher cost of living.  Whether you are in debt because of your spending choices or in debt because of a poor economic situation, keeping a budget will help you get out of debt faster or prevent you from getting into debt.

 You generally want to begin your budget at the very beginning of a month. Keep the receipts of all your expenditures in the month so when the end of the month rolls around you can add up all your purchases and figure how much you spent and the things that you spent money on.

Budgeting Tips

Below is some handy advice that I like to give my clients about setting up a monthly budget:

•  Your household income

Calculate your monthly household income. Don’t forget to include child tax benefits, interest income etc. This is the actual amount that goes into your chequing account on a monthly basis

•  Manage and prioritize your monthly expenses

This is a good time to take a look at the receipts that you have kept in the month. How much did you spend on essentials like food, shelter, electricity and many other things that are necessary for your survival? Now think about how much you spent on the things that aren’t necessary for survival, luxuries, such as a new pair of sunglasses, a fancy dinner, daily coffee, junk foods, and other similar comforts. For an accurate amount, I advise that you take 3 of your monthly expenses and average it out. If you are someone who is fully aware of their basic needs, then one month of expenses should be fine for your budgeting purposes.

•  Subtract monthly expenses from your monthly net income

If you have money left after the subtraction, then you will be able to plan for long-term savings and some emergency funds. But beware, if you have a negative number, this means that you are spending more than you’re currently earning. If you find yourself in a situation where you’re spending more than you’re earning, it might be a good time to look at the receipts that you have been collecting and remove the things that you can do without.  Be warned, if you decide to get an additional job to help cover some expenses, as this might not always work. It’s not about how much you make, but about how much you spend.

Once you have a monthly budget in place and you know what your expenditures are, you can now work on your monthly savings plan. Most people save money for retirement, emergency funds, vacation funds, etc. 

Whatever your savings goals are, these tricks seem to always help out my clients:

         I.       Pay yourself first:  Based on my experience, the best way to save is to have a preauthorized deposit from your payroll go into a savings account or investment. If your savings goal is for retirement, you might want to look into diversifying your portfolio by talking to mutual fund specialist or a financial advisor. If your savings goal is for an emergency, I advise my clients to put the funds in a regular savings account or in a TFSA where it is easily accessible.

I I.   Start by saving $25-$50 monthly. I know that most mutual fund accounts will accept a preauthorized deposit of as little as $25 bi-weekly or monthly when you open the account.

Please keep in mind that it is advisable that you spend 30% of your income on shelter, another 30% on your loans and miscellaneous expenses and 10-20% on your monthly saving but not less than 10% on savings. I want to assure you that the 10% savings rule is achievable.

 If you have challenges saving or feeling overwhelmed with credit card payments. It might be a good time to contact me.  I have helped a lot of clients pay down debts, buy their first home and save for raining days. I can help you too.

Leave a comment to let me know if this information was helpful or let me know the topics that you will like to read about.

Feel free to email me directly at margmortgages@gmail.com or call 780 901 8060 with all your personal finance questions.

Financial Literacy for Children-Start them young

As parents, we often teach our kids good morals, our primary values and the importance of good education.

I wonder why financial literacy is often left out.

I asked my 5-year-old daughter a question this morning, "I asked what is money?" she answered "money is for buying stuff". I am sure that any kid her age will probably give the same response. 

Most kids understand the basics of spending because we do our best as parents to buy them most of the things that they ask for. Do they understand the basic principles of saving?  I think most adults shy away from having conversations about money with kids because of their own money management skills or is it lack of confidence due to their own spending habit.  

Adults have experience and perspective that kids do not have when it comes to money management. Therefore, it is very important to start having conversations with kids. If kids are not taught about money management at home they will learn it from their friends. I bet most kids believe that the children of rich parents are born lucky.  if kids associate luck with wealth  how responsible will they be with money?  It is very important that we explain to them from a very young age that people work hard to get money and once you have the money, you have to also make the right decisions with the money in order to get rich. 

Teaching children about money will help them understand the relationship between working to earn money, spending and saving money.  Kids need to understand the value of money, and I believe financial literacy will give them that foundation. 

You can start this process by teaching the little ones how to count coins. The next time you go grocery shopping, let your older kids hold the shopping list and make sure they keep to the list, then explain why they have to keep to the budget.

If you have any question, email me at margmortgages@gmail.com or call me on 780 901 8060

Credit Score = How You Manage Your Money

Controlling your finances can be very stressful and overwhelming.

It is really tough to make financial goals and keep to it. But the long term benefit will give you security as you move through life.

Let's talk about your credit score.

A credit score ranges from 300-900 and all banks, phone companies, landlords, and trust or insurance companies make a judgment about how well you are managing your money.

Do you know how your credit score is calculated?  Do you know the impact of your money management on your credit score? Do you understand the importance of a good credit score?

The things included on your credit report contain but not limited to:

• Credit cards
• Loans
• Lines of Credit
• Student Loans
• Utility Bills
• Phone Bills
• Collection Items
• Legal Action

Here are some tips to follow if you plan on improving your credit score:

•  It is very important that you pay your bills in full every month or at least pay the minimum payment. If for any reason you are not able to make your payment in a timely manner, talk to your lender or the company that you owe. Most of the time, they will make an arrangement with you
•  Make sure that you don't use more than half of your credit limit. Using more than half or maxing out your credit is an indication that you might have a spending problem or cash flow issues
• Avoid applying for too much credit. The more inquiries you do, the less your credit score gets

It is very stressful and challenging to rebuild credit once you have a problem. My advice is that you pay close attention to your monthly statements, spend what you have and avoid using too much credit.

This is how your credit score is calculated

1.     Your payment history is calculated as 35% of your credit score. Lenders worry more about how well you pay your current debt. Lenders also want to know if you will repay any new loan granted to you.This is a good way to determine your credibility and character as a borrower. Keep in mind that payment on your credit facilities are reported separately.

2.     How much you owe is weighted at 30% of your credit score. Lenders want to know how much debt you currently have and the impact your debt has on your budget. Maxing out your credit cards will have a negative impact on this factor.

3.     The length of your credit history weighs 15%.  The longer your credit history, the better your credit score will be. It takes time to really determine how responsible an individual is with their credit. If you've had credit for 10 years and you make your payments as agreed, then you have earned the right to get lower interest rate. How long and how well you've had and used your credit is always a good negotiating tool when applying for any kind of credit facility.

4.     Credit application weighs 10%. Avoid applying for too many credit cards or lines of credit because it could be an indication that you need cash flow. Applying for credit often will also impact your credit score negatively. This factor considers credit that you recently applied for or opened. It also looks at the number of times that your credit was checked in the past 5 years.

5.     The type of credit used is 10% of your total score. A credit card and a line of credit are considered revolving credit. This means that you will always have access to the credit limit as long as you make the payment. While a loan goes down as you pay it and cannot be reuse. I like telling my client to take a loan for their major purchases so that they are sure when the payment will be completely made. It is easier to get in trouble with revolving credit than with a loan.

Your money management skills have a lot of correlation with your credit score. Your credit score is a reflection of how well you manage your available liquid fund.

Please follow me on my blog, leave a comment and send me an email at margmortgages@gmail.com or call 780 901 8060 if you have any question.