Tom Drake

Mar 3: Best from the blogosphere

March 3, 2014

By Sheryl Smolkin

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If you haven’t started to think about filing your 2013 income tax return, this week is as good a time as any. You’ve made your 2013 Saskatchewan Pension Plan and RRSP contributions and T4s are in the mail.

Last April, on Million Dollar Journey, the Frugal Trader wrote a great blog to help readers prepare for filing their 2012 income taxes. It is equally relevant this year – a great checklist to get all your paperwork in order before you sit down to complete your return.

If this is the first year your home was your principal place of business, you’ll want to read what Canadian Finance Blog’s Tom Drake has to say about how you can reduce your taxes with business-use-of-home expenses.

On a similar note, in Canadian Living, blogger Krystal Yee offers income tax tips for freelancers so those of you in that category you can get all of the deductions that you qualify for. She also warns the self-employed to put money away for taxes on a regular basis so there are no surprises at the end of the year.

Media-savvy accountant and author Evelyn Jacks writes about claiming employment expenses. Even employees may claim certain specific expenses, depending on whether their employer will verify that this was a necessary condition of employment. Allowable expenses may include travel costs, the cost of using an automobile to earn income, supplies used up in the course of employment, the cost of an assistant, and home office costs.

Retire Happy blogger Jim Yih reminds us to take advantage of the Pension Income Tax Credit. He says if you are age 65 and do not receive a pension (other than a government benefit) you should open a Registered Retirement Income Fund and transfer $12,000 from your RRSP. If you draw down $2,000/year until age 71 you will be entitled to the pension tax credit and effectively receive the money tax-free. An unused pension tax credit can also be transferred to your spouse.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere. Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.


Feb 24: Best from the blogosphere

February 24, 2014

By Sheryl Smolkin

185936832 blog

RRSP season is almost over for another year so remember to make your Saskatchewan Pension Plan contribution by Monday, March 3, 2014 in order to get a tax deduction on your 2013 income tax return.  But the need to spend carefully and save regularly is an important part of everyday living.

On retirehappy.ca, Jim Yih reports that 7 Causes of Financial Stress including high debt levels, low savings rates and increasingly complex financial markets are keeping many people up at night.

In The Insanity of “RRSP Season” Young and Thrifty blogger Kyle says anyone with a basic handle on grade 9 math ought to know that making periodic contributions to a registered plan (either a TFSA or an RRSP) is a better choice than procrastinating until the last minute and then trying to scratch together the money to fit in under an arbitrary deadline.

Blogger Krystal Yee on givemebackmyfivebucks.com says she will have to dip into her emergency fund and suspend TFSA and RRSP payments for some time because she was recently laid off. But 44 comments from her fans leave no doubt that she will land another great gig before long.

The pros and cons of withdrawing RRSP contributions are explored once again by Tom Drake on the Canadian Finance Blog. While the lost opportunity cost of taking out money and losing RRSP room are important, he acknowledges that in some emergencies RRSP withdrawals may be unavoidable. The good news is that if you need money because you lost your job, you will pay taxes on the money at a lower rate.

Many of you may be aiming for early retirement as early as age 55. However Dave Dineen on Brighter Life reminds readers that some sources of retirement income don’t kick in for another five years or more so you need to have a plan to bridge the gap or early retirement could be a financial nightmare.

And on Boomer & Echo Robb Engen identifies 6 Fees Worth Paying and notes that trying to avoid fees can sometimes be false economy. For example, the return on investment if you buy a Costco card, use an annual fee credit card or join the CAA can easily exceed the initial amount you have to pay.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere. Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.


Feb 3: Best from the blogosphere

February 3, 2014

By Sheryl Smolkin

185936832 blog

The depths of winter (and this has been one of the worst I can remember) seems to be the time when we all wish we could retire somewhere warm but figure we will never be able to afford it. After all, post- Christmas credit card bills have to be paid and finding the money for SPP and RRSP contributions may not be at the top of your “to do” list.

But now is the time to set up an automatic withdrawal plan for next year’s retirement savings plan contributions so in February 2015 you won’t be faced with the same dilemma.

It is also important to make retirement savings a part of an overall financial plan that you review often to make sure it still works for you, says Dave Dineen at Brighter Life. When you make your financial plan, Robb Engen on Boomer & Echo says there are 4 Big Rip-Offs To Watch Out For including mortgage life insurance.

Kerry K. Taylor (aka squawkfox) has been saving in an RRSP for about 17 years or half of her life. She recently blogged about how a can of cat food scared her into saving for retirement.

“I always thought seniors eating cat food to afford food was a myth. I wanted to be sure. [So I asked a woman in the grocery store line who was buying 25 cans about her cats.],” says Taylor. “She threw me a side-eye and said nothing. Whether she ate the cat food or not didn’t matter. [Since then], my fear of eating Fancy Feast in retirement [has been] very real.”

And once you have contributed to an RRSP, don’t forget that you will completely defeat the purpose if you treat it like a normal bank account and make withdrawals for reasons such as paying down debt. In an excellent Financial Post column Should you raid your RRSP to pay debt? Melissa Leong does the math.

She reminds us that if you need $8,000 for credit card debt, you’ll have to withdraw $10,000 to have enough to pay the full bill. Furthermore, once the money is withdrawn the contribution room is lost forever.

One case where it may make sense to take a loan from your RRSP is to Help Pay for Your Education with the Lifelong Learning Plan (LLP). However, as Tom Drake explains on the Canadian Finance blog, you are borrowing from yourself, but it is still a loan. You have to repay your RRSP, or face the tax consequences which can be quite hefty if you aren’t careful.

There is also a lost opportunity cost that comes with withdrawing money from your RRSP. While you can use the money for your LLP and education, you won’t be earning a return on it until you pay it back. You’ll have to decide if this approach is worth it for you.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere. Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.


Jan 27: Best from the blogosphere

January 27, 2014

By Sheryl Smolkin

185936832 blog

RRSP season is in full swing and since the beginning of the year, we have been bombarded with a media blitz suggesting few Canadians are saving enough and exhorting us to maximize contributions to our retirement savings plans by the end of February.

If you wonder what all this retirement planning is for, anyway, take a look at Sandi Martin’s blog or boomer & echo. She says planning for that inevitable day when you stop collecting a paycheque, or invoicing clients, or collecting ad revenue is an exercise that will let you spend more money than vaguely worrying about “saving enough” or “running out” will.

In order to save enough to retire worry-free, you need to figure out how much you will need. On the Canadian Finance blog Tom Drake suggests that for every dollar of annual income you need in retirement you should plan to have $20 in savings. That doesn’t include the value of your home because it is not earning income.

You can save in many different kinds of accounts including the Saskatchewan Pension Plan, employer-sponsored pension plans and RRSPs. But Jonathan Chevreau at MoneySense says investing in a tax-free savings account (TFSA) should be a priority for most Canadians. In fact he says the moment you make your January contribution, you should start accruing for the next year’s installment, even if it means parking in short-term cash vehicles and paying a little tax for the balance of the calendar year.

Brighter Life discusses how you can pay yourself from your retirement savings when you retire. Some of the options are annuities, registered retirement income funds, and payments from several kinds of locked-in accounts holding funds transferred from locked-in company pension plans.

And Jim Yih on retirehappy.ca reminds us that one area of tax planning that does not receive enough attention is the designation of beneficiaries when it comes to Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs).

When you open up an RRSP or RRIF, you are opening up a special contract under the Income Tax Act, which allows you to designate one or more beneficiaries. Far too often, this is done too casually and without enough thought. More importantly, as your circumstances change, like marriage, divorce or children, you should consider reviewing your beneficiaries to make sure you have the right people designated.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere. Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.


Oct 21: Best from the blogosphere

October 21, 2013

By Sheryl Smolkin

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Over the last year the blogs at savewithspp.com have focused on ways you can spend less and save more. By paying yourself first and allocating a fixed amount to savings each month, you can put your savings plan on autopilot. Here are some additional ideas from some of our favourite bloggers.

Before you start socking away your savings, most financial advisors will tell you to set aside a three to 12-month emergency fund. Tom Drake on Canadianfinanceblog.com discusses why an emergency fund really matters and how to build one.

In Where to find your savings Gail Vaz-Oxlade says nickel and dime-ing is really worth it. If you save $5 a day 20 days a month and put the money in your retirement plan earning 7% on average, in 20 years you will have $55,000. That’s got to be worth $5 a day, and a little time to find it!

Robb Engen on boomer& echo identifies lifestyle enhancers such as cable television, shopping at Costco, paying for a housecleaner and children’s activities as potential budget busters he is keeping a close eye on.

It’s fine to cut corners, but if you think the Fraser Institute got it wrong in a report that says you can raise a child for $3,000/year, you are not alone. Squawkfox blogger Kerry K. Taylor explains why daycare, accommodation and transportation costs have to be factored in to get a true picture.

Finally, Thanksgiving may be over for another year, but Canadians have much to be thankful for every day. Check out Kevin Press’ Brighter Life blog that summarizes findings of an OECD online report that outlines seven reasons to love living in this country.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere. Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.


Apr 22: Best from the blogosphere

April 22, 2013

By Sheryl Smolkin

blogospheregraphic

This week our favourite bloggers have been writing about getting ready for retirement.

On Boomer and Echo, Boomer asks Have You Made Your Retirement Plans? — not only saving enough money, but deciding where you plan to live and how you will fill your time.

However, for RetiredSyd, retirement is a already full-time job. She is thrilled to finally be learning to play the piano and improvising retirement as she goes along.

Canadian Finance blogger Tom Drake de-mystifies Locked in Retirement Accounts.

RetireHappy gives you the facts so you can decide whether an annuity is right for you.

And on Brighter Life retiree Dave Dineen realizes he and his wife have 27 bank, investment, credit, and insurance accounts, so it may be time to shut a few down.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?”  Send us an email with the information to so*********@sa*********.com and your name will be entered in a quarterly draw for a gift card.


Feb 4: Best from the blogosphere

February 4, 2013

By Sheryl Smolkin

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With RRSP season in full swing, you may be reviewing your budget projections to ensure you are saving enough for retirement. But are you factoring in the future cost of health care?

In Planning for health care in retirement, a guest post on Retire Happy, Sun Life Financial AVP Kevin Press suggests that some combination of disability insurance, critical illness insurance and long-term care insurance can help fill the post-retirement health care gap.

Understanding your family’s life insurance needs is another important element of financial planning. The blog Riscario Insider links to a LIMRA Quizz which you can take to test your life insurance literacy.

And if maxing your Sask Pension Plan and RRSP contributions are top of mind this month, tax season can’t be far behind. In Canadian Finance, blogger Tom Drake explores the mysteries of pension income-splitting, while in Boomer and Echo, Robb Engen discusses tax considerations for single income households.

Finally, if you’ve decided that this is the year you will finally buy a smartphone or trade your old one in for a newer model, on Engadget, Tom Stevens explains and evaluates the new features found in the BB10 which was released with great hoopla this week.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?”  Send us an email with the information to so*********@sa*********.com and your name will be entered in a quarterly draw for a gift card.