Do you see your Mortgage as a Debt?

According to a recent survey by Manulife Bank 68% of homeowners in their twenties don’t include their mortgage when they calculate their debt.  This compares to 60% of those in their 30s, 48% of forty year olds and 29% of those in their fifties.

These finding may be the result of where people are focusing their attention, younger people carry more consumer debt (credit cards) while older people have already tackled their consumer debt and are focused on paying off their mortgage. 

While Canadians feel that debt is a normal part of life; 38% believe they will have a more difficult time becoming debt free than their parents did.   This compares to 23% who believe it will be easier for them to pay off their debt than it was for their parents.

Furthermore, many people feel more comfortable than their parents carrying debt and discussing it with their spouse.  The survey also finds that how our parents feel about debt has a significant impact on how we manage our own finances.  If fact, of those that say their parents talked to them about debt management 67% feel they are in good or great shape.  This compares to those that didn’t discuss debt; only 34% feel like they are in good or great shape.

Putting generational differences aside, the desire to become debt free is consistent among all age groups.  Nearly 80% of all homeowners surveyed said that becoming debt free is one of their top financial priorities.

Tips to Reduce Your Debt

• Take the emotion out of your personal finances and run your household like a business, make it profitable.
• Use your debt as a financial tool, restructure it to free up dollars that can go towards other financial goals.
• Actively manage and pay attention to your money.  You can’t get the best out of your finances if you don’t know where your cash is going.
• Unify your debt and reduce the number of credit sources you have.
• Set a debt freedom goal date
• Implement a Cash Flow Plan

As many of you may already know I have recently upgraded my skills to include Certified Cash Flow Specialist, with this new skill set I can help you pay off your debts years sooner and free up cash flow to fund your other financial goals.

Please don’t hesitate to contact me to get started.

Have a great weekend,

Tracey

Source:  Manulife Bank

2nd Quarter Market Update

After a hesitant start to 2014, positive trends in the global economy helped to push both equity and bond prices higher in the second quarter of the year, and the Canadian dollar rose in value relative to its U.S. counterpart.

Canadian equities as measured by the S&P/TSX Composite Index reached a new high in mid-June, breaking the previous record set in June 2008. After lagging other regions throughout the global economic recovery, Canada has become one of the world’s best-performing major markets in 2014, returning 6.4% for the second quarter and nearly 13% for the year-to-date, including dividends. Canadian stocks benefited from higher prices for natural resources, particularly energy, lifted by the conflicts in Ukraine and Iraq and improving economic data from China. Banks and other financial services companies also posted strong results.

Other global capital markets were also broadly positive for the quarter. In the U.S., the S&P 500 Index followed its muted first quarter performance with a healthy second quarter gain of 5.2% (or 1.6% when expressed in Canadian dollars), and it also reached a new high in mid-June. European markets continued to make gains during the second quarter and most indexes in Asia also advanced in local currency terms, although results for the first half of the year remained mixed. The MSCI World Index rose 5%, or 1.5% in Canadian dollar terms.

Central banks around the world maintained their cautious tone, keeping monetary policy highly accommodative to growth. Global interest rates remained largely unchanged – or in the case of the Eurozone, were slightly lower – allowing government bond prices to drift upward. The FTSE TMX Canada Universe Bond Index, a measure of Canadian government and investment-grade corporate bonds, added nearly 2% for the quarter. The increase in the Canadian dollar, meanwhile, reflected the economy’s perceived strength, as well as higher resource prices.

Markets have made strong gains in recent years, and the global economy’s modest expansion continues to support a positive outlook for equities as we enter the second half of 2014. The volatility that characterized most of the recovery has subsided for the time being, and many of the risks that have threatened growth, including Europe’s debt struggles and the slowdown in China, have also faded. Nevertheless, I continue to believe that a well-diversified portfolio that is tailored to your individual objectives and risk tolerance is prudent. This diversification will help to maximize returns for your portfolio, while mitigating risks as they occur, including the possibility of rising interest rates.

As always, if you would like to discuss your investment portfolio, or any other wealth management issue, please do not hesitate to contact me.

Have a great weekend,

Tracey

Source:  The information in this letter is derived from various sources, including CI Investments, Signature Global Asset Management, Bloomberg, Globe and Mail, National Post, and Trading Economics. Index information was provided by TD Newcrest and PC Bond. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances.

Planning a Staycation this year?

Elaborate vacations can be expensive, this year you and the family might decide to say close to home and re-discover the local attractions.

Along with being more affordable, staycations are easier to plan and can be less stressful.  You can visit local festivals and then check out the new trendy restaurant everyone is talking about.  

Here are some helpful tips to make your staycation a success:

• Create a vacation budget like any other holiday; this will help you control your spending
• Pick specific dates and book the time off, it is not a holiday if you are still checking your email
• Pretend you’re a tourist; do some research and find out what activities are going on in your area
• Spend at least one day relaxing in a nearby park or beside the lake
• If you enjoy learning, schedule that class you have been meaning to take, learn a new skill whether it be dancing, cooking or singing
• Even though you will home at night, don’t announce your vacation plans on Facebook, daytime robberies are on the rise
• Make sure to take lots of pictures!  It is still your holiday

Taking a holiday is something we should all do because it helps us relax and get away from the day-to-day grind.  One key element to a successful vacation is not to create additional debt; you can achieve this by planning ahead.

Steps to Saving for a Vacation

Open a separate vacation account – figure out how much you want to spend on your vacation, divide that number by 12 and transfer that amount into your vacation fund every month.  It allows you to watch your money grow and eliminates the desire to spend the money on other things.

Stick to your budget – There is nothing worse than coming home from a great holiday to a huge credit card bill, know in advance how much you are going to spend – and stick to it.

Tax Refunds and Work Bonuses – put half of these amounts towards your financial goals, but put the other half towards something fun – like your vacation account.

Spending Diet – One week per month try and spend as little as possible on the things you don’t need, add up those savings and put them towards your next vacation.  

Go ahead, take a week off, you deserve it.  Besides it’s finally summer.

Have a great weekend,

Tracey

Source:  Advisor.ca original articles posted 06-23-14 and 02-14-13 by staff