2014 Resolutions – is it too early?

2014 Resolutions – is it too early to plan ahead?

Yes, it is only late October. No, no-one likes to make resolutions as most people fear the self-recriminations if they fail. So let’s call them guiding principles for 2014 instead!

1. Avoid credit to the greatest extent possible. Special offers arrive weekly in our mail box – many from institutions with which we already have a business relationship but also some of the “Dear Occupant” variety. And they all sound so tempting. Loans, lines of credit, new credit cards – the choices seem endless – and sooooo easy. For lifestyle items (toys, vacations, etc.), the wanton use of credit can be a death knell for your financial well-being. It is tough realising you are still paying for that vacation 6 months after you return and that 60 inch flat screen is rapidly losing its attraction a year later and the “interest free” purchase is starting to cause cash-flow problems.

2. When you decide you absolutely MUST borrow, shop around and keep your calculator handy. Of course, it is difficult to completely avoid debt. HOWEVER, when you do have to borrow, generally, the lower the interest rate the better it is for you – but beware of the so-called “interest-free” payment plans. NOTHING in life is free – don’t be fooled. The vendor isn’t making that offer without covering all of their costs in some manner. Maybe it is an “arrangement” or “set-up” fee; maybe the actual price is higher than normal. The seller has costs that have to be covered and they aren’t in business to intentionally lose money.

3. Pay off debts as quickly as possible. Especially credit card balances! In some cases, they can carry a rate as high as 2.4% per month compounded. That is nearly 33% annually –and yes, it is a usury rate as far as I am concerned – but tell that to our Federal politicians! To put that in real terms, a $1,000 purchase carried on a credit card for a year will actually cost nearly $1,300 in total. For a home mortgage, the shorter the amortisation period, the better off you will be. Go to www.mortgagecalculator.org and play with some numbers yourself – this site also produces some nice graphs for picture-lovers.

4. First, pay YOURSELF, not everyone else. Usually, we have too much month left over after our pay-cheque. If we wait to save money until everything else is paid, there’s never anything left. If we don’t see it, we don’t spend it. Talk to HR (yes, I know they are sometimes interesting people) and arrange to have something deducted from each pay cheque to buy Canada Savings Bonds – this is just one alternative. Some businesses will split your cheque and deposit part into one account and another sum into a different account – perhaps a savings account. Make sure you contribute monthly to your RRSP or TFSA. We make loan payments each month so why not make financial future payments the same way?

5. Plan for your future. If good things are to happen to us, we have to plan – the future will not take care of itself. We have to plan for long term goals such as education, retirement and major purchases. And let’s not forget emergencies such as unemployment, a falling economy, disability or death. We can’t rely on our employer and certainly not any level of Government – which leaves only a Fairy God-Mother. We must take action ourselves.

Talk to a financial advisor about your plans today!

Ian Whiting

Ian R. Whiting CD, CFP, CLU, CH.F.C., FLMI (FS), ACS, AIAA, AALU With more than 40-years of experience in the industry, Ian has qualified 3 times for MDRT, completed LUATC in 1979, the LUAC Financial Planning Skills Course and attended numerous Schools in Agency Management and Sales Management through LIMRA. He obtained his CLU in 1987 while also completed his IFIC qualification and completed his Fellowship in the Life Management Institute with a specialty in Financial Services in 1988. In 1989, he completed qualifications for his Chartered Financial Consultant designation. In 1992, he qualified as an Associate of the Academy of Life Underwriters (Head Office underwriter qualification) and in 1993 he completed his Associate, Customer Service designation program through LOMA. In 1997, he qualified as a CFP and also completed his courses and exams to obtain the Associate, Insurance Agency Administration designation. In 1999, he completed the study and examinations to qualify as a Trading Officer, Partner and Director for Mutual Funds with the BC Securities Commission. As a result, he is also qualified as both a Branch Compliance Manager and Head Office/Provincial Compliance Officer. He served for nearly 18 years with the Canadian Forces (Air) Reserve (reaching the rank of Captain) primarily working with Air Cadets and was award the Canadian Forces Decoration (CD) in 1982. Long known as a maverick and forward thinker in the financial services world, Ian enjoys the challenge of learning new material and planning for the future evolution of his chosen profession.