Wednesday, 18 November 2015

Why NOT to Get Mortgage Insurance

Negatives of Mortgage Insurance

If you've ever applied for a mortgage you'll know that they always offer you mortgage insurance and I'm hear to tell you (or remind you) not to get it. If you're on the other side and are a first time home buyer then even better, as you'll be armed with the info before dealing with the bank.

Now don't get me wrong, insurance is important, especially when it comes to covering your debt but there is a better way of doing it.

Your bank will have you pay a monthly premium to cover whatever is outstanding on your mortgage (hence 'mortgage insurance'). Sounds great right, but let's just think about that for a minute. You are going to be paying the same premium every month for the life of your mortgage but your mortgage is going to keep shrinking, so you are basically paying the same amount for less and less of a payout. Plus, the payout goes straight to the bank so you have no control over it. Not so great now huh?

Instead you're going to want to look at getting some term insurance for an amount that will cover your debt. A term life insurance policy will more than likely be cheaper than mortgage insurance, the payout will not decrease and that payout will come directly to the beneficiary who can use it for whatever they want. The term insurance will also stick with you for as long as the term whereas you will need to reapply for mortgage insurance anytime you move your mortgage. Cheaper, guaranteed payout amount and no need to renew if you change mortgage holders...lots of positives!

If you already have mortgage insurance you should be able to cancel it at anytime with no penalties. Definitely get some term insurance quotes, get that in place and then cancel your mortgage insurance to ensure there's no gaps in your coverage.


Negatives of Mortgage Insurance

Friday, 13 November 2015

Credit Cards: Best Bang for Your Buck

In the market for a new credit card and want to make sure you get the best possible deal? Here's a look at some of the best cards in the Canadian market and what makes them so great. You'll first want to decide which category will work best for you. If you carry a balance you'll want to go with a low rate card but if you're pretty good at paying them off every month you'll want to start reaping those rewards. If you travel a lot you should look at a card that pays out in travel rewards, otherwise a cash back card is likely the best option. 

Best Low Rate You should try as hard as you can to not carry a balance on your credit card but if you absolutely must (I get it, things happen) you should look into a low rate card. Even paying a small annual fee can be worth it if you carry a balance. The TD Emerald Visa will cost you $25/year but you'll get an interest rate as low as 4.2% depending on your credit rating. Just remember, if you're paying off your card every month don't even consider a low rate option, move right on down to something rewarding.

Best Cash Back If you spend a lot on your credit card but are on top of paying off your balance it can be worth it to fork over some money for a fee card because you'll likely make it all back and then some. The MBNA World Elite Card will cost you $89/year but can get you 2% cash back. The interest rate is 19.99% though so pay off those balances (yup, I'm a broken record). Another good option if you spend a bit less is the SimplyCash Card from Amex with 1.25% cash back and no annual fee.

Best Travel Rewards The best option for travel really depends on what airline you prefer to travel with as the cards for specific airline rewards tend to be a better value than others (like Airmiles). If you like Westjet you'll want to look at the Westjet RBC World Elite Mastercard for $99/year. If your in the Air Canada/Aeroplan club you should look at either the Amex Gold Rewards card.

Best Retail Rewards If you're not much of a traveller you can instead earn rewards to use at places you spend money. The PC Financial World Mastercard will earn you PC points to save money on your grocery bill. If you shop at Superstore (or other Loblaws stores) and already collect PC points this no fee option might be a good choice for you. Another good option, if you're a Rogers customer, is the Rogers First Rewards Mastercard. This is another no fee option that can earn you money off your phone bill. The Scotiabank Scene Visa is also a good option if your a frequent movie goer but they did just increase the number of points you need to get into imax or other premium movies so keep that in mind.

If you want more details on these or some other good options check out this article from Moneysense.

Tuesday, 10 November 2015

Your Investment Options

Types of Investments

If you're just getting into investing one of the first things you need to understand are what options are available to you. It's important to have an emergency fund setup and easily accessible (I suggest a high interest savings account) but when you start an investment account it should be for longer term goals like buying a house, your kids education or retirement and you want that money to work for you. I'll breakdown some of the most popular investment options to help give you a better idea on what will work for you right now.

GICs
GICs are the ultimate in safety when it comes in investments because they guarantee your return. Now this sounds great but the return you get (especially right now) is going to be low; think 1.50% on a 5 year GIC. The concern with such a low return is that your money may not beat inflation, which means your're actually losing money in the long term. The other concern is that most GICs are locked in so you can't get access to your money if you need it before the term is up.

Bonds
Now onto more complicated matters...bonds. There are many types of bonds but they are all basically debt investments where you loan the issuer money and in return they pay you back your principal with interest. Bonds are usually a low risk investment but it really depends on the type of bond you buy and the trustworthiness of the issuer. You can get government bonds (think Canada Savings Bonds) or corporate bonds that could be backed by very solid companies or those in financial trouble. Wit
h that said, even if a company goes under, bond holders get paid out before stock holders which makes them inherently less risky.

Stocks
Stocks are a riskier option but they are also where you can earn the highest returns. High risk, high reward right? When you buy stock in a company you essentially buy yourself a little (or big I suppose) piece of the company. Now stocks don't always have to be high risk but there is, of course, always some amount of risk. Even the biggest and most successful companies can loose you money and they often aren't the ones that will have big increases in returns. It can be fun to get into trading some stocks but it is always important to have a lower risk portion of your portfolio to pull you through rough market conditions. 

Mutual Funds You can buy a mutual fund that covers just about any part of the market, whether it be a specific risk level, geographical region or corporate sector. Now, mutual funds will cost you and you need to make sure you understand all the costs involved, but I think they are a good option to help you maintain a diversified portfolio. The guys and gals that run mutual funds are good at their jobs and have all possible research, analytics and models available to them to help them succeed. Stock picking can be fun as I said, but you just aren't going to have the time or resources to do the job they do so I'm OK paying them to do that for me. If you're just starting out funds can also be a way to get into a few sectors of the market with smaller amounts of money.

Index Funds and Exchange Traded Funds (ETFs) Index funds and ETFs are created to mirror an index (such as the S & P 500) which basically means they hold the stock positions used in that specific index. Like mutual funds, they are a good way to diversify your account but they won't cost you as much because they simply buy what's in the index and so aren't actively managed. Just remember that while you won't do any worse than the index, this doesn't mean you are always going to have positive returns. The markets aren't always up and can sometimes be down...by a lot.

Hopefully this helps you understand some of the different components you can use when you start investing. Let me know if you have any questions.

Types of Investments

Wednesday, 4 November 2015

Saving Series: Handmade Gifts

Christmas is always such an expensive time for us. I love buying, wrapping and giving gifts, and even though we don't have a huge family to buy for it still adds up so fast. We also don't have many kids to buy for so it's mostly parents, siblings and friends who can be hard to buy for since they always seem to have everything. This is when I turn to some easy (but still awesome) handmade gifts that people really seem to like.

Here's some things that have made my DIY list for the season.

1. Tile Coasters - I haven't tried this out yet but I will be (I'll let you know how it goes). I looked through a bunch of tutorials and this one sounds the best and makes the coasters water and heat resistant. You can use patterned scrapbook paper or even your own pictures for these coasters (Instagram pics would work great since they're already square). 

2. Crochet Slouchy Beanies - I am addicted to making these right now and will be giving them to everyone this year. I only learnt how to crochet last year and taught myself from you tube videos so don't feel intimidated, it's easy! These beanies are cute and really comfy, I pretty much live in one of mine every weekend. My favourite yarn for these is Caron Simply Soft which can be found at Michael's (make sure you grab a coupon).

3. Color Blocked Wood Vases - These vases are so cute and simple to make. I think they would make fantastic hostess gives with some fresh flowers in them. You can go with festive colours or keep it a little more neutral to match anyone's decor. Or change up the pattern and go with thinner stripes or even a chevron pattern instead of the colour blocking. 

4. Twenty Minute Totes - Have a sewing machine at home? These totes would work up super fast and would work great as reusable gift bags that can be used over and over. The gift bag that keeps on giving ;)

5. Marbled Clay Ring Dishes - How pretty are these little jewelry dishes? I think these would be perfect for any ladies in your life and they look unique and pricey! The tutorial sounds easy enough but I have zero experience dealing with clay and I have some doubts mine would be so nice and bowl-shaped. But hey, if it does work out...awesome, and if not I guess I'll have a misshapen jewelry dish for personal use. 

6. Boozy Hot Chocolate Mix - Here's a super easy (aka last minute) gift that would be great for neighbours, co-workers or teachers (or maybe not teachers...is it acceptable to give booze to teachers? Probably not...). Anyways, you could make a bunch of these really fast if you need something quick. 

7. String Art Map Panel - This one isn't so much a tutorial as just picture inspiration but it's easy enough to follow. You could do a province (or state as shown) or do a country or pretty much anything else you can come up with. I also think it would be cute to do a star (instead of a heart) in the middle and mark off the location of a meaningful city. A piece of wood, some stain or paint, nails and some string...can't get much easier than that and you didn't even need to be an artist. 

8. Infused Olive Oils - Flavoured olive oil is so popular right now and its really simple to mix some up for yourself or as gifts. Get some cute little bottles, good quality olive oil (try Costco) and some herbs and you can whip up some little gift sets in no time. 

Let me know how it goes if you try any of these or if you've got other great DIY gift ideas. 

Tuesday, 3 November 2015

Tipping Etiquette

To Tip or Not to Tip?

What do you guys think about tipping? When do you do it and how much do you give and what makes you tip a lot or a little?

I feel like I'm a pretty generous tipper in most situations but sometimes i kind of hate how so many places now prompt for tips....I'm looking at you Starbucks and your annoying phone pop-ups.

I've been a server/bartender in the past so I know that it's a tough job and you definitely depend on tips, so because of that I almost always tip about 20% (unless the server is straight up rude). Lots of things can happen that are completely out of your servers hands, so as long as they're polite and try to make up for it I think they've done their job.

What about food delivery? We actually hardly ever order food, pizza once in awhile but we live central and are so close to so many great restaurants that usually we'll est out or go pick something up. From what I do know, lots of places now charge a delivery fee so I definitely take that into account when tipping the driver. I'll still usually give them something, $5 maybe.

I also tip for spa type services like haircuts, massages or when I get my nails done but less, usually around 10%. If I'm paying $50 for a haircut and it takes about an hour I figure that's pretty expensive, but I get that there are overhead costs and that's not all profit.

Now, what about all those places (like Starbucks, Booster Juice, etc.) who all hassle us for tips now. For places like that I very rarely tip, and if I do its usually a $1 or less. I figure that tipping is for really great service, and how exemplary can your service be in the 30 seconds of contact we have when I'm pulling through the drive thru. Sorry but no.

Am I totally offside on any of this? Let me know your thoughts and if it also annoys you with all the tip requests.

To Tip or Not to Tip?