Using your home as a piggy bank – Tap the equity you’ve accumulated and get tax breaks

With the increase in the debt obligations in the nation, there is an increasingly large number of people who are desperately looking for ways to make ends meet. Due to the lack of people who can don a stellar credit rating, the chances of grabbing unsecured loans at high interest rates are gradually becoming fainter. But does that mean that it is impossible for all those debtors with a tarnished credit score to get a consolidation loan? Certainly not! If you’re someone who owns a home and has accumulated enough equity in your home, you needn’t worry as you can tap the equity in your home and take out a secured debt consolidation loan through which you can easily combine your debts into single monthly payment. Check out the concerns of this article to know more on home equity loans.

What are home equity loans or lines of credit?

If you’re not aware of the meaning of the word “equity”, you should know that it is the difference between the value of the property and the amount that you owe your home mortgage lender. Both home equity loans and home equity lines of credit allows you to borrow a lump sum amount against the equity that you’ve accumulated in your home to make some kind of discretionary purchases and even to repay debt. While incurring additional debt, you need not worry as you have the option of taking out a home equity loan.

Using a home equity loan to combine your unsecured credit card debts

Although home equity loans carry typically high interest rates than the first mortgage loans, they undoubtedly carry lower rates than the unsecured lines of credit. If you wish to combine your unsecured debts through a secured home equity loan, here are the benefits that you should consider.

  • The interest rates help you save money: When you’re already drowning in unsecured credit card debt, you must be looking for ways in which you can repay debt and also save your dollars. The home equity loan carries interest rates that are way lower than what you would have to pay on an unsecured loan and therefore this process of merging your debts will offer you a win-win situation.
  • The repayment term is long enough: As the home equity loan is a secured loan and involves a huge amount, the repayment term is usually longer. With a longer repayment term, the monthly payments become manageable as you can spread your payments throughout a longer period of time.
  • The tax breaks: Is a home equity loan tax deductible? Well, the answer is Yes. In fact the biggest benefit of merging your unsecured debts through a home equity loan is that you get tax breaks. The interest rate that you pay on the home equity loan are tax-deductible and hence you can get tax benefits through this option.

A deeper view into the tax-saving feature of a home equity loan

A nice feature about home equity loans mentioned above is that the homeowners can get a tax deduction for the interest rates that they pay on the mortgage. The taxpayers are supposed to claim a deduction on the interest rate paid on a loan that has been secured by their first or second home. Although most of the home equity loans fall into this same category, the borrowers might get confused when they have more than one “Second homes” in excess of the value of the home.

So, this goes without saying that the advantage of using a home equity loan is that you simply save your dollars. If you use your HEL for a debt consolidation program and your interest rates become tax-deductible, isn’t that a huge savings? If you’re going through such a situation, get in touch with your lender and get a home equity loan to avail the above mentioned benefits.

Fixing Your Tax Return After It’s Been Filed

As humans, we are all prone to mistakes. You never know what is going to come up to prevent you from filling something in properly or from missing out a document you needed to complete. There are so many different aspects that you can forget in a given day, everyone does it and it just part of who we are. However, sometimes these mistakes occur when you file your tax return. This often leads to larger problems with the government, but it can also mean you are missing out on financial income that you should be receiving. Because of this, if you notice there is an issue with your tax return and you want to correct it, you can file a new return after you have already file the previous return. In order to do this though you just need to know what to look for and what is going to work out for you. This way, it is going to work out in your advantage and you can receive the money you are properly owed.

When it comes to filing a tax return after you have already filed the original one you can either go about doing it yourself or you can pay a professional to do it for you. If you just don’t have the time or want to deal with it at all it is possible to pay someone else to file the documentation. You just need to bring in your paperwork and the adjusted information and the professionals are able to handle it for you. Just make sure to know how much it costs and what you’ll be receiving in return, because you don’t want to end up paying more money to the company than what you’d actually make in return from the altered tax filing.

If you want to perform the filing yourself you need to make sure and obtain not only the corrected information, but also the paperwork that signals an alteration and correction towards your original tax return. You can obtain this online through an easy download and you really just need to fill out the information, which should take no more than a few minutes. With everything corrected you just need to mail it out and, without a few weeks or so, you should receive the corrected information. It might take a little bit longer, depending on the time of year you send it, so just make sure to watch your mailbox.

Home Business Expense: Deduct From Your Earning To Reduce Tax


When you are owning a home business, you are incurring some expenses against it. It is a good idea to maintain proper record of your business transactions through out the year. You can take help of various financial and bookkeeping softwares for this purpose. While filing your income tax return at the end of the financial year, deduct the business related expenses from the taxable income and enjoy tax benefit. These expenses are to be entered in form T2125, Part 5. The only word of caution here is that you should have back up documents to prove, if required by CRA, that the expenses are incurred for your business only.

Now let us discuss some expenses that are eligible for deduction in home business. In most cases, you need internet service to run your business. You can claim this cost as business expense. When you become member of a professional organization to run your business, you can claim the fee amount that you pay. Advertisement, office stationaries and postage expenses are also deductible. The travel expenses and expenses against business entertainment are eligible for tax deduction. All business related payments and bank expenses can be subtracted from your income. Sometimes you can even claim expenses incurred for usage of your residence for carrying out the business. In any of the above cases, if you are spending some percentage of your total bill for your business, claim tax benefit for that percentage only.


Tips to Control Spending after Retirement

People who are very careful with their money save enough bucks to live a comfortable life after retirement. Saving while working is not very difficult but it becomes extremely difficult after retirement. Even if you have saved up enough money for your life after retirement, your old age will be miserable if you squander the money. To make your life comfortable after retirement and to make your savings last as long as you live, try to follow the following tips:

Plan Your Budget in Advance 

Preparing a budget and sticking very strictly to it is essential to have control over spending. You may think that you have plenty of money saved up but if you are lavish in your spending, whatever money is there in your account will vanish faster than you imagined. It doesn’t mean that you should cut back on your necessities. Just calculate how much you can afford to spend. Think of your old age and your expenses on medical care.

Avail Discounts Allowed for the Aged

Aged people are allowed discounts almost everywhere and you should ask for them if they are not offered to you. By availing these discounts, you can curtail your spending in your old age.

Invest Your Money in Income Generating Assets

Whenever you spend money, think whether your spending will generate income or the money will become dead. Rather than buying luxury items, buy things which will give you a decent return on your investment.

Take Up a Job

If you are physically fit, why not work either full time or part time? Working after retirement helps you to stay fit, earn some money and be in touch with the field which you are proficient in.

Stop Paying Your Insurance Premiums

By the time you retire from service, your children will have grown up and you will have saved up sufficient money to pull on your life in your old age. Your needs and the needs of your family are very limited now and you can easily go forward without the assurance from the insurance company. Why should you, then, continue to have life insurance and pay the heavy insurance premiums?


Tips On Saving For A College Fund


So you’re a parent of a teen, and you need tips and strategies to begin a saving plan to send them to college or university. The first thing a parent must do when it comes to saving for a teen’s college fund is start early. There is no better time to start, than when they are born. As soon as you give birth to your child, it’s time to start saving, preferably through a Registered Education Savings Plan (RESP). Saving for college early is a great way to relieve a little of the stress that saving for college can do to a parent. Something else to keep in mind when it comes to saving money is to simply ask for contributions. For instance, instead of having grandma and grandpa buy you a new bike for your birthday or for Christmas, talk to them about contributing to your college fund. Your child can even raise the money him or herself by working odd jobs, like delivering newspaper or selling baked goods. The amount of ways you can put money towards college is endless. Once a child is at the age of being ready for college, parents play a huge part in financial advice and assistance. Never forget your role as a parent when it’s time for a child to make there entrance to college, because you are your child’s biggest supporter.

Cut Mortgage Costs with Simple Tricks

With the extreme benefits that come with owning property, many desire to buy homes. But, those who are not rolling in money will most likely need to take out a mortgage, and as you likely know, mortgages can be costly. To pay off a loan in an efficient manner, there are various tips and tricks that can be followed. These can be broken down into seven primary groups: keeping a stable cashflow, using shorter amortization times, buying a smaller house, accelerated payments, shopping for good mortgages, buying a house that is a good long term decision, and making prepayments.

Having a stable cashflow is critical, as without it your payments may not be made on time. An unexpected dip in income or an emergency expense can send you scrambling, often having to make the choice between paying your mortgage bank a late fee plus overdue interest or taking out a payday loan and paying the high premiums associated with that form of debt.

Interest rates have a significant impact on cost of property over time. Because of this, cutting several years off of the time that it will take to pay the mortgage will significantly reduce the cost of the home in the long term, generally by thousands of dollars.

Buying a smaller house may also help with cutting costs. Space that is not going to be used is just costing you money. Adding these savings not only saves on the principle, but also saves on the cost of interest.

Another way to fight interest rates is through accelerated payments such as those offered by RBC Royal Bank. By paying twice a month rather than once per month, interest cannot build as fast, since interest is based on the principle, which is reducing more quickly. Every bank’s policies are different, so check with your lender for details.

While it may seem obvious, some mortgages are better than others. For a significant purchase such as a house, spending slightly longer to find a good mortgage will be worth it in the long term.

In addition to considering the cost of the mortgage, also consider whether the product is something that should be purchased in the first place. If you do not live in a house for a significant amount of time, you are likely going to be losing money on your mortgage.

Finally, make prepayments on your mortgage. Spending more than you are required to spend now will save you significant money in interest, and will get the mortgage paid sooner.

Following the above six tips will allow any homeowner to knock both time and money off of a mortgage, allowing money to be saved for other needs and wants.

Law students only do poorly because of cognitive bias


Many people believe that law school is a “scam” due to the fact that only around fifty-five percent of law school graduates had a job that required their degree after a few months. This means that around half went to law school for no discernible reason. However, the real reason that most people do bad at law school is due to cognitive bias.  Everyone believes that college is a magic bill that will make them a great lawyer, but this is most surely not the case. For instance, schools that tend to attract worse law students, such as the Whittier College of Law, have higher unemployment rates than more esteemed, expensive colleges like Columbia. The thing to take away from all this is that many law graduates have unimpressive test scores and GPA’s and have very little passion. People tend to have a strong cognitive bias towards themselves, believing that they are incredibly attractive or intelligent when this may not be the case in reality. Law students need to seriously consider whether or not they have the drive to be a lawyer, as no matter how much schooling someone with no drive gets, zero multiplied by zero is still zero.

Four ways low interest rates affect you

The Bank of Canada has been promising lower interest rates for a while, but again it disappoints. There are four reasons that you need to be wary of the current interest rates:

First, the lower interest rates are going to cause investors to not be able to get good returns on their safe investments. If you have investments in them, you cannot expect to get better returns for quite a while thanks to the enormous hesitation to increase interest rates.

Second, you now need to save more money for your retirement, because thanks to having less returns on your investments, you will not have as much money in the future. Even your pension might be affected, as defined-benefit pensions will not be able to meet their obligations thanks to all of the uncertainty out there.

Third, those who are heavily in debt have the risk of losing their jobs due to low interest rates, which are really just signs of global softness.

Finally, the housing market is continually at risk, with fewer people able to afford housing even though interest rates are low.

Interest rates will likely remain low well into 2013, maybe increasing by only one percentage point, so these problems will remain.

Canadians still have a long way to go on their mortgages


The Bank of Montreal reported today that the average Canadian has about fifteen years left on their mortgage. Twelve to twenty percent of Canadians, depending on the province that they live in, have more than twenty-five years to go on their mortgages. This is all on the heels of new government regulation that are supposed to lower demand and prices on home mortgages. These new regulations will decrease the refinancing limit on houses to 80% of home equity while limiting the amount of help that the federal government can make available for insurance from the Canadian federal government to home owners. The senior economist of the Bank of Montreal estimates that the prices of homes will need to fall an average of three percent in order to neutralize the impact of amortization rule changes on mortgage payments. It is his hope, and the hope of many others in the industry, that these new rules will help th real estate market landing softly back on its feet rather than hardly and dramatically. The study goes on to say that Canadians made larger payments than they had to and some even paid lump sumps on their houses. Unfortunately, twenty four percent of those surveyed could not afford to do so.

The finances of Canadians are mostly on the right track


The finances have Canadians are definitely on the right track as we look back at them on this Canada Day weekend. While some areas have improved, others have gotten worse. On the positive side, the net worth of Canadians has continued its rise, as have real estate gains and the Toronto Stock Exchange. The Canadian dollar is also increasing in value against the Euro and US Dollar. Canadians may have one of the lowest savings rates of OECD countries, but they still have less debt than most others, so this may account for the lessened need to save. Even the Canadian federal government is doing well, with continued surpluses while other countries, like the United States, have huge deficits. In fact, the Canadian government has continued to post budget surpluses of 1% since the 1990’s. One slightly negative thing is that the appreciation of the Canadian dollar has led to worsened stock market returns from the United States, but the Canadian economy or Canadian dollar cannot really be blamed for this. All in all, Canadians are doing better with their finances on average than those in many other nations, and Canadians all have something to be proud of this Canada Day weekend.