Getting your questions answered around financial topics can be hard. With that in mind, our team has put together a list of common questions and answers to help you. If you have any questions, or want more advice on your specific situation, you can always make an appointment with one of our Credit Counselors.
- Why do I need a budget?
- How do I make a budget?
- What should my budget include?
- How to I manage getting paid once per month?
- How do I find a place to live in London, Ontario?
- How can I save money on housing?
- How can I save money on utility costs?
- What do I do if my landlord did something illegal?
- What kind of property taxes should I expect?
- How can I save money on my banking?
- What discount programs can save me money?
- How do I use my RRSP? How do I change my RRSP into a RRIF?
- How can I get help filing my taxes?
- How can I reduce my income tax and optimize my tax return?
- How can I get credits for medical costs and assistive devices?
- Do I need a will? How do I address estate planning?
- Where can I get help managing my debt?
- How do I prioritize which debt to pay first?
- How do I know when I need to look into bankruptcy?
- How much are my loans costing me?
- What is a reverse mortgage?
- How do I renew my mortgage without an income?
Budgeting is important because it helps you plan how to spend your money, set goals and track your progress towards them. If you find yourself relying on debt to get through the month, a budget can help you balance what you earn and what you spend.
Budgets are especially helpful if:
- You’re struggling to get through the month with the money you make
- You want to pay off your debts
- You have variable income (you make a different amount of money throughout the year)
- You want to save money for a specific purchase, retirement, or an an emergency
- You stay up at night stressing about money
Remember, a budget isn’t about denying yourself– it’s about making decisions that will help you feel more secure and happy long-term.
You’ve decided you want to start on a budget– there are a couple easy ways to get started:
- Figure out how much money you make. Use your take-home pay for a safer estimate
- Start tracking your fixed expenses — things like rent, utilities, and tuition. Bank or credit card statements are a good place to start
- Start tracking your variable expenses– things like groceries and entertainment costs
- Think about your goals. Knowing what you’re saving for can be a great motivator.
- Look at your income and expenses and see how they balance out. If you’re spending more than you make, this is when you look at what things you can cut to put more money into debt repayment and savings
That’s all there is to it. You should take time once a month to check in with yourself, see how you’re doing, and adjust your plan as needed. No one makes a perfect plan the first time around, so don’t be afraid to make mistakes. If you need help getting started with your budget, or figuring out where you can cut back, you can always reach out to a Credit Counselor.
A budget can look different for everyone, but you should try to include as many categories of expenses as possible. Budgets are usually calculated based on monthly costs, and generally cover a year or more. There are plenty of great calculators online, but a few good ones include You Can Deal With It, Government of Canada Calculator and Practical Money Skills.
For income, you should consider tracking:
- Your pension
- Your take-home pay (averaged over a month)
- Your partner’s take-home pay (averaged over a month)
- Any interest you make on your investments
- Any other regular sources of money
For expenses, you should consider tracking:
- Rent/ mortgage costs (don’t forget about property tax, insurance, and interest)
- Utility costs (gas, telephone, cable, electricity, water, and internet)
- Transportation costs (if you have a car, that means your lease, insurance, gas, maintenance and parking)
- Credit cards costs (if you don’t pay off your whole bill each month, you’ll want to track what you do pay)
- Education costs (tuition, books, and fees)
- Entertainment costs (movies, concerts, books, games, and eating out)
- Food costs (food, and cooking supplies)
- Medical costs (procedures, medications, and health insurance premiums)
- Miscellaneous costs (anything that doesn’t fit into any other category above, like a music subscription)
Anytime you change the schedule you are being paid on, it can complicate your budget. The good news is that once you sit down and put things in order, it’s not that much different from biweekly pays.
So how do you get started:
- Make a budget and stick to it as much as possible
- Take advantage of the envelope method and switch to cash broken up into weekly portions
- Move all your bills to the beginning of the month
- Keep saving up for emergencies so you don’t get stuck in debt, or low on cash for holidays
London has lots of options for housing– in the end, it all depends on what you’re looking for in living arrangements. If you have social or familial obligations, you should consider your commute to them. If you don’t have a car, you should make sure you have nearby amenities you need for your day to day life.Make a list of must-haves and nice-to-haves and use that as a place to start.
Once you’re ready to start checking out your options, you can use online aggregators, which pull together listings from across different sites. Some of our favourites are PadMapper, ViewIt and RentHello.
One of the best ways to cut down on housing costs is to consider less expensive areas of the city, and buildings with fewer amenities. If you’re willing to move into a new area of the city with lower housing costs, make sure to visit to area before you sign anything, and make sure you still have access to everything you need nearby. A good sense of the city’s bus routes is even more important if only one or two routes go by your prospective housing. As far as getting fewer amenities, know what you’re willing to compromise on– washers in a nearby building make a big difference compared to having to go to a laundromat.
That said, housing costs in London are notoriously high, and sometimes to amount of cutting back seems to help enough. In cases like this, it might be a good idea to look into social housing or co-op options. Co-ops allow you to play less rent in exchange for helping with the maintenance of your building. Social housing is rent that is geared to your income, and is ideal for anyone struggling with rent payments.
You can qualify for social housing if:
- You are 16 or older, and can live independently (if you need supportive living, check out these options instead)
- You are a Canadian citizen, landed immigrant or refugee
- No member of your household has a deportation order
- No member of your household owes rent or damage arrears to any social housing unit
If you’re interested in social housing, you can start your application on the City of London website. If you are looking for Aboriginal housing options, there are several options in the city. If you need emergency accommodations, you can reach out for support as well.
If you’re a low-income individual, there are several programs in the City of London built to help out with rising utility costs. The Housing Stability Bank is a great resource– with programs to support with rental assistance, emergency utility support as well as applications to the Ontario Electricity Support Programs, you an access up to two month’s rent, $500/ utility and lower your monthly electricity bill by $50 or more.
If you don’t need support through the application, you can apply for the Ontario Electricity Support Program yourself.
The Landlord and Tenant Board exists to resolve disagreements between landlords and tenants. There are guidelines on how much your rent can be raised in a year, how you can be evicted, why your application was rejected and to ensure there is heat, safety and privacy in your home. Neighborhood Legal Service of London and Middlesex specializes in support and mediation, and offer ‘duty counsel’, advice and information free of charge on your hearing dates.
Your property taxes are based on the City of London’s budget and are informed by an assessment of the value of your property. You can use a property tax estimate calculator to get a better sense of what to expect. You can learn more about what your taxes are used for on the City of London website.
The best ways to save money on your banking is to understand your contracts and to work within the system to get the most benefit for the lowest cost. Think about what your needs are for a bank, and then look for one that fits best. For example, many banks charge per transaction– by using cash and credit effectively, you can reduce your use of your bank to a minimum, saving you money every month. Some banks will even reduce your charges to $0 if you keep a minimum balance, but this can be very difficult to do.
In general, try to:
- Complete fewer transactions
- Only use bank machines run by your bank
- Pay your bills online
- Use cashback to avoid ATM fees
- Look at lower cost accounts
As a senior, you can take advantage of many branch benefits and programs for people aged 60 and up. Ask at your bank to explore options.
As a senior, you have access to prefered rates from hundreds of providers. From your retail purchases, to restaurants, groceries and entertainment, the options are limitless. A few great lists for discount programs have been curated by the Ontario Government, Save.ca, and the Huffington Post . If you’re not sure about a discount, always ask! Some start as low as age 50.
As far as free/ reduced cost programming, the City of London has lots of great options to get you enjoying your retirement years.
When you decide to retire you’ll need to convert your Registered Retirement Savings Plan (RRSP) into an Registered Retirement Income Fund (RRIF) for regular usage. A simple way to think about it that an RRSP is for saving, while an RRIF is for drawing income. The biggest difference is that once you convert and start withdrawing from your RRIF, you can no longer contribute to it, and you must withdraw a minimum amount yearly.
Keep in mind, that an RRIF is taxable income. A banking or investment expert can help you better understand your unique situation and the best way to withdraw to reduce income taxes.
If you are considered low-income and have a simple return, the Community Volunteer Income Tax Program (CVITP) is the best option for you to file your taxes. The are over 80 free clinics across London that will help you file your taxes and ensure you get all the benefits you’re entitled to. The Cross Cultural Learners Centre has a great list of the items you need to bring to your appointment.
The CRA maintains a list of open clinics across the city, but local libraries, churches, and community centres also host their own events throughout tax season. Most clinics run through tax season, from early March to the end of April. If you are owed taxes, being late isn’t as big of a deal, but you’ll be missing out of potentially significant benefits until you do file. If you missed tax season, there are two year-round tax clinics in London: Life*Spin and Compass Community Church.
Depending on your tax bracket, there are many different ways to optimize your return. Generally, if you’re in the lowest bracket (you make under $42,960 net income each year), you’ll get the greatest benefit from government programs. Once your income goes over that amount, your income tax will start increasing (only on the money over that $42,960 however). This is why many of the solutions to optimizing your tax return involve moving your taxed time to when you make less money (say, when you’re retired and have no other income).
Some great ways to save money on your income taxes are:
- Save money in low-tax investments (RRSPs, TFSAs, etc)
- File your taxes on time to avoid penalties and interest
- Donate to charities strategically
- Claim all the expenses you can, including childcare, car expenses, public transit amounts, etc.
- Save for your grandchildren’s education in an Registered Education Savings Plan (RESP)
- Split the income from your RRIF between you and your spouse
There are a couple government programs you’ll want to consider if you have medical or assistance device costs. The Assistive Devices Program is meant to help people with long-term physical disabilities who need customized equipment. You qualify for the program if you are an Ontario resident, have an OHIP card and have a disability requiring equipment or supplies for more than six months. This fund will help cover 75% of the cost of items. The Government of Canada provides a full list of medical and assistive devices that are included.
Once you turn 65 (or earlier, if you’re on Ontario Works, ODSP, or OHIP+), you are eligible for the Ontario Drug Benefit program to help with prescription expenses. If your expenses are especially high (3-4% or more of your after tax household income), you qualify for the Trillium Drug Program. You can find out that is covered on the Ontario.ca website. You have to apply for the program to be included, however.
If you are over 18 and have need of 24-hour nursing support and assistance with daily activities, you can apply to live in a long-term care home. Mostly stay in these facilities is at least $1,848 each month, though there are substitutes available that cover up to $1,819. You need to apply for both the long-term facilities, and for substitutes separately.
Wills are essential to ensure that your wishes are carried out after your death. When we talk about estate planning, your estate is any assets (property, life insurance) and liabilities (debts) left after someone passes. If you don’t have a will, provincial legislation decides what happens. As a rule, you should revisit your will any time you are getting married, separated, divorced, remarried or having children/ grandchildren.
There are few steps to getting your will in order:
- Make a list of all your assets and liabilities
- Think about your family’s needs and their lifestyles if you passed
- Consider what programs will work best to protect them (RESPs, RRSPs, RDSPs, etc)
- Think about who you want to appoint to make health and personal care decisions, powers of attorney, executors and trustees for your estate
- Decide if you want to portion any of the funds out before you pass
- Change individual accounts to joint accounts to ease the transition process
- Get a professional team to help you record your wishes and protect your plan
It depends on where your debt originated. If you have consumer debt, general steps to reducing your debt loan are:
- Identify your debts — total amount of debt, interest annually, late fees, etc
- Review or create a budget so that you are spending less than you make each month
- Decide how you want to approach the debt. Choose a timeframe, decide what to pay off first and work with your creditors for reduced interest or reduced payments
- Consolidate your debts from higher interest sources into a line of credit or a loan
- Avoid taking on more debt
- Reach out for help when you need it.
If you need help getting paying back your debts, you can always reach out to a Credit Counselor for support.
That really depends on who you are and your goals around debt repayment. There are two options. Purely based on cost, the best method is to pay off your highest debt loans first. This has the benefit of costing you the least money overall, but it can also take a lot longer, as these loans are often larger. The second school of through it so pay off the smallest debt first. This lets you reduce the amount of payments you make and can give you a boost of motivation as you see yourself succeeding.
Think about your motivation and goals and choose the option that works best for you. Don’t forget to plan for emergencies and to consider your credit score and how much you need to improve it.
There are lots of misrepresentations around bankruptcy in Canada. In truth, it’s a valuable tool that can help many people get their lives back on track and improve their quality of life. There are costs and sacrifices related to filing for bankruptcy, but the important thing is to weigh this against your current situation. If your debts are under $250,000, the investigation could be worth your time. You can learn more about bankruptcy at the Government of Canada website. Hoyes has a great debt options calculator, which provides options that you might not have considered to approach your debt.
To work out the cost of your debts, you need a few numbers:
- How much your loan is
- Your interest rate per year
- Your loan term
There are lots of greta calculators, like this one from Bankrate.com that will do all the math for you. If you’re looking at a debt that doesn’t have a set term, you can compare based on different timeframes.
Reverse mortgages are loans that allow you to borrow from the equity in your home, without selling it. You can mortgage up to 55% of your home’s value tax free, assuming you and your spouse are at least 55 years old. There are two financial institutions in Canada that offer this service: HomEquity Bank through the Canadian Home Income Plan (CHIP) and the Equitable Bank’s PATH Home Plan.
Like any loan, it carries both risks and benefits. You don’t need to make regular loan payments, your money is tax-free, the income does not affect your Old Age Security or Guaranteed Income Supplement, and you still get to live and own your home. The cost comes at the cost of a higher interest than other mortgages, the reduction in your home’s equity, a cost to your estate when you pass, and other costs associated with the process.
Having no income, or relying on your pension when it comes to renewing your mortgage can be a very stressful time. Taking on new debts when retired is risky, and some financial institutions might think twice about lending you money when you need it.
If you decide to carry a mortgage when you retire, you’ll be relying on your savings and investments as your primary sources of income. You should work towards improving your credit rating while you can, and there are other loans for special groups you can explore to help along the way. The best way to start is to talk to a mortgage broker, and see if you qualify. Your specific institution may also have steps to help protect you and ensure you can renew when the time comes.