Tips to Painlessly Having Your Best Year Ever

General Pam Pikkert 25 Jan

Tips to Painlessly Have Your Best Financial Year Ever

                Welcome to 2016!   We have all had a few weeks to settle in now and get back to reality and as always getting our finances in order is at the top of mind for many of us.  This week we are going to look at a few tricks to help you navigate this as easily as possible.

  1. Do you feel bogged down by the little payments?  Consider refinancing your home to include all the little payments such as credit cards and smaller loans.  Your overall monthly payment obligations can drop dramatically which in turn frees up your cash for your TFSA or other savings vessels.
  2. Consider changing your payment frequency on your mortgage.  Going from a biweekly payment to a biweekly accelerated will save you 2.4 years off your mortgage and thousands of dollars in interest.  Failing that, consider the power of adding even $25 extra to each mortgage payment.  In a year that is $300 if applied monthly which is $1500 over 5 years which cuts your mortgage down by 3 months way down the road.  Small changes really add up.
  3. Saving money is a discipline which is not contingent upon your level of income.  If only the very wealthy could afford to save then you would never hear of NBA players going bankrupt.  I have seen clients making minimum wage with investment portfolios which greatly exceed those earning six figures a year.  So all that being said, find yourself a professional financial planner and set a monthly automatic withdrawal.  It’s way easier to save when it does not feel like a horrible and painful choice.
  4. Call your credit card companies and get the best card you can.  The annual fees on some cards can be quite high so you need to ensure you actually need the ‘perks’ the card gives you.  If you carry a balance then you should make sure to ask for the lowest rate available.   The difference between 19.99% and 12.99% adds up really quickly.   While you have them on the phone and are negotiating like a boss for the best card possible, opt out of paper statements.   Most companies charge you $2.00/month and it’s a nice little step you can take for the environment.
  5. Get realistic with your spending.  There is a terrific app brought to you by the makers of Quick Tax called  You enter you banking and credit card info into this very secure and very free site and every time you make a purchase this app tracks it and allocates it to the proper category such as food etc.  You can set a budget for every part of your life and receive notifications when you are nearing the limit you have set.  It can be very eye opening to come face to face with your spending reality
  6. It’s a great idea annually to make sure your will is up to date.   Life changes quickly and the last thing you want to deal with during this time is an incorrect will.
  7. Another item for annual review is your insurance.  Do you have enough or too much coverage?  Are the beneficiaries reflecting correctly?  Are your homeowners and auto policies up to date and give you the coverage you want? One hour a year should be enough to give you piece of mind.
  8. And finally, where could you save even more?  Is your bank offering a better all-inclusive plan to cut down on monthly fees?  If not then maybe it’s time to look at your options.  $25 a month per account really adds up.  Is your cable cost efficient? Your cell phone provider remaining competitive?  Are you opting for paperless statements to avoid unnecessary fees? If you saved even $50 between all of the above that my friends adds up to $600 a year which you could put right against your mortgage in fact!

And there you have it, some pain free ways to keep your money.  I mean it is your money after all.   Have a great week!

What did 2015 mean to the Mortgage World?

General Pam Pikkert 4 Jan

What did 2015 Mean to the Mortgage World?

Happy New Year!  It’s always a little bit hard to believe just how fast the old year actually passes but here we are again and before we move forward it is probably a great idea to take a quick look at 2015 to see how it will impact the year ahead. 2015 was the year of change

                The first impact to the mortgage world has been the severe decrease in the price of oil.  It is no secret that here in Alberta the economy is very reliant on the oil and gas sector.   The price decrease has had a huge impact on the income of many.  This translates to lenders increasing their due diligence on all applications from anyone in these fields.  Mortgage lenders and insurers like CMHC require a 2 year history on all overtime and bonus income which are both very common across this type of employment.  We have seen some lenders decrease the amount of overtime they will allow.  Other lenders have increased their down payment requirements. While others still will not proceed without verification of increased overall savings and little to no balances on credit facilities. If you work in these fields then you should prepare yourselves for a higher level of scrutiny.

                The second change with implications still not fully known was the complete change to the provincial and federal governments.   During these early days it is hard to say exactly the impact will be but given the some of the current proposals on the table it is likely.  Already we have seen a proposals such as a Carbon Tax, Royalty Review, and an increase to corporate taxation.  Seems like we will have to wait and see how things unfold.

                The third and final change was recently announced and was made by the federal government in regards to the minimum down payment on homes over $500,000.  You may be wondering why the government is involved in such things and there is a really easy answer to that.  All mortgages with less than 20% down have to be insured through CMHC, Genworth or CG.  Through these agencies the federal government guarantees these mortgages in case of borrower default.  That means they are now financially invested in the housing market.  The down payment change means that anyone purchasing must have 5% to put down on the first $500,000 and 10% on any amount over that.  For example. A home worth $650,000 previously could be purchased with $32,500 down but under the new guidelines must have $25,000 for the first portion and additional $15,000 for the balance or $40,000.  The rational is that anyone purchasing a home of this value should be able to put a bit more down which helps mitigate the overall risk.

                And so what does this all mean.  Despite the doom and gloom reported daily in the media it is important to remember the sky is not falling.  We have weathered this type of an economic downturn in Alberta before and come through just fine.  Rates are still historically low making it an ideal time for first time home buyers and investors looking to expand their rental portfolios.  Homes which are priced well are still selling albeit more slowly.  Builders proceeded much more cautiously after 2009 which means they are not carrying a huge inventory of homes.   We are Albertans folks, we are tough, and we will get through this as well.