Lines of Credit

We have been offered a $10,000 line of credit with the Bank of Montreal because of our good history with our auto loan and credit card that we have with them.  They are offering us a really reasonable rate (less than 4%), no credit check and it would be unsecured.



We're very interested because of the work were planning to do on the back yard this year, we were planning on having to use the credit card a bit as we saved up money (we won't have the $10,000 for the yard technically until December, 2013 so were planning on using the CC and then paying it off as we saved the $$).



A line of credit with such a low interest rate would seriously help with the interest for next year's back yard project.



....what are your thoughts?

Updated Tracking Bars

All the tracking bars are updated with the 2013 goals and current balances!



Question - does anyone get a Christmas or annual bonus/profit share this time of year?  If you do, how do you manage where it gets allocated?

Credit Card Update

Today I just wanted to share a quick credit card update.

Jordan and I are still on track to get the card paid off by the end of December!!  

2013 Plan

Last week Jordan and I went out for a budget date - Vietnamese soup - so it was an inexpensive budget date.  I really like saving for everything at the same - money going into each 'pot' each week, so that you can see the progressive growth overtime.  Jordan likes aggressively tackling one goal at a time.



Such is life, we compromised.



We are going to continue to make weekly RRSP contributions, while we aggressively tackle one (other) goal at a time.



Here's the breakdown of our goals:

We're going to save for each of these goals in order - it was easy for Jordan and I to agree that our emergency fund was the number one priority and the past $1,000 we maintained was simply not enough.   Following that is our Vehicle Maintenance/Emergency Fund - we're planning on buy a second set of rims in the summer when we switch our tires back from winters to all seasons.  That will save us about $200/annually on switching and will extend the life of the tires/rims all around.



Our camping/vacation fund is seriously lacking this year.  Under some protest (by me), we decided that we just can't have it all - and trying gets us into trouble.  So we won't be going on our two annual week long camping trips this year.  Instead, we'll hopefully have some long weekends and staycations.



Next are our gift and Christmas funds that Jordan wanted to separate - we never save enough for these, and want to do better this year.



We will reach the first 5 goals by the end of May.

Check out the 2013 Budget Page to see the budget breakdown.



Last for 2013 is the House fund - and all remaining cash flow will go into that account.  We are going to be building a fence, installing the grass, building a dog run and a deck - and biggest of all - a garage.  Within our current budget, we'll save about $10,000 - so we have to find ways to come up with another $5,000.  We've got some ideas for that - but I'll share those in another post.



the baby fund

is on hold.



I had a look at our baby budgets again after considering Jordan's raise, and we can actually now survive without additional savings or income with Jordan's salary and me on EI.   There wouldn't be extra's - but it can be done.  So, that's on hold.  Getting the yard done is the last big thing that Jordan wants to do before we start a family - and so I really want to support us getting that done so we can start our family together with both of us feeling strong and confident about the decision.

Loss

Yesterday morning, our family dog of the last 14 years passed away peacefully.

My mom let my brother and I know straight away and it was so very difficult for us to all be in different cities - provinces too actually.  I'll be going back home in three weeks to visit - and it really just seems so far away.



There has been so much loss, heart ache and upheaval this past year.  My heart needs time to heal before I can manage any more life challenges.  My family needs time to heal.

a Pleasant Surprise

Never have I, nor has Jordan, experienced what we did this past Friday.



I mentioned in my last post that we knew the second part of his raise had finally been approved albeit six weeks late.   We weren't actually expecting it to be processed so fast - but it was - but the real surprise is how much it was.



I pride myself on being able to run the numbers and figure out within about 10 cents what our net will be when we get a raise - and I was off by quite a bit.  When I got to my spreadsheets I realized that Jordan didn't get a raise to $50,000 he got a raise to $51,600.



He's salaried - but for hourly folks that's a difference of $24.04/hour vs $24.81/hour.



Gross Monthly it's a difference of $166/month vs $300/month.



At the end of the day Jordan will take home an extra $33.63/pay or $874.38 over the course of the year.

CPP FINED BUT BANKS IN THE FRAME

When I appear on BBC Breakfast I write a cue and notes of what I am going to say. I never read it but it is a useful aide memoire for me. And where there are allegations it ensures I get them right and am fair and balanced.

This morning my spot on BBC Breakfast was stood down for some breaking news. These things happen. But here are the script and notes I wrote about CPP and its mis-sold insurance products.

CUE: A firm which sold millions of people insurance against ID theft and loss of their bank cards has been fined more than £10 million by the financial regulator and told to pay compensation to customers.

CUE: The Financial Services Authority revealed that CPP had told customers untruths and misled them while selling the insurance, which was unlikely to pay out in any normal circumstances. Paul Lewis is in our London studio

Q: What did CPP sell and why was it mis-sold?

PAUL: Two products were mis-sold. What CPP called card protection plans which were supposed to pay out if you had money stolen from your account – but of course if you do the banks pay out in almost all circumstances so the insurance was generally useless. The FSA revealed CPP charged around £35 a year for it but the product cost it just 60p. The other was ID theft insurance. It was more expensive at £84 a year but it cost CPP just £16. Both products were mis-sold by sales staff who, to put it bluntly, lied. They used false statistics, made misleading claims, exaggerated the value of the insurance – which as I said would almost never pay out – and they gave advice which in the later years they were banned from doing. Their contracts also contained unfair terms.

Q: How did it manage to sell so much?

PAUL: Altogether it sold more than £840m of new and renewed business to 4.4 million people between 2005 and 2011. CPP sold about 10% of its products directly. But the bulk of them – about 4 million new policies – were sold as a result of a partnership with four High Street banks – Barclays, RBS, Santander, and HSBC. In some cases the bank put a phone number on newly issued cards with the instruction to call it to ‘activate’ the card. In fact you got straight through to a CPP sales person. So some banks at the least colluded in this mis-selling to 4 million people.

Q: And have the banks also been censured?

PAUL: No. Not yet. I understand the FSA is in discussions with the banks and other CPP partners. CPP has been fined £10.5m for direct sales and is expected to pay out £14.5m compensation. But ten times as many policies were sold through the banks – so will the fines and compensation be ten times as big? We won’t know that for some time. But it is more bad news for the reputation of those banks.

Q: What compensation will customers get?

PAUL: Anyone mis-sold these products – and the FSA report makes it clear that was widespread, so it may be most or almost all of those with them – will get their premiums refunded plus interest. CPP has been banned from selling these products – in fact its whole website is down at the moment – but those who have them are allowed to renew. Anyone who is offered a renewal should think very carefully about whether it is good value for money. And should prepare to make a claim for compensation when the scheme is announced in the New Year.

Q: What does the company say?

PAUL: In a long statement it apologised, said this was all in the past, it would pay the penalties, and move on to a better future.

You can call CPP in office hours free from a landline on 0808 156 0199

Richard Fisher: Fed Won't Catch Markets If US Falls Off "Cliff"

Senator Kyl Sees Higher Revenues Without a Tax Hike

A federal budget deal to avoid the fiscal cliff can be achieved without

raising tax rates, Senate Minority Whip Jon Kyl said Friday on the Kudlow

Report.

“Tax revenues can be generated by two ways other than raising tax rates,” he said. “One is to eliminate some of the deductions, credits, exemptions, special provisions in the code that end up producing more revenue but without affecting the rates. And the other is through economic growth.”

The senator from Arizona said he thought it likely a deal could be struck to avoid the so-called “fiscal cliff,” a deadline by which the lack of a federal budget would result in the expiration of the Bush tax cuts and trigger automatic spending cuts.

Kyl sees additional revenues as the key.

“If we can focus, not on tax rates, but to give the president something that he

wants, more tax revenues, as I said, there are ways to get more tax

revenues,” he said. “Either through and/or producing more wealth as a

country, thus resulting in more taxes paid to the government.”

The Republican senator also took issue with the recommendations of the

special committee co-chaired by former Sen. Alan Simpson, R-Wyo., and

former Clinton White House Chief of Staff Erskine Bowles.

“Simpson-Bowles is not a good template here because it sets up a contest

between lowering marginal tax rates and raising the business taxes, that is to

say, dividends, capital gains and the estate tax,” he said. “Simpson-Bowles

in effect says, you can have lower rates on one side or another, but not both.

That’s not good.” 

CHILD BENEFIT HIGH INCOME CHARGE

UPDATED 9 JANUARY 2013

If you get child benefit and you or your partner has an income over £50,000 a year some or all of your child benefit will be taken back in extra tax. It is called the Child Benefit High Income Charge.

The rules are complicated and may seem illogical.

The Charge
The charge began on 7 January 2013. No-one has their child benefit itself taken away. Instead the partner with the higher income pays an extra tax charge. If their income in a tax year is £60,000 or more the tax charge will equal the child benefit. For a household with three children child benefit is worth £2449.20 a year. So the extra tax will also be £2449.20. It will be collected through self-assessment. If you do not already fill in a self-assessment form you will have to in future. The Revenue now estimates that 300,000 more people will have to fill in a self-assessment form as a result of the charge.

If the partner with the higher income gets between £50,000 and £60,000 a year the tax charge is less than the child benefit. It will be 1% of the CB for every £100 by which income exceeds £50,000. So if income is £55,000 the tax charge is 50% of the CB. For a household with three children that would be £1224.60

The charge is assessed on the partner with the higher income. If one partner has an income of £60,000 and the other partner has no income then the full tax charge will be made and every penny of the Child Benefit will be taken back in tax. On the other hand if both partners have an income of £50,000 no charge is made even though their household income is £100,000.

The charge began on 7 January 2013. If it applies to you then you will need to inform HMRC by 5 October 2013 and register for online self-assessment and submit your form online by 31 January 2014. It will be charged pro rata for the three months of the tax year 2012/13. If you are en employee and the total amount due under self-assessment is £3000 or less then it can be paid through your tax code. The charge itself will be more than £3000 if you have four children or more.

HMRC estimates that 1.1 million people will have to pay the charge. It identified about 800,000 of them and wrote them a letter explaining the charge before it began. HMRC failed to find the other 300,000. If you did not get a letter but believe the charge may apply to you, then you must contact HMRC by 5 October 2013.

Cohabitation
If someone who gets CB lives alone then it is their income which is assessed. If they live with another person as husband and wife or as civil partners the partner with the higher income is assessed and – if their individual income is more than £50,000 – charged. It does not matter whether two people are married or in a legal civil partnership. If they live as if they were then they are counted as partners. And it does not matter whose children the child benefit is paid for.

This rule can lead to anomalies when relationships begin and end.

• Amanda Smith is divorced and has two children. She earns £35,000 a year and gets £1752.40 a year in child benefit. Her income is below £50,000 so the tax charge does not apply to her. She meets Charles Wright. After a few months they start living together. He earns £60,000 and has to inform HMRC and pay the extra tax charge of £1752.40 even though the children are not his and he contributes nothing to their upkeep. On the other hand their biological father James Smith, who earns £95,000 a year, pays no extra tax.

The rules about living together are the same as those used for tax credits. If two people have a relationship but have two separate homes HMRC can still decide they are living together as partners.

Marginal tax rates £50,000 to £60,000
A person liable to the charge whose income is between £50,000 and £60,000 faces very high rates of tax on each extra pound they earn. They pay income tax at 40%, National Insurance at 2%, and then the  child benefit charge. If there are three children that charge is 24.5%. That means for every extra £100 they lose two thirds of it to tax and keep just £33.50. If they have a student loan and pay the graduate tax of 9% they will keep less than a quarter of any extra earnings, losing £75.50 of every £100 to tax.

The more children there are in the household the higher the child benefit tax. If there is one child it adds 10.6% to the tax rate. For two it is 17.5%, three children is 24.5% and four adds 31.5%. Five children adds 38.4%. If there are eight children it is 59.3%, taking the total tax take to more than the money earned. For every £100 earned the total tax is £101.30. And if graduate tax is paid then a partner in a seven child family will pay £103.40 on every £100 earned. In other words they will be better off not earning the extra money.

The child benefit tax charge means that anyone with even one child and an income between £50,000 and £60,000 will pay a higher marginal rate of tax than someone with an income of £1,000,000. Everyone with even one child will pay at least 52.6% in tax for each extra £1 earned. That is a higher rate than the 52% income tax and NI charged in 2012/13 on those with an income above £150,000. That rate is being cut to 47% from April 2013 in order to boost incentives among high earners to earn more. But the marginal rate for those on £50,000 to £60,000 with children is much higher and will not be cut.

Income
The income which is assessed is called 'adjusted net income’ though in fact it is more like gross income before tax. It is your total taxable income from all sources including earnings, rent, dividends, and savings interest before any tax allowances are deducted. However, you do adjust it by deducting pension contributions, gift aid donations, and salary sacrificed for child care vouchers. So someone who earns £60,000 and would face the full 100% tax charge could pay £10,000 gross into a pension scheme and avoid the charge altogether. As most of the contribution would be tax relief that would be a very good deal.

Avoid the charge
You can avoid the tax charge and the hassle of self-assessment if the person who gets the child benefit tells HMRC they do not want to receive it. The child benefit will stop and the tax charge will not be due. Although child benefit is not received, entitlement to it will continue. So it can be reinstated if circumstances change and National Insurance credits will continue to be available for the person entitled to it. Those build up entitlement to state pension if National Insurance is not paid at work.

Giving up child benefit should not affect a current or future entitlement to widowed parent's allowance as you will still be 'treated as entitled' to child benefit even if your late spouse/civil partner or you have given it up.

If you give up child benefit but it turns out that the tax charge is not due you can reclaim it for up to two years.

Giving up child benefit is only sensible if the higher earner has an income well above £60,000 and the relationship between them and the person entitled to child benefit is stable. Even then there are good reasons for keeping the child benefit. It can be put into a savings account where it will earn interest and the money in the account can be used to pay the tax charge up to 21 months later leaving a small profit on the interest. If the account is an ISA no tax will be due on the interest.

The Revenue estimates that about 270,000 people had given up their child benefit before the charge began on 7 January 2013.

More information
This brief guide covers the basics. Always get advice and study official documents before making changes in personal circumstances. HMRC has comprehensive but hard to follow information on its website http://www.hmrc.gov.uk/childbenefitcharge/index.htm

Making Up for It

So we got a random deposit of $500(+) from Jordan's insurance provider this morning - that's fantastic because today our weekly mortgage payment also came out.



We have looked into a few other things we can do to help with the bit of shortfall, and still meet our goal of paying of the credit card.

• We checked our points Aeroplan/Air Miles balances




• We had enough Aeroplan to order a $100 Costco gift card - it should arrive in the next week or so




• Checked with Enmax




• We have signed up with something called Easy Max Rewards with Enmax - basically you accrue $100 a year (or you can get it applied to each bill in increments) as a 'thank you' for bundling your utilities with them


• We have a $88.48 credit we'll be applying to the next bill 




• Return Pop Cans




• When we have a bag full of recyclables we toss them in the back of Jordan's truck (it has a canopy and isn't driven much). 


• We haven't gone yet (but hopefully this weekend) - the truck has half a dozen black garbage bags full - I'm crossing my fingers for about $50-$75 there.

With these three methods - we've almost found the $300 shortfall!! 

What strategies do you have to find more money when you have a shortfall or unexpected drop in income? (other than your emergency fund, which I know, I know, we need to get funded again).

STD - It Continues

So yesterday we found out that Jordan was actually only paid for 6 days at full time for the days he was at work before he went on short term disability.  The insurance company, will pay him separably for 80% of his pay for the 9 full days that he was off work.



Jordan also found out yesterday that the rest of his raise is FINALLY approved.



So I'm not sure if his STD will get paid at his new salary or his old salary and no one really seems to know the answers.



I had a look at the budget and realized that over the next few days we were going to wind up in the overdraft pretty badly - so I transferred my allowance money ($702) into our joint account as a buffer.



For those folks who remember, yes we stopped giving ourselves an allowance, but I still had some cash stashed away.  I was planning on using this money for a pretty day bed for my craft room - and hopefully will still be able to once we get the disability money and Jordan's raise comes through.