financially dumb

[julie.leeds]

We have no RRSP's, or life insurance, or GIC's or stocks.

And we have no clue where to begin.

We are going to see about RRSP's later this month, I don't know if we are going to get them or not...but I guess its something I should know about.

Also when it comes to doing the upgrading your home thing for the government. I know there is something where you have an energy audit done and last year they had the renovation tax credit. When will I know if the renovation thing will happen again this year?

See I am just plain dumb. I don't have a clue at all!!!

[Justine]

Do you have money set aside at all? You can put that towards RRSP's, GIC's, stocks etc. I don't have any money put aside either.

[Woofy]

Hey, Julie. Don't be harsh on yourself... You are not dumb. Glad you are stepping out and wanting to know more about financial matters.

The home renovation tax credit is separate from the energy rebates offered by the government via the OEE program.

You do not need an energy audit to claim for the home renovation tax credit, but if you want to apply for energy rebates, then you need to do the energy audit.

As for RRSPs, life insurance, GICs or stocks... one step at a time. All these are like the different instruments that make up a symphony orchestra.

For starters, most importantly, tackle your debt first, if you have any, and set up a plan to ensure you have emergency savings.

[Andit]

If you can put aside a little bit each week, it will soon add up. RRSPs are a 100% tax write off - if you`re on the border between tax brackets, than it makes a real difference. For anyone who is a first time home buyer, there is a program where you can borrow up to $20000 interest free from your RRSPs towards your downpayment (paid back over 15 yrs).

FYI, RRSP season is over for this yr (can`t claim any you buy now for this yr`s taxes).

Your best bet is to sit down & work out a budget of just how much money you can set aside without feeling any pain. If you resent having to set money aside, you`ll be less likely to follow through. Also, most banks have a system where you can have an amount automatically deducted weekly/monthly, so you won`t be tempted to skip a payment.

Life insurance - some people swear by it, some are dead set against it, it really depends on your situation. If you`re single, you`re better off investing that money each month, if you`re married it depends on each spouse`s benefits. Some workplaces have a small plan as part of your benefits.

GICs - basically, you lock in a set amount of money for a set term so you can get a higher interest rate. It`s a safe investment & you can cash it in if you absolutely have to (you might have to forfeit all the interest you would have earned).

Stocks - a bit risky, especially in the short term. You can make a lot of money, but you can also lose everything. Best if you have money to play with that you don`t care if you lose.

Hope this helps.

[JumboShrimp]

Don't forget you can contribute up to $5000 each year (plus any left over contribution room from the previous years) into a Tax-Free Savings Account. It's good that you are trying to learn about saving money and asking for help. That's a great first step!

[julie.leeds]

OK quick bring you up to date.

Hubby works for Catholic School board, good pension, good benefits (but has only been working there 5 yrs and he is 40 now, so looks like he might be there til 65 unless some kind of a buy out comes up...) I have worked at my job for 18 yrs and have been paying into the pension for 15 yrs already but I can't retire for another 16 years....if I want a full pension at 55.

We haven't been too concerned about finances because our house will be paid off in 11 yrs. and...this is the part that sounds bad....but we are both only children, his parents are in their 70's and mine in their 60's. both have nice homes that are paid off, and money in the bank and good pensions to live off.

we are not good with money. we do have credit card debt and a line of credit (pay off the line of credit and use the credit card in the mean time....then use the line to pay off what we put on the credit card *lol*) We are very much the instant gratification type personality.

[Zonny]

Don't forget you can contribute up to $5000 each year (plus any left over contribution room from the previous years) into a Tax-Free Savings Account. It's good that you are trying to learn about saving money and asking for help. That's a great first step!

DEFINITELY no such thing as stupid questions. You have to ask!

For me, the TFSA is not a good deal, because my RRSPs are not maxed. I don't have investments that earn interest, outside of RRSPs. My little personal savings account has maybe $400 in it, I've earned probably $5 in interest this year. Woo. DH on the other hand, IS maxed out on RRSPs (he's a saver, I'm not). So the TFSA is good for him.

I can speak from experience on the home renovation tax credit in NS. We had it done a couple of years ago, when we were planning to replace all of our windows.

First, we got the home energy audit done before having ANY work done (important, at least here). They attach a big blower thing to your front door, which creates a negative air pressure inside. Anyplace that air is leaking from, you can definitely feel the air blowing in when they turn it on. It's amazing where the air comes from. You know how people put those childproof things on electrical sockets to prevent kids from sticking a fork in and getting zapped? They're also useful for keeping cold air out! Even if you have no kids, use 'em anyhow!

You get a rating based on the readings they get at that time.

In NS, we got $30 from the province and $30 from the Federal government for each window we replaced. We replaced all 17 windows, so that was a fairly big rebate right there. Our mortgage was due for renewal at about this time, so we borrowed the money from that to pay the windows.

Then we got insulation put into our attic, which gave us more money in rebates.

After we'd done everything we'd planned, we arranged for the second visit. They do the blower test again, see how much you've improved, that can get you more money back if you've improved your energy efficiency by a certain number.

It takes quite a while to get your cheque, but you can get a lot of cash back if you have work to do. It's worthwhile to do if you're planning home improvements.

Z

[Sunraven]

If you can put aside a little bit each week, it will soon add up. RRSPs are a 100% tax write off - if you`re on the border between tax brackets, than it makes a real difference. For anyone who is a first time home buyer, there is a program where you can borrow up to $20000 interest free from your RRSPs towards your downpayment (paid back over 15 yrs).

FYI, RRSP season is over for this yr (can`t claim any you buy now for this yr`s taxes).

Your best bet is to sit down & work out a budget of just how much money you can set aside without feeling any pain. If you resent having to set money aside, you`ll be less likely to follow through. Also, most banks have a system where you can have an amount automatically deducted weekly/monthly, so you won`t be tempted to skip a payment.

Life insurance - some people swear by it, some are dead set against it, it really depends on your situation. If you`re single, you`re better off investing that money each month, if you`re married it depends on each spouse`s benefits. Some workplaces have a small plan as part of your benefits.

GICs - basically, you lock in a set amount of money for a set term so you can get a higher interest rate. It`s a safe investment & you can cash it in if you absolutely have to (you might have to forfeit all the interest you would have earned).

Stocks - a bit risky, especially in the short term. You can make a lot of money, but you can also lose everything. Best if you have money to play with that you don`t care if you lose.

Hope this helps.

Great point, Andi! I just wanted to mention though that the HBP is now $25K, not $20K. I think effective early 2009 they raised it to $25K.

Managing my personal finances is a favourite past time of mine, so I'm loving this new section.

[Sunraven]

We have no RRSP's, or life insurance, or GIC's or stocks.

And we have no clue where to begin.

We are going to see about RRSP's later this month, I don't know if we are going to get them or not...but I guess its something I should know about.

Also when it comes to doing the upgrading your home thing for the government. I know there is something where you have an energy audit done and last year they had the renovation tax credit. When will I know if the renovation thing will happen again this year?

See I am just plain dumb. I don't have a clue at all!!!

I assume you're asking about the HRTC. You will find out when the Feds release the budget... which is in... three days ... we will find out about any perks come Thursday March 4th!

[gourmetsue]

word is the HRTC will not be renewed this year.

[Prairie girl]

word is the HRTC will not be renewed this year.

That's what I heard too. The HRTC is completely seperate from the energy audit program.

I got an energy audit done under the old program and replaced my old furnace as well as two doors in my house and still got about $500 back. I was told that replacing windows is not the biggest payback. I would do insulation and furnace to max out your cash back (although I think each province is a bit different because there are provincial subsidies as well as federal ones). I think a new furnace has good resale value as well.

You can also get provincial or municipal rebates for things like replacing appliances with more energy efficient ones, get low-flow toilets (although mine get plugged up all the time - is it worth the hassle?), etc.

[Tylers]

Everyone has to start somewhere - at least you're looking for help!

It sounds like you might need a budget more than anything else - there is lots of free budget software or budget books - ask at your local bank/credit union.

You could also look into securing your debt against your home. You'd very likely pay a LOT less interest than having unsecured debt.

Once you start saving, THEN look into what tax shelter will work the best for you. There's not a whole lot of point filling up your RSP or TFSA if you're accumulating a lot of debt to do it.

As for the insurance - it sounds like both employers likely provide some if they both provide pensions. It's still probably worthwhile to go see an advisor/planner and see what advice they can give about that.

[Zonny]

I got an energy audit done under the old program and replaced my old furnace as well as two doors in my house and still got about $500 back. I was told that replacing windows is not the biggest payback. I would do insulation and furnace to max out your cash back (although I think each province is a bit different because there are provincial subsidies as well as federal ones). I think a new furnace has good resale.

Windows are not always a great idea from an energy efficiency perspective, but for us, our old windows were quite drafty. We had 17 windows and two doors replaced, which gave us a rebate of over $1100. Added into the other improvements that we did, we ended up with over $1800. Replacing the furnace wouldn't have been a good payback for us, since it's not that old and it's currently in a lease.

Z

[ashedfc]

Hi Julie,
It does not makes any sense to pay interest on a credit card, & save in a GIC at the same time.
Please pay down your credit card first. You will save a lot on interest.
That saving you can direct towards a RRSP.
Now a days you have RRSP or TFSA (as low as $25 a month regular contribution, some are even $10 a month), & it all adds up over time.
Its the type of DEBT (not the type savings) what decides our destiny.

[Insane]

Hi Julie,
It does not makes any sense to pay interest on a credit card, & save in a GIC at the same time.
Please pay down your credit card first. You will save a lot on interest.
That saving you can direct towards a RRSP.
Now a days you have RRSP or TFSA (as low as $25 a month regular contribution, some are even $10 a month), & it all adds up over time.
Its the type of DEBT (not the type savings) what decides our destiny.

If you read Gail Vaz Oxlade's blog and articles (and book) she talks about how you NEED to save. The rational is that if you have no savings, the next emergency that comes up (car repair or new roof or whatever) you are going to go right back to credit undoing all your hardwork. It can be very demoralizing and doesn't get you ahead. You need to save regardless of your debt. You need that cushion otherwise you can't get ahead.