Webinars On Demand

KOFE with liv.rent – Rentals, Scams, and Keeping Your Budget Fit

Speakers:

Robbie Shifman (KOFE, Consolidated Credit Canada)

Matisse Yiu (liv.rent)

00:00:05 [Robbie]

Hi everyone. Thanks again for attending today’s KOFE webinar with liv.rent about Rentals, Scams and Keeping your Budget Fit.

My name is Robbie Shifman. I’m the Community Outreach Manager for an organization called Consolidated Credit Canada. And I’m here with my colleague from liv.rent, Matisse Yiu.

And I want to thank you again for taking the time out of your day to attend today’s webinar. With our KOFE webinars, we try to bring you topics that could be useful in our day-to-day lives and that are important to be aware of so that we make sure our finances are in good shape.

Importantly, first, I want to do some quick housekeeping. Please make sure you get yourself acquainted with the GoToWebinar platform. There are opportunities to ask us questions through the platform, where you can write us, there are some handouts. We’re also going to be doing some poll questions throughout today’s session too, so make sure you keep an eye out for those and participate with us. We want you to get the most out of this session as possible.

And without further ado, I want to introduce my colleague from liv.rent. Thank you for being here, Matisse. Go ahead and introduce yourself a little bit.

00:01:17 [Matisse]

Thanks, Robbie. Hi everyone. My name is Matisse. I’m the marketing manager for liv.rent, overseeing all content and campaigns. I’m so excited to be here and talk about rental scams.

00:01:29 [Robbie]

Thank you again Matisse for taking the time to be here. So, let’s get started talking about Rentals, Scams and Keeping your Budget Fit.

Ok, so, first thing I’d like to talk about in these sessions and, it really helps us get oriented for the day, is a little bit about us at Consolidated Credit Canada. Our mission is to assist individuals and families in Canada in ending financial crises and debt management problems through both education and professional counselling. We are one of the largest non-profit organizations that operates across the country to help Canadians find debt solutions to meet their situations.

But today, of course, we’re focusing on our educational efforts to hopefully give you the tools you need to stay out of debt and achieve your financial goals with the money you have. But, if you or someone you do know is experiencing some issues related to debt, you’re always welcome to contact our team for help and advice. Contacting our team is always a free call to see if we can help you out whether you’re in debt or if you need help with your budget.

And with that, I want to pass it over to Matisse – give us a little bit of intro in terms of liv.rent.

00:02:44 [Matisse]

Yeah, for sure. Thank you. So our goal at liv.rent is to build a trusted rental community to improve tenant-landlord relationships and to create a platform to eliminate the stress and uncertainty of renting.

Now, I think we can all agree that renting is not always the most fun thing in the world, but we do try to make it just a little bit less stressful through transparency and technology.

We are all we are an all-in-one rental platform for renters, landlords, and property managers. So, for renters, specifically, we are one of the safest rental platforms through our multi-layered verification processes, which we’ll get into a bit later on.

And for landlords, we are a productivity tool that helps them, list advertise screen tenants, sign digital leases and everything all on one platform.

00:03:35 [Robbie]

All right. Thanks for that Matisse. And it’s always great to hear about all the excellent and really important work that liv.rent does in the community. You are really great resource to so many. Whether you’re looking to rent or you’re a landlord for that matter.

Ok, so, as I mentioned polls! We’re going to be launching some of them and the first opportunity to participate is coming up, now. So, let’s go ahead and look at this image on the screen.

So, we’re going to see the first poll come up momentarily. Looking at this image, “How would you describe it?” And I’m going to get that poll launched. We’re going to have that up for a little bit.

Alright, it should be in front of you right now. So, the options for “How would you describe this image?”

“Worried or stressed, this person’s thinking, too many bills, they have a headache, or they’re just simply not sure what to do?”

Matisse. I’m going to go to you. What do you see out of this image in front of you?

00:04:36 [Matisse]

I’m going to select all of the above. This definitely looks like me when it’s tax season or when I’m trying to figure out all of my bills. What do you think, Robbie?

00:04:49 [Robbie]

Yeah, I completely agree. There’s a lot going on here. It really it sort of depends on, your own experiences to a certain extent, right? We definitely see that dollar sign, and money is certainly involved, but, I would say this person is probably stressed out. They’re probably thinking about money and how to use it appropriately so that they’re not falling into a stressful situation, right?

Alright, so, it looks like most people have now done the poll, and thanks for participating! And I’m going to close that up in a couple seconds. Ok, let’s see what people said.

In terms of the results, looks like we have: about 70% of the group, said “worried or stressed”, half the group said the person “looks like they’re thinking”, I would agree with that. Next was, “too many bills”, which was very similar to the “thinking” answer and actually, second on the list, “this person is just not sure what to do.” I agree. It could be really any of these depending on your experience.

And the reason I show an image like this is because this is the type of person that we here at KOFE and at Consolidated Credit Canada – this is who our team talks to every single day. They’re those that might be struggling to pay their bills, making ends meet. Maybe they’re having issues paying their rent on time. Or maybe even being able to pay their mortgage bills. Or something to that extent.

They need help. They need some financial education, and this is who we strive to help every day and who we talk to. So that’s why we show this image. To give you an idea of who we end up helping.

So, today we’re going to be discussing, what to expect when you’re renting. We’re going to be discussing creating a budget and tracking your expenses effectively. The importance of checking your credit report and score. Common rental scams and what you should watch out for. And actions you should take if you do run into some sort of trouble, and you need some support.

And Matisse, I’m going to pass it over to you.

00:07:23 [Matisse]

Thank you. So, when it comes to renting, both landlords and tenants have their own sets of responsibility.

So, let’s start with landlords. First, a landlord is supposed to maintain a property that is safe, legal, in good condition, and provide what’s included in the rent. Now – a disclaimer here. This does vary per agreement, so it’s always important to check what is included within the monthly rental price that is listed. For example, utilities, we’ve got hydro, gas, Internet, as well parking and storage spaces. Now, the landlord is also in-charge of collecting monthly rent and establishing a written rental agreement.

Another disclaimer here – it is important, I would say, very important, if not the most important thing to know what is and isn’t allowed in your province. As this does vary from province to province.

So, for example, between British Columbia and Ontario. There’s a very different set of rules when it comes to pets. In Ontario, you’re not allowed to put a no pet clause in your agreement, whereas in BC you are, you are allowed to do that. So, it’s really important to research and know what is legal in your province.

Now on to the tenant side. The tenant is responsible for paying rent on time, as agreed. Keeping the property clean and well maintained. Repairing any damage that you or your guests or roommates may cause. Because let’s face it, damages can happen. Being respectful of neighbours and abiding by rental agreements, and notifying landlords if repairs are needed.

Now, I would say that keeping clear communication is probably the most important thing that you can do as a tenant because damages do happen. Some things happen, like when Covid hit, you just have to adapt. So, the number one thing you need to do is really keep that communication clear. Since, you know what, this is the relationship in your life regardless of what happens between you and your landlord. So I would say, that it’s probably at number one in terms of what we tell our renters. Make sure to really keep communication clear with your landlord.

00:09:52 [Robbie]

Yeah, thanks for that, Matisse. I think that’s an excellent point to leave off in terms of the tenant and landlord relationship having that communication, whether it’s the agreement, whether it’s open communication to say “hey, the stove is not working or whatever” or there’s a damage. Life happens, these things can happen so it’s important to communicate. So, that’s a really good point.

Ok, but before we rent, there are obviously a few things we need to look at, reflect on, and consider. So, we want to be considering things like: “Well what can I afford in terms of the place I’m live in?”, “What can I actually afford” thinking about things like moving expenses, right?

Obviously, we’re thinking about the direct rental expenses, but what else is involved? Think about moving expenses, utilities, electricity, water, gas bills. If you have to pay them, you should really keep them in mind and consider how much that’s going to cost you every month. Insurance expenses for the property, furniture that you’re going to need, because maybe you don’t have it and need to buy some and move it in, parking, laundry expenses. All of these things are relevant and they’re going to change your budget.

Next, where is the location? Location, location, location, right?

We want to look at the pros and cons of where you’re going to be living, because if there’s too many negatives that could be an issue. For example, yeah, it’s a great neighbourhood, but it’s really far from your work and really far from your family. It’s going to be fun, but the rental doesn’t make sense in any other part of your life. You’ll probably want to weigh those pros and cons and make a decision from there. So, these are things we should really think about before we go into a rental agreement, right?

Other factor too, like how long will you rent? This is a really good one to consider in combination with your longer term financial goals. Ask yourself, “Hey, how long am I live here?” Is it just a year because I’m in school or am I going to live here for longer? Will I live here four or five years and really build a life through this this unit, this property?

And, importantly, property features, rules and amenities. Especially, when you’re living in neighbourhoods or condo communities. We want to be considerate of “what are the rules to living in there?” Some might be from your landlord, some could be out of your landlords control, in terms of, for example, condo. Other features, this is relevant to how long it may live there and location it. There are some overlapping pieces to this. But it’s really important to keep a lot of these in mind before we do rent.

And with that, we have our second poll of the day and I’m going to ask you what you think about these areas. “What do you think is the top consideration when you’re looking to rent a property?” Now, we’re looking at the options, “what can I afford?”, “location”, “how long will I rent?” or maybe you’re just not sure.

And Matisse. I’m going to pass it back over to you. You’re my co-pilot, what do you think about this? What do you think is the most important or what do you hear?

00:12:56 [Matisse]

Yeah. So, when thinking about these considerations, all of these are actually really, really important. But I think a great starting point is what you can afford and go from there.

I think with the pandemic we’ve seen a bit more flexibility in terms of where you can live, with remote working, hybrid working, for your location, but, going off of your budget and what you can afford is always a great starting point for renters.

00:13:25 [Robbie]

Yeah, I completely agree. Ok, I’m going to close up the poll in about 5 seconds, which we’ll have given everyone a minute to complete it. It looks like most people have participated, so that’s great.

Ok, so unsurprisingly, the number one choice “What can I afford?” and then the next two top responses we said as a group were “if I like the property” and “location”, which I totally get. We want to make sure we enjoy and we like where we live. We definitely want to make sure the location makes sense, but what can I afford, right? Because if we end up spending way too much of our budget on renting, that’s going to hurt us financially, in terms of what can we afford for other living expenses, right?

00:14:13 [Robbie]

So with that, we’re now thinking money. Well, it’s important to talk and think about that money and this is pretty indicative of that last poll. We want to make sure the money we have is able to meet our needs without overspending. When people overspend, they have too many expenses compared to their income. That’s where they can run into some issues. We want to use a budget in order to track those finances. Know where your money is going instead of wondering where it went and looking for it – like that guy on the side of the screen, he’s looking for it behind bushes. Might not be a great situation.

What is a budget, though? So, simply a budget is a snapshot in time of your income, money coming in, minus your expenses, money going out. Importantly – snapshot and time – this budget is going to change every time you do it, and the whole idea is to really become mindful and aware of your finances.

Now in terms of those changes, we do know budgets regularly change on people in a routine basis based on time of the year and situations that can arise. Now some of these things, we know to expect. Time of the year, think of holidays and birthdays, right? Summer vacations or winter vacations or going to school and tuition expenses with your kid being in school. These are things we know to expect that maybe we do every year.

Meanwhile situationally, are you employed? Are you unemployed? Do you have an income? Maybe you have a summer job and then it ends, right? These are situations you want to keep in mind in terms of your income and what you have for expenses. There are other situations that can arise, though, like right now we’re dealing with record high inflation and things are getting more expensive and we’ve got to weather that storm as best as possible and have financial resilience.

00:16:03 [Robbie]

Importantly, in terms of that budget, we do know the Canadians list housing as a top budget priority. One thing to keep in mind, and this is really a general idea of what to be targeting, is you want to keep your rental payments under 35% of your monthly income.

So, if how much money you bring home every month, 35%, really at the higher end, should be how much you’re spending on your rent from your income. Now, this is absolutely going to fluctuate based on where you live. If you’re in an urban city centre versus a more rural area, this is going to be a little bit of a different situation, but this is generally what you want to keep in mind, so you have money for your other areas of your budget.

00:16:47 [Robbie]

Now in terms of budgets, they certainly make cents (sense)! Pun intended! Budgets are going to help us know our sources of income and really have a good concept of those sources. We’re also going to feel more comfortable and doing a budget reduces your stress. There can be a reduced level of anxiety if you’re aware of your financial situation, aware of, for example, “ok, this is how much I spend on these areas every month or usually in a month”, “this is how much money I have to pay for these things.” We have a better concept and understanding of this. This is really important for our mental health and reducing stress.

Track and prioritize your expenses. Really this all goes hand in hand in terms of our budgeting. We want to keep in mind, “ok, what are expenses?”; “what do I need versus what do I want in my budget?” This is crucial. We want to prioritize.

We know housing expenses are at the top of the list, right? Rent. You pay a mortgage, condo fees. There are needs that we need to take care of that go over top of some things we want even though we know that these wants will certainly bring us happiness.

So, with needs, there are some that are more stable. Like rent or mortgage payments, car payments, student loans, tuition, insurance, they just don’t change too much every time we pay them. That’s good to aware of so, that we can plan around them.

Meanwhile, there are also needs that can change every time we pay. Think of a grocery bill. Every time you go, it’s different and it charges. Your cellphone bill, maybe it’s pretty much the same, but you do have some control to make that a little bit more affordable, or, make it more expensive. So, we have more control in terms of services like a cellphone. Think of your electricity bill, how much you’re spending on clothing, or what you’re putting aside in terms of savings.

And, importantly, if you do have some sources of debt, like if we have credit card debt going on, or something like that, that needs to be included in your budget expenses so that you’re making sure your budget is accurate.

Last, but not least, we have discretionary expenses that are our wants. These are lower priority in typical scenarios. So, for example, entertainment, sports expenses, subscription services – wow, that’s a big one – donations, and hobbies. So, think about your subscription services, all those streaming services that we all enjoy these days. Whether you’re watching videos, movies, or TV shows, but also think about how you listen to your music, some of us have subscription services that we see receive deliveries and home of items, magazines, and newspapers. Then there’s also food delivery services that have subscriptions too. This can add up in a big way, and we have control to cut back on these or take them out of our budget completely, if we need to.

00:19:43 [Robbie]

Importantly, as well, when we do a budget, we have a good idea of what we have available to put aside into savings to save ourselves for that rainy day that can always come up. Really, the goal here that we like to set is three to six months worth of expenses – so, your average expenses in your budget – we want to put that into an emergency fund.

So, for example, if you have a job, you have an income, that’s great. Well, what happens if the company closes down? You lose your income. You’re able to use this emergency fund to cover your expenses while you find new employment. That’s the simple idea of it. We don’t want you to be forced into taking out a high-interest loan and borrowing money to pay your day-to-day bills, which can lead to a pretty stressful debt situation.

Additionally, when we do the budget, similar to how we can build up some savings, if we do have debt already existing, this can help us strategize about how we’re going to pay it down.

When you borrow, it’s really important to think when we’re talking about credit, this term “credit”, what does it really mean? It really means borrowing money, and that means debt. So, we’re talking about credit or borrowing money, it is debt. And when we do a budget, it can really help us to pay it down.

But, of course, if you need to talk to someone about that debt, you’re always welcome to contact our team at Consolidated Credit Canada and KOFE.

Ok, and now I’m going to pass it over to Matisse and we’re going to go further into that term “credit” and look at credit scores and reports.

00:21:20 [Matisse]

Yeah, for sure. Thanks, Robbie.

So, when we’re talking about credit scores, especially in the rental realm, landlords and property managers commonly use this to help assess rental applicants. So, in addition to interviews, reference checks, employment status, rent versus income ratios, and, other methods of assessing rental applicants, credit scores are probably one of the most common ways that landlords help quantify your trustworthiness. So, credit scores can help lenders, verify you truly are who you say you are. Whether it’s verifying previous addresses, employment, your name.

But it also really helps them see how responsible you are with other payments. It’s a great indicator for them on whether you’re going to be able to pay rent on time every month. And now, I do want to add a disclaimer that, while credit scores are very common in the rental industry, it’s not the end all, be all. We’ve got a lot of people coming from out of the country who don’t even have a credit score yet.

So, while it is one of the things that landlords look at, it should never be the only thing.

00:22:36 [Robbie]

Yeah, that’s a really good point, Matisse.

Credit scores, credit reports, some people are fully aware of them, and they may even stress on them to a large degree. But it’s not the end of the world if your credit score is only so, so or maybe you’re new to the country. It’s definitely not the only thing a landlord, and really, a responsible landlord, is going to look at because, at the end of the day, they want a good tenant who’s going to pay that rent.

Alright, so, let’s continue this thinking about understanding credit reports and scores. Really this is a huge one in terms of our experience, working with so many groups at KOFE – Knowledge of Financial Education, of course. Understanding credit reports and scores, we get so many questions about this, and people really want to know more.

So, credit reports are your credit history as a borrower. It’s a credit history that’s 6 to 10 years in length of those credit accounts that you have in your name. When you look at a credit report, you’re going to usually see that 6 to 10 years of history of various credit accounts you’ve opened in the past.

Credit scores are a number based on your credit report. So typically, if you have a credit score. It will be 300 to 900. That is the scale. In terms of that range, it could be 0 and if it’s zero, that might mean that you’re new the country, you have no credit history to date because there’s no record of that. That’s ok, that happens. Or you haven’t turned 18 yet, you’ve never opened a credit account in your name.

Importantly, in terms of the first things we typically see on someone’s credit score, it might be a credit card they first opened or it could actually be a cellphone bill. If you’re getting a cellphone from one of the major providers, they typically will log that with the credit bureaus as well.

In terms of your credit score, high scores are between 660 and 900. This means you’ve been responsible with your credit in the past. So you’re making your payments appropriately, paying as you’re supposed to you’re not carrying a lot of debt or missing payments or anything like that. Usually, you’re paying everything in full to a large extent, especially the higher the number goes.

A lower score means you might be under 660. Really, that means you might be a high risk borrower who won’t be able to pay. If you’re, 300 to 660, if you’re at or around 660, that might be when you receive a different situation where you might not qualify when you apply for credit or you qualify but you end up receiving higher interest rates.

Now we’re going to go into our next poll here, because we’re curious. “How often do you check your credit report and score?” So, I’m going to launch that poll now and going to give everyone about 30 seconds to participate.

And Matisse, I’m curious to go to you. What do you think about this in terms of your experience checking credit reports or what you hear from people, how often they check them. What do you think?

00:25:51 [Matisse]

Yeah, it definitely varies a lot on how often people check their credit reports. For me, actually, I usually do it one to two times per year. If I do it more, it’s only because  I’m applying for a credit card or  something else that just requires me to be aware of what my credit score is at the time. But yeah, I think most people check it one or two times per year.

00:26:20 [Robbie]

Yeah. That’s more or less what we end up recommending. So that’s good and very responsible. Thanks for giving your take on that.

And I’m going to close up the poll now. And let’s see, we had a pretty even spread, but the top 2 answers are really one to two times per year, which is really what’s recommended. We want to check with both credit bureaus, we have a credit report with TransUnion, one with Equifax. We’re going to get into that next slide. We want to check both of those every six months.

But the next highest answer was actually, I’ve never checked it. So, for those of you who are attending, who said I’ve never checked you before, great that you’re here. We’re happy to talk to you about this. You’ll learn about it. You’ll probably know a lot more than you ever thought there was to learn about credit scores. And there’s definitely more to learn beyond this. But make sure one of the things you take out from this webinar is check your credit report and score.

And with that, that’s a great segue into our next slide. How are we going to do that?

00:27:18 [Robbie]

In Canada, we can do what’s called a soft credit report check and we can do that with the two credit reports from the two credit bureaus. Like I was mentioning, we have Equifax and we have TransUnion. Both should be checked at least once every six months, and we can do this in a lot of different fashions for free. Now, of course, there are paid options where you want it more actively monitored. Maybe you’ve experienced an issue.

But, in most cases, we would absolutely recommend going with the free options because it’s probably fine for your situation. You can do so with the bureau websites Equifax and TransUnion. Remember, you need to check both because the information should be the same, but it could have some errors and we want to make sure we catch them. You can do it free online and by mail, and we’re going to have the links for that a little bit later on about how to do it online.

Online banking – a lot of major banks now offer the ability to check your TransUnion credit report and score for free, so that’s another great option that’s out there. Just remember, you’ll still need to separately check the Equifax one.

And importantly, if you are experiencing some debt or budget issues, absolutely contact our team at Consolidated Credit Canada. You can e-mail us at [email protected] if you want to talk to our team. Or call 844-526-2904.

Also, well, are you a landlord? Because liv.rent has something called a Trust Score and it’s powered by Equifax credit scores. And Matisse, I’m going to toss it over to you and maybe can tell us a bit more about this.

00:29:01 [Matisse]

Yeah, for sure. Thanks, Robbie.

So, we have something called the Trust Score and it’s an intelligent rating system designed to establish a renters reliability and credibility. It’s presented on a scale of 100 with four categories.

So, the first one is actually credit, which is powered by Equifax credit checks. This is great because it shows to both the renter and the landlord four years history. So, payment records, bankruptcy records, things like that.

The next section we’ve got is trustworthiness, which is really trying to quantify someone’s trustworthiness. So, we do this through a few different verifications based on, the salary you’ve reported as well as your employment. And we check that information with the renter’s submitted documents to ensure it’s verified.

Now the next section is the income to rent ratio, which is automatically calculated based on your reported income as well as the listings monthly rental price that you’ve applied to. And then the last section court records. So, it’s a court record verification that we add to our trust score.

So when renters are applying to listings on liv.rent, a Trust Score is automatically generated for their profile, which again is powered by Equifax credit checks. And yeah, it’s just a really great way of showing just how trustworthy you are as a renter. And it’s a really, it’s a tool that our users really love.

00:30:46 [Robbie]

Yeah, thanks for sharing that with us, Matisse. I think, especially if you’re a landlord who’s looking to rent property, a great resource to use. But also, if you’re a tenant and you want to search for rental properties it’s another great way to do so on liv.rent. That’s a really great resource to have.

So, let’s go into this rental scams topic, which I know a lot of people are quite interested in discussing.

Rental scams happen typically for two main reasons. Well, first, for money, they’re out to get your money and hopefully get away with that. And, second, is to access your personal info for a fraudulent scheme. This can really hurt us financially and emotionally, especially if we’re someone who’s living on a tight budget. And can definitely cause a decreased sense of security or trust in the community, which is just a negative thing all around.

About 50% of those searching for rentals have actually said they have encountered a scam before. This is information from the Better Business Bureau from a couple years ago and we can only imagine that this trend has, at least, continued because we know rental scams have really remained very prevalent. The Better Business Bureau also warns that these scams are definitely rising in current times because of increased housing expenses and rental prices themselves.

And Matisse, I’ll pass it over to you.

00:32:16 [Matisse]

Yeah, for sure. Thanks for that quick overview about rental scams.

There are a lot of different types of scams out there, but I would say one of the biggest scams to be aware of, and probably one of the most one of the scams that renters most often fall for, is when it’s too good to be true. Because, in a high demand renting season, which typically is from April to about August, September, competition is high, rent prices are high and especially this year we’ve got huge increases month to month. This makes it for an especially prime environment for scammers to take advantage of renters who are looking to secure a rental.

Scammers often target first time renters or new renters in Canada. Just because it’s a new country for them and there’s new laws that, even Canadians are not always aware of. Young Canadians, especially students, and those in vulnerable situations are who they target. So, those who need to rent a place as soon as possible, or those who are dealing with financial difficulty, so lost income separation, etc.

It’s definitely one of the most common scams that we see when listings are listed for quite a bit lower than what is actually true in the market. So that’s definitely something to be aware of.

Now moving on to some scam warning signs, which we call these red flags to look out for, the number one is when rent is lower than other places you found. So, being aware and doing your research of what the current rental market rates are, because sometimes they do change quite a bit from month to month, is really important.

Another warning sign is when they ask for a deposit without an agreement in place. This is another really common scam. Even before you see the property, if a landlord is asking you for a deposit without a signed agreement in place, you should run the other way.

Whenever a landlord asks you to send money to someone outside of Canada or asked to pay through a money transfer app or gift cards, that is also a huge red flag. We’ve seen scams before where landlords, share a bit too much in terms of something like, “oh, they’re out of country because they had a family emergency.” There’s a lot of different stories that sometimes landlord scammers will say to you just so they can get you to send money to someone outside of Canada. This is a huge red flag.

Another warning sign is when you are asked for a lot of personal or financial information without an agreement being shared. Now, there’s a fine line between asking for too much information and asking for too little. Landlords may ask for some information so that they can actually verify your identity or make sure that you can afford to pay for rent, but only after the tenant has agreed to move forward with an application should you pay for the deposit. As a tenant, if you feel unsure, you can always ask to confirm who owns the property. On liv.rent we do verify our landlords and our listings, but it’s always important to be aware of what a landlord can and can’t ask you.

Now remember what I said about a fine line, if a landlord asks you for very little information and they’re really pushing you to sign an agreement as soon as possible, this is a red flag because the landlord is not doing their due diligence to ensure you are who you say you are and that you can afford to pay rent. For us, I think responsible landlords really attract responsible tenants. So, it’s again a fine line, but if they’re asking for not a lot of information and they’re really pushing for you to sign an agreement. You should definitely really take a look at this listing and situation and see if it is a legit listing or not.

And finally, if the ad only shows outside photos, so exterior photos or they don’t match the listing, or the full address isn’t listed. This is also a warning sign that really should prompt you to do more research on the listing and the address.

00:37:01 [Robbie]

Yeah, these are all really good points. Thanks Matisse. This, this can really save someone a big headache.

And, with that, we definitely want to launch our last poll of the day. And the question is “have you ever encountered a rental scam?” So, I’ve launched that now for you. Everyone should be able to see.

Just thinking about this question, I know for myself, thinking of the workshops we’ve done in communities, we’ve definitely heard some stories of people experiencing scams here and there. I’ve personally encountered those in the past as well. They are unfortunately a little too common. Matisse, what do you think about this?

00:37:44 [Matisse]

Yeah, I mean, there is definitely quite a large percentage of renters who come across rental scams. It’s actually quite sad. A lot of our content does surround the theme of rental scams because it is so unfortunately common.

I remember trying to do some research on my own, just looking at different types of rental scams. And, really, I was all I did was search for rentals on Craigslist and I could see so many that were scams, so it’s unfortunately really common. And yeah, I wouldn’t be surprised if our audience has come across them.

00:38:23 [Robbie]

OK, I’m going to close up the poll. Let’s see the results.

A small percentage of the group said they weren’t sure. But pretty much over 50% said “no, they have not encountered a rental scam before”, which is a good sign, but now you know the red flags, hopefully you can avoid that if you do experience it and.

But we do have just about 40% of the group saying, yes, “I have encountered a rental scam before.” And for a lot of these, depending on age, demographics and other factors, and those risk areas of who these scammers target, you may or may not be more susceptible to this. And it’s really important to know those warning signs and really remember, as the saying goes, “if it’s too good to be true, it probably is.” Keep that in mind, right? If it doesn’t sound right, don’t be afraid to just Google it, look it up, and see if you can find it.

So, with that. Thanks again everyone for participating in that poll. That was fantastic. And now let’s talk about avoiding rental scams. Matisse, I’m going to pass it back to you again.

00:39:34 [Matisse]

Yeah. Thanks, Robbie.

Being prepared so you don’t get scammed is very, very important. It all comes to, knowledge and education about what to expect in the rental market, so doing your rental market research is really, really important, especially when in the post pandemic world we’ve got a lot of different changes coming.

We’ve got higher inflation rates, higher interest rates, things like that. These can really push a lot of changes in the rental market, as well. So comparing prices with similar listings in the area or even in the building can be really, really helpful in letting you know whether this listing is a scam. So, we can actually do that with liv.rent. We do put out monthly rent reports and they’re really helpful because our team actually goes to all the different listing websites, including our own, to gather this information. So, it’s a realistic representation of what the current rates are for the given month.

Now a second one is to set a realistic budget and stick with it. This is really important. Combining that with your rental market research, you’ll be able to know, roughly, where you’ll be able to rent or what kind of rental you’ll be able to get as well.

Now, Robbie has brought this up before, but Googling the listings, images, phone number, or address can be really helpful. I don’t know if everyone has seen, but one of the biggest, latest scams was a Kijiji scam where someone actually rented an Airbnb and then signed multiple agreements with tenants and it turned out to be a scam. Another common one Is when listings are actually for sale and people put it up as a rental, so, just Googling the address can, give you a lot of answers as to whether you and it might actually be for sale or list on Airbnb, and things like that. It’s amazing and also kind of scary sometimes about what Google can help you find.

Now seeing the unit in person or even scheduling a virtual showing, if you’re out of the country, is super helpful. It’s just a great way to be able to see it in real-time, in person, that’s always best.

And of course, remembering that you don’t have to pay anything until the agreement is signed by both parties. So, typically, at maximum, landlords can only require first and last months rent plus a refundable key deposit. But, it’s really important to again know your provinces laws because there are certain things that landlords can’t collect and can’t ask you for. So again, doing your research is key here.

00:42:34 [Robbie]

Those are all really great points because, at the end of the day, no one wants to experience a scam. So, if you kind of know what to keep an eye out for, that could make all the difference for you.

Now, if you do run into trouble, what you want to do is think about notifying affected bank or credit card companies. So, if you do end up in a situation where you’re experiencing some sort of scam or you think you might have, or you might have exposed certain accounts to that, notify the bank and credit card companies that are involved.

You may want to also, potentially, file a police report. If you do end up needing to do this, make sure you are keeping good documentation. Keep the original police report and make copies because other organizations you’re going to reach out to are going to want those copies.

In particular, we want to make sure we notify the credit bureaus. This is a big reason why we always recommend keeping an eye on your credit reports and scores. You don’t have to do it every single month but doing at least once every six months for both of them, because we can usually identify if there is a some fraudulent activity, it will pop up on your credit report rather quickly, especially if someone’s trying to borrow some money in your name through fraudulent means. What you can do is put a fraud alert or fraud statement on your credit reports and that way there essentially a heightened alertness in case something’s going on or a new account is being opened.

You also want to send copies of that police report to the credit bureau, so they’re aware of the situation. And, of course, you can report any fraudulent activity or scams that you experience to the Canadian Anti-Fraud Centre. You can do this at www.antifraudcentre.ca.

00:44:22 [Robbie]

Now, of course, throughout the session we’ve been talking about budgets and credit and a whole bunch more, and if you need help with that, you know you can use our financial wellness platform, Knowledge of Financial Education, KOFE.

KOFE is a great resource. We have so much going on there between our budgeting tools, financial calculators, videos. We of course do webinars like these every little while. Lots of great things to take advantage of.

If you have any questions, most of you here, you should have access already to a KOFE account through the organization you signed up with. If you have questions about how to access that free account, by all means e-mail us at [email protected]. We’ll be happy to direct you. Or if you have any questions and want to talk to our team, we can also help you out with that as well.

And Matisse, tell us a bit about liv.rent and how we can get some resources there too.

00:45:20 [Matisse]

Yes, thanks, Robbie. So, we are really trying to promote a smarter and safer way to rent. So, we’re really proud of ourselves in our verification processes in keeping our tenants safe.

So, with our landlords and listings, we do verify them. So, with landlords, if you see a badge on their profile, they are actually ID verified by our team. This is a government issued piece of ID that we will match with a selfie that they have to take at that time of verification. For listings, we verify the listings either through land title documents or, if it’s a property manager, representation documents, or landlords can also ask to have a postcard mailed to the address with a unique code that they would then enter in our platform.

So on top of that, we also really pride ourselves in the technology that’s a part of our platform. One of the biggest pain points for renters, aside from rental scams, is always filling out applications after application when it’s essentially the same thing. So, with us, you can complete your profile once and actually apply to multiple listings with just a few clicks. So, your profile is your application. What’s also great about this is that you can actually withdraw your application, as well, if you are no longer interested in the listing.

With our platform, you’re actually able to sign digital BC and Ontario standard tenancy agreements from anywhere in the world. Currently, we only have the BC and Ontario agreements, but we will be expanding to more provinces soon. This is a really great way, especially if you’re an international renter, to be able to sign that agreement and go through that entire process safely and securely is really, really helpful.

And finally it’s always free for renters, so definitely, check us out. Learn more at www.liv.rent.

00:47:28 [Robbie]

All right. Thanks for the information, Matisse.

So just to summarize, what we’ve been talking about today. We want to make sure we’re doing some responsible renting and we want to keep within our budgets and also of course being aware of our credit. Be prepared and informed. This is the first thing we’ve definitely were talking about.

Know your role and duties as a tenant or as a landlord, whichever is your responsibility. You want to be aware of your income, expenses, and priorities. Make sure you’re prioritizing what you’re spending on. And, know what you need versus what you want in the rental you’re looking at.

What actions can you take? Well, creating a budget is a huge one. We know people who create it for the first time, they’re usually shocked to see the totals of what they spend on, for example, going out and getting coffee or take out food, or their subscription services.

We want to also check our credit reports. Remember those tools I mentioned before, those are soft credit report checks, which means that anytime you do them, it does not lower your credit score. It’s free to do. It’s not going to impact your credit score and you can see what’s on your accounts very easily – great information and educational resources there and, again, awareness of your credit accounts.

Additionally, absolutely, use KOFE – Knowledge of Financial Education – if we talked about some things and you want to learn more, you want to work on a budget. You want to use our budgeting tool, you want to learn more from the videos, we have booklets, it’s all there, free for you to use. Highly recommend it. If some of this stuff is new to you and you want to learn more, absolutely take advantage of those resources.

Additionally, if you’re renting, research those rental listings use liv.rent, If you need some help finding those resources, and of course they have all sorts of additional tips and tricks for finding a great rental property.

And don’t be afraid to ask questions. Watch out for scam warning signs. But don’t be afraid to ask that landlord questions, or tenant, if you are a landlord. Ask questions if you want to know more about things. Just make sure you’re responsible based on the rules the province you’re in.

And don’t be afraid, even ask questions of your bank or your credit card company. If you’re not sure about something or a certain product you’re using is not going your way. You’re always welcome to talk to a financial coach, a financial advisor, a credit counsellor for help, if you need to, as well.

00:49:53 [Robbie]

And with that, thank you very much for attending today’s webinar! We are staying on for a little bit longer to answer some questions that have come in and we’re happy to do so.

And last but not least, there’s a handout with this information, so you can easily download it. If you have questions or feedback, you can e-mail our team at [email protected] or the liv.rent team at [email protected].

We have a survey set up. We’d love to hear your feedback. It’s a SurveyMonkey. So, it’s www.surveymonkey.com/r/KOFEBoost spelled with a K of course, KOFE, K-O-F-E.

Free credit report and financial tools. You can go to the TransUnion and Equifax free credit report checks. Those are the hyperlinks to go there www.KOFEtime.ca resource there. If you want to talk to credit counselor, the phone number is right there – 844-526-2904. It’s a free call. There’s no obligation if you talk to our team in terms of anything, you can just call for. And we also have our website www.ConsolidatedCreditCanada.ca.

And, of course, finance and renting tools with liv.rent start your rental search www.liv.rent. Rental resources on their blog as well. And you can follow liv.rent on Instagram at liv.rent.

So, thanks again, and Matisse. What do you think about answering a few questions here and there?

00:51:20 [Matisse]

Yeah, let’s do it.

00:51:21 [Robbie]

OK, so let’s get into it. So, I’m just going to take a look and see if we had questions posted in the Questions Tab from the group.

We had one come in. And to give a bit of an idea of this rental situation here, especially thinking of a landlord’s perspective – if a tenant is not really paying their rent on time and they’re still in the unit, what do you recommend they do? What advice or what would you say to that landlord if they’re in that sort of situation and they’re looking at how they could recover that rental expense, those rental amounts?

00:52:09 [Matisse]

Yeah, for sure. This is definitely a complex question and a topic that really came from the pandemic as well. I think the number one tip is to have your documentation very organized. And know your rules, whatever province you’re in. So, for example, in BC, your landlord can serve you a 10-day notice, at which point you have five days to either dispute the notice or pay the amount in full. If you haven’t paid your rent.

But however, in Ontario, this process is lengthier, and you have to go through the LTB. You have to fill out the N4 form for non-payment, give them the notice. There’s definitely a lot of lengthy processes that differ by province, but the number one tip is to ensure that you have all your documentation, especially with your chats and communications with your tenant that is something that you can bring to the LTB and show them.

When it comes to trying to recoup those, that rent. Again, because it varies so much by situation, it’s a hard question to answer. But, if you want to chat through this, contact our team because this is something that we’ve talked to a lot of our landlords about. Getting to know their situation, what documentation they have, where they are in the process of either serving their notice or speaking to the LTB or RTB. I definitely encourage you to reach out to our team because, while we may not be able to help you exactly evict the tenant, we can definitely give you and share advice based on what we’ve seen with other landlords.

00:54:08 [Robbie]

Yeah, that’s great. And by the way, in case anyone wasn’t sure, Matisse mentioned LTB, that’s the Landlord and Tenant Board. Every province has  a Landlord and Tenant Board or something that’s called something similar. So, you can always contact them or look them up online for information as well.

Looking at some of these questions. Alright, let’s see what else we have.

So, we had one come in that says, “if laundry is included in your rent, but the washer and dryer stopped working for a month, causing you to have to go to the laundromat. Would a landlord be expected to reimburse the cost of using the laundromat.” What do you think about this one, Matisse?

00:54:55 [Matisse]

That’s a great question.

I would refer to your agreement. I think in most cases the landlord would not be expected to reimburse. But, depending on the communication, perhaps what you have documented in your chats, you can work something out with your landlord. But it really is what’s in your agreement. So, I would advise you to check that out to see if there is anything that you can use in the agreement to bring to your landlord and say, “hey, it’s been over a month…” and, just work that out with your landlord.

00:55:42 [Robbie]

Definitely. And it makes sense. You want to be good, in terms of communication I think and corresponding in a respectful way. Because, at the end of the day, the machine broke, and the landlord is unlikely to have caused that. And, especially these days, we’re seeing supply chain issues which might cause it to be a little bit difficult getting that installed immediately. So, the delay might be fully out of the landlord’s control. Definitely, communicating and making sure everyone understands the situation. And be transparent – I think that’s the key.

00:56:14 [Matisse]

Yeah, totally agree.

00:56:18 [Robbie]

So, there’s one question here. Someone asked about breaking rental agreements before moving in but after the agreement is signed.

So, how does that work if someone decides, “hey, I signed up for a rental agreement, I haven’t moved in yet and I don’t want to go ahead with it.” I’m not sure if this is a tenant situation or a landlord situation. But what do you think of that one?

00:56:41 [Matisse]

Yeah, that’s tough it does depend on whether you are the renter or the landlord. I would say it’s a bit easier because you haven’t, the tenant actually hasn’t moved in yet, if the agreement hasn’t started. So, it’s a little bit easier simply because they haven’t even moved in yet.

But the laws do differ if you are the tenant or if you are the landlord. It could be the case where you’re just really clear with your communication with them and say, “hey, for whatever reason you don’t want to go ahead anymore.” And seeing what the response is. If they’re ok with that, it might be ok to just end the tendency there. However, if the other party is really wanting to go ahead with it. You may get yourself into a bit more of a sticky situation because you have already signed the agreement. I think that’s what the question said.

But, again, it depends if you’re the renter or the landlord, so whoever asked us question, if you do want to get in touch with us at liv.rent, we can shed a bit more light if you are able to share a bit more information about which role you play in this agreement because it really does depend.

00:58:00 [Robbie]

Yeah. That makes sense. Especially if you’re signing a rental agreement, you really want to be able to commit to that. Things can happen if you’re the tenant and all of a sudden, “hey things have changed. I can’t move in.” And, again, being transparent with good communication can be helpful. And, definitely, the province you live in I’m sure there are rules and regulations around what can and can’t happen too.

Looking at doing another question here. I think we’ve got to wrap it up soon. We’re just past three.

But I have one question that was about credit scores and this person is asking, “if I have a subscription to TransUnion, does it affect my credit report and score?”

So, I’ll take on this one. So, with that question, it sounds like this person has enrolled in credit monitoring with TransUnion and you might be paying for that. So, in terms of that service, that would count as a soft credit report check. So that would not affect your credit score.

Only when we do a hard credit score check, that’s when our credit score goes down. Because that communicates to the credit bureaus that we’re trying to access some more borrowing power, right? We’re trying to borrow money through a credit card or a loan. And the reason it goes down is because, when you first open that, the credit bureaus look at you as being a little more risky. They don’t know how you’re going to use that new money you’ve applied for, and they want to know you’re going to be responsible. Not knowing and an unknown situations, inherently make it more risky, and that’s why they get concerned a little bit for the short term. They also don’t want you to take out too much money at the same time from multiple sources.

But that’s a hard credit score check. In all situations, in terms of ourselves, we’re looking at soft credit report checks. A credit monitoring situation through TransUnion like that, that would be a soft credit report check. So, I wouldn’t worry about affecting your score.

I would remind, again, if you’re checking with TransUnion, you also want to keep an eye on Equifax. They are similar products. They use this information, they compile it themselves, but they are weighing those ingredients they have in your credit report differently. You will have different scores. And we do know, one could have an error and one might not, so it’s really important to have an idea of both and make sure, just once in a while, making sure they’re accurate. It’s really important.

And the last question, and really importantly I think overall, in terms of what we talked about, “how do I make a budget and stick to it?”

Well, the first thing I would say about creating a budget is – get to it!. Get your income in there, your expenses. Really think about it, review what you’ve spent money on and then really track what you should be spending going forward.

The KOFE budgeting tool gives you insights, if you create one on there, about how much you should be spending on certain things in your lifestyle. Whether that be home expenses or school, or to do with children, or to do with housing, and so on, it will give you ideas and percentages about Canadian spending averages. And then it can give you an idea of, “ok, where might I be overspending?” Typically, in this day and age, we’re seeing subscription services being a big one. Take out food is another one. Things that are really fun. You want to do, but it’s pretty easy to have that slippery slope that causes you to say, “uh oh, I spent too much money all of a sudden.” Especially, with inflation and food prices and gas prices going up. So, something to be aware of. If you ever need help and advice, contact our team. Contact liv.rent if you’re looking at to help and advice about rentals as well.

So, with that, thanks everyone for your participation engagement. If for whatever reason we didn’t get around to the topic you wanted to discuss, please feel free to reach out to us. Download the handout you have there as well. We’re here to help and we wish you all the best on the rest of your Thursday. Thanks again for attending.

Matisse, I wanted to thank you, especially again, for joining us. I know how much our members value liv.rent being here to talk about rentals, especially this time of year going into the September months. In August people are renting all over the place, all over Canada. So, thanks for taking the time.

01:02:09 [Matisse]

Yeah, no worries. Thanks so much, Robbie, for having us. And definitely, good luck out there. It’s tough, but definitely do your research. Stay vigilant and I wish you guys all the best of luck.

01:02:21 [Robbie]

Alright. Take care, everyone.

01:02:23 [Matisse]

Thank you. Bye.

Ben: Hello everyone, and welcome to another fabulous Consolidated Credit webinar. We have our Executive director here Jeffrey Schwartz, and he’s joined by our industry expert Ryan Watt from Climb Credit.
Today we’re going to speak about building or improving credit, and then highlight some strategies and some tools that you can start using today to help do that. We’ll kick things off with Jeff.
Jeff: Hi everybody. Right out of the gates, whether you’ve bruised your credit with late payments or accounts that have been sent to collectors, or you just want to get the best interest rate on a loan or mortgage, the first step you need to do is get copies of both of your credit reports.
Ben: Yes, you need to get both. You see that there are two credit bureaus in Canada: Equifax and TransUnion. It’s a good idea to check both reports and to know both of your scores. But we’ll cover that more in a second.
Every Canadian is entitled to one free copy of their credit report per year through the mail. You simply go to the bureau’s website, download the request form (it’s a PDF), then you’ll have to fill it out and include two photocopies of government ID. Then in about 15 to 30 days, you’ll receive a paper copy of your credit report, and that’s when the work can start.
Jeff: You also may want to check with your bank. Often, banks will give you your credit score or report for free. Often this will be from one of the bureaus, and not both, so be sure you get copies from both TransUnion and Equifax.
You can also get both your scores from the bureau websites. Just beware that they’re likely going to charge you a fee. And there are some other credit monitoring and loan brokerage websites you can find on the web that will also give you free scores and some information on the accounts in your credit report.
Ryan: Yes, and whatever way you choose to get your credit reports, it’s important that you look at both scores and both reports. Now, they may not be the exact same, and that’s OK. What you want to look for is large gaps between the scores.
Let’s say you have a score of 700 at TransUnion and a score of 600 at Equifax. You want to examine both reports and find out why there’s such a difference. It’s especially important when you’re looking for larger loans as most lenders will look at the average of both scores. The closer they are to each other, the better. In the last example, the person with a 700 score and a 600 score would actually average out to 650. This could mean you’re paying a higher interest rate than you deserve.
Jeff: In order to have good credit, you need to use credit in a positive way. Being debt free is a great financial goal to have, however, most of us will need to take on some type of debt in our lives, whether it’s to finance education, purchase a car, or work towards homeownership. Having debt isn’t always a bad thing. On the other hand, having no loans at all to repay means you’ll have nothing to report to the credit bureaus and therefore nothing to build or improve your credit score on.
Ben: That’s a good point. It’s also important to note that not all debt is bad debt. And in some cases, debt can be a great tool for convenience, and it can also help improve your financial situation. Some examples of this would be taking out a student loan. Typically you’re younger, it means you’re interested in finding a good job. And by paying off that student loan once you’ve graduated, you’ve started building that credit at a young age.
Another popular example of using credit for convenience would be using one of those cashback or reward credit cards every month. As long as you pay it off, not only does this help improve your credit, it also helps you get some free perks, like gas, or groceries, air miles, that type of stuff. There are some good reasons to use credit regularly.
Jeff: Great points Ben. But just because you have to have a credit card to build a credit score doesn’t mean that you need to accept every offer and credit card thrown your way. We’ll talk a little bit more on that later.
It’s important to understand how having a mix of credit types can work in your favour as well. Revolving and installment credit are two of the more common types of credit and are called “trade lines” on your credit report. Having a good mix of them can help you build your score faster.
Revolving credit examples include credit cards where there can be a revolving balance and limit. Installment, on the other hand, is pretty self-explanatory, meaning you pay in installments. Things like car loans or student loans would be considered installment loans.
Ryan: That’s right. A good example of a healthy credit mix would be a person with a car loan, a student loan, perhaps two credit cards. In that case, lenders can see that they can handle two different types of installment credit (the car loan and student loan), and two types of revolving loans (the credit cards). Now, don’t get me wrong. Any of these loans will hurt your credit quickly if you start paying late or if you default on them.
Ben: Good point. That brings us to our next slide here, which is “understanding your credit scores.” Understanding the credit score calculation can help you get the best credit score. Two of the biggest factors in that calculation are what are called “utilization” and “payment history.”
For the payment history, 35% of your credit score is made up of your history of paying accounts. That means if you’ve paid off every credit card bill, every loan payment without fail for the last seven or eight years, you’ve probably got really good credit. Excellent even. Also, if you never carry a balance month to month, or on the rare month that you do happen to carry a balance – January is a popular time for that – or if it’s very low, then you probably have great credit too.
The way you want to think about utilization rate, is it’s just a way to look at how in debt you are. Staying below 20% to 30% of your limit when carrying a balance month to month is the best way to maintain a strong credit score.
Jeff: Great points Ben. Let’s take a look at that example. It’s one we see quite regularly. Let’s say you had a $10,000 limit on your credit card, and due to some unforeseen emergency, you had to put a charge of $5,000 on it. Doing the math, you’re now 50% utilized, which is well over that 20% to 30% we mentioned. If that card gets paid off by the end of the month, then it’s going to be seen as positive information on your credit report. But what happens if you can’t pay that card off by end of the month?
In order to lessen any negative impact on your score, you’ll need to make a payment of, let’s say, $2,000 on the card. But even better would be a $3,000 payment. Making a payment of $2,000 to $3,000 would bring the balance down enough to fall within the 20% to 30% utilization rate that we mentioned and not negatively affect your credit if you’re unable to pay the card off in full by the end of the month.
Ben: It looks like that was a popular topic. We have a question now, and I think it would be a good time to answer it. This one’s for Jeff. They’re asking, “Does keeping cards overutilized or maxed out month after month lower my credit score, even if I make the minimum payment?”
Jeff: Yes, definitely. With only paying the minimum, the majority of what you’re paying goes to interest and fees anyway before being applied to the balance. There are some easy ways to prevent missing a payment or paying late. Setting up reminders to pay on your phone, or even better, setting up automatic payments through your bank will help ensure that you don’t miss any payments. Just be aware that there could be penalties for missing a payment if there’s insufficient funds in the account resulting in those NSF fees.
Also, overdraft on these accounts can include some pretty hefty interest rates as well. So make note of the amount and what day the payment comes out so you don’t get dinged with any unnecessary fees. And like we said earlier, you really don’t want to over apply yourself. Making the distinction between “soft” inquiries and “hard” inquiries can save you from losing some of those valuable credit score points.
Ben: Good. That’s something I hear quite regularly in my workshops. So I think now would be a good time to cover that question, probably for Jeff: “Does checking my credit score affect my credit?” I hear that quite a bit.
Jeff: Checking your own credit report once a year through the mail does not impact your credit score, and neither do any of the online soft checks on many of the websites and also on your online banking. But if you’re unsure, make sure you ask the lender before you attempt to pull.
The bottom line is, don’t overapply yourself. Next time you go to the grocery store, someone may offer you a free box of cookies, or some steak knives for setting up their new rewards credit card. But just know the cookies or the knives aren’t free. Once you sign that agreement, you’ve given permission to do a hard pull on your credit and your score will dip slightly as a result of that.
Ryan: That’s right. Now, there’s an exception to this rule often found with mortgage lenders. When shopping for a large loan or mortgage, you’ll be able to have five credit checks done with different mortgage lenders. And for the purpose of your credit score calculation, the bureaus will only count it as one single mortgage inquiry.
Ben: That’s a good point to note. So, shop around, especially for the biggest purchase of your life. After you’ve received the copies of these credit reports, you’re going to want to start going over it with a fine tooth comb and you want to start looking for mistakes, inaccuracies.
What needs to be fixed? Personal information, collection accounts, credit information. According to a national survey put out by the Public Interest Advocacy Centre, nearly one in five Canadians found a mistake on their credit report. So, take a close look at all these things. And if there are accounts in collections, make sure they’re yours. Take some time to govern all of those inquiries and make sure you recognize all of them.
Did you open that credit card? Did you get that free box of cookies? That sort of thing. If you do see any inquiries that you don’t recognize, check it out right away. That’s a really good sign that there’s an identity thief trying to open an account in your name, maybe a cell phone or credit card. Something like that.
Jeff: These are all excellent points. What people need to know is that the dispute process is pretty straightforward if you have found an error. You can fill out the dispute form they send you when you receive your free credit reports. You can also call the bureau directly or even do it through their online dispute center.
If the bureaus are unable to correct the mistakes found there, your next step is to contact whoever legally owns the debt, whether it’s the original lender or the collection agency the debt has been sold to. If you’re unable to remove or update the information, you always have the option of adding a consumer statement to your credit report. It’s just a few short sentences that lenders can read that are meant to explain the blemish or mistake on your report.
Ryan: Right, but the bottom line is to think like a lender. Would you loan money to yourself? If you took a look at the last seven years of your credit history, what would that tell any future lenders? That’s why it’s important to honestly ask yourself, “what does my credit report say about me?” Because that’s exactly what the lenders are asking themselves when they’re looking at your credit or loan application.
Ben: Great. Some good points there. Now we’ll move on to, what could the problem be?
Jeff: Is debt the problem? Just as the slide said. Carrying high debt levels, missing payments, and having debts sent to collections are some of the worst things you can do to your credit. So, what is your particular situation now that you have your credit reports and understand a bit more about them?
It’s time to do a bit of a personal inventory. If your balances aren’t going down, even if you’re making the minimum payments, you’re likely headed for trouble. We’ve seen how being overutilized on your loans directly impacts your credit score, so each month that a credit card stays maxed out, your score is going to feel it. Late payments over 30 days are going to be reported to the credit bureaus, and again, your score is going to feel it.
These are all warning signs that you need help with your debt. You’ll have to ask yourself some tough questions though. Why did the debt become a problem? When did these things go off the rails? What if an unplanned expense were to crop up tomorrow? How would I handle it? Would I be able to handle it?
Ben: Those are all some good questions. And if the answers to these questions scare you – or some people who stick their heads in the sand, they don’t want to know the answer – that tells me it’s time to speak to a professional. So, speaking to a credit counsellor, or a trusted financial advisor will help you understand where your money is going and how much debt you’re carrying. Based on that budget snapshot and the debt assessment, they’ll have the tools necessary to start putting a plan together for you.
Jeff: And there are several options for getting you out of debt. And if debt is the problem, then fixing that problem should be the first step towards improving your credit. The most severe of these options would be bankruptcy. If your situation is dire enough, then you need to speak to a Licensed Insolvency Trustee about the bankruptcy process.
Debtors not wanting to file bankruptcy also have the option of speaking to a trustee about a consumer proposal. A proposal is an agreement made by the consumer to repay a portion of their debt within five years. Both of these options have a severe impact on your credit. So, you’re going to want to make sure you fully understand them before you go ahead with either of these insolvency options.
Ben: Right. Those are not simple decisions to make because there are a number of reasons why a person can’t or may not want to go bankrupt, depending on their situation. They might lose their home, they could lose savings. If they’ve built assets, they could lose those as well. Others might lose their jobs depending on what industry they work in.
So bankruptcy is not an option for everyone. A restructured payment plan – something like a debt management program (DMP) – is another option for people carrying high levels of unsecured debt. Unsecured debt would be anything that’s not backed by some sort of collateral or asset. What the DMP does is it consolidates all of your debts at a reduced interest rate, often at about 0%. Debtors will then make one monthly payment which is applied to all the accounts at that reduced interest rate until the debt is repaid.
The debt management program does have a negative impact on your credit, but it is much less severe than the ratings associated with a bankruptcy or consumer proposal. The bottom line is, find some sort of help if you need it.
If improving your credit is a concern of yours, then it’s worth it to take a look at some of the tools out there that can help you. Climb offers a credit building program to rebuild your credit while you save money. Ryan can explain a little more about what it is and how it’s been successful for some of their clients.
Ryan: That’s great. The credit building program is fantastic for people who currently have low credit scores and are looking to build positive trade lines and have that positive credit history. It could be that you don’t have that history from the past, so you’re looking to build up your file. It could be – as you mentioned in the last slide – that you’re considering a consumer proposal or debt management plan and you’re looking to rebuild your credit from there.
The credit builder program allows you to save money while you’re rebuilding your credit score. With an improved credit score, you’ll be one step closer to achieving the financial future that you’re looking for, being approved for loans, better interest rates. Not to mention at the end, you’ll have money that will be returned to you that can go towards whatever you were saving for, be it a car, a vacation, even your child’s education.
The way the program works is that you would be paying a loan on a monthly basis. We would be holding the payments in a savings account for you and we’d be recording all your payments to the credit bureau, building up your positive credit history. At the end of the program, we return your savings to you so that you have that money to be able to spend on whatever you’d like.
Ben: Great. Sounds like an interesting program and certainly worth taking a look at if improving your credit is a concern of yours.
Now I think we have some time for some questions. It looks like the first one is, “How long will it take before I see an improvement of my credit score?” Well, that depends a lot on your personal situation and what your credit looked like before you started taking action to repair it. But people who manage to reduce their debt loads, or stop paying late, or maybe take care of a debt that’s in collections can start seeing a big improvement in about 6 to 8 months.
Next question that we have there, it looks like it could be directed towards Jeff: “How can I build credit as a young person with no credit history?” Good question.
Jeff: Firstly, and I experienced this with one of my children, I would start with a credit card. As long as you can trust yourself with paying it off in full every month, and if you’re over 18, you can talk to your bank about applying for a low-limit, preferably low-interest credit card. It’s a little easier to get approved for a student card if you’re attending a full-time post-secondary program. So that’s something you might want to think about.
Now, if you can’t get approved for either one of those, then look at applying for what’s called a “secured” credit card. With a secured credit card, you’re required to pay a deposit up front. And that deposit is going to act as your credit limit. So you put down, say, a $500 deposit, and then they give you a credit card with a $500 limit. Once you get that credit card, leave it at home.
Figure out what you can comfortably afford each month. It could be your Netflix subscription or your Hydro bill. Whatever it is, make sure you pay it off each month. Borrow, pay, and repeat. That’s the best way to build your credit history. Remember that in order to get the most impact of using a card, pay it off prior to the end of the period of that statement, and not just before the due date.
Ben: Good point as well. Ryan, are there any questions you seem to get about your program that you want to cover now? Anything else you wanted to mention?
Ryan: Yes, it comes down to exactly what Jeff said in his previous comments, is that a secured credit card or credit card of some type is a great way to build your credit. But as we said earlier in the webinar, having installment loans and revolving loans is a one-two punch in order to improve your credit even quicker. So, that’s where a lot of our customers will look at getting into our credit builder program, also getting that secured card to be able to improve their credit scores even faster.
Ben: Great. Thanks for taking that. It looks like that’s all the questions we’ve got so far. If you’d like to contact us or Ryan at Climb to learn more about their program, please let me know. You can reach us by phone or email. Feel free to check out the website. There’s a ton of information and educational resources there.
That concludes the webinar for today. Thank you all, and have a great day!

Ben: Hello, and welcome to another Consolidated Credit Webinar. This time we’ll be looking at what all the fuss that RRSP season is about. Today our executive director Jeffrey Schwartz has been kind enough to join us so we can take a step back and examine what exactly happened during RRSP season and why it might matter to you. So, RRSP season has come and gone, and some of you are probably even wondering what that even meant. What’s all the fuss about? Why should I even care? Well, that’s what we’re going to take a look at today. We’re going to look at some of those questions in detail and give you some tips on where you can go to get help. And as always, we’ll end off with a Q&A session and cover some of those burning questions you have about RRSPs or RRSP season. I’ll let Jeff lead us off here with, “When is RRSP Season?” Jeff: Thanks Ben. As we’ve said, RRSP season has come and gone this year, and now your focus has probably shifted to the upcoming tax season. And given the tax implications of RRSPs, it might make sense that these two deadlines are only 60 days apart. So, that answer our first question: “When is RRSP season?” For most people, it’s the first two months of a new calendar year. You’ve got until March 1st to contribute to your RRSPs up to the maximum amount, which is typically 18% of last year’s total income. That means if you’re set to earn about $100,000 in 2019, you’ll have until March 1st, 2020 to contribute up to $18,000. The reality is that RRSP season is all year long, but we can get into that a little bit later. There are some exceptions to this rule: for instance, if you have an employer RRSP Matching Program, a pension, or you’re self-employed. So be sure you understand what your situation is so you don’t get hit with penalties for over-contributing. Ben: OK Jeff, I’ll try to tread lightly a little bit here. It’s never a good idea to insult your boss, but you’re a little bit older than I am. But I’m not exactly a young man, but I’m willing to bet that we have different retirement goals. So a question we get a lot in my retirement planning workshop is, “Should I care about RRSPs, or RRSP season?” Sometimes it’s older baby boomers looking at retiring in three to five years and maybe a fresh college graduate looking to enter the workforce. But they all ask me in some form or another, “What can an RRSP do for me?” Jeff: And you’re right Ben. Different people will always have different financial situations or goals and they can be intensely comlex, or simple and straightforward. There are so many factors involved, like, how old are you? When do you want to retire? What kind of assets have you built? How much debt do you have right now? What do you want to leave to your family when you’re gone? Really, in order to answer your question about whether or not you should care about RRSPs is to first ask yourself, “Do I have to have an RRSP?” If you do, what do you want to do with it? And if you don’t have an RRSP, then what’s your long-term goal? As you’re probably aware, CPP, OAS, and GIS (if you qualify) will not be enough to live on comfortably or close to how you’re living now when you’re retired. You’ll need some other sources of retirement income to meet all of your wants and needs so you can actually take time to enjoy your retirement. Ben: Great. And that brings me to another popular question: “How do RRSPs work? What can they do for me?” Those are two very important questions and they depend a lot on your financial situation and your tax situation. But when used wisely, RRSPs can lower your annual tax bill. For people who regularly contribute to their RRSPs – and maybe they find themselves in a higher marginal tax rate – the benefits can be high there. They’ll be getting a refund on the taxes they’ve already paid, and they’re building a retirement income stream here. So, Jeff, another popular line of questioning I get from workshop participants is, “What are the benefits of an RRSP if I don’t have to pay taxes each year? Jeff: That’s a great question, and while there’s no taxable benefit for you when you’re contributing to an RRSP, you’re still saving for a secure retirement, and that’s never a bad idea. That means years and years of compounding interest and sheltered growth in a relatively secure investment vehicle which will literally pay off big when it’s time to think about retiring and withdrawing that money. Ben: Great. So I guess that leads into the next question: “What do you want to do with your RRSP if you do have one?” Hopefully, you’re a little bit better informed about what RRSPs can do now, and maybe start opening one, or contributing to one, or come up with some sort of retirement plan of your own. Those are some great financial goals to have, but before we jump on the RRSP bandwagon, let’s take a second to find out what you want to do with your RRSP. Is there somewhere else you could put that money that will better serve your needs? These are serious questions that you need to spend a little bit of time answering as best you can. Jeff: Yes. Definitely spend a little bit of time exploring answers to those questions. You may want to speak with a financial counsellor or a trusted advisor to clarify your situation first. If you’re looking for a place to save money first for paying off a debt or a home reno, don’t do it with an RRSP. Find some other place to save that money, like a TFSA. Ben: OK, once and for all, here are the three biggest benefits to an RRSP. The first is tax savings and retirement income. That was the reason these registered retirement programs started way back in the 50s. And I’m willing to bet that was probably before your time, Jeff. So, they’re meant to save taxes so you can pay them at a lower tax rate later. Now, at the same time, you’re adding an additional source of income to any pensions or any investments that you’ve had or what you’re planning on drawing down on in retirement. So, another thing that you might want to consider is the Homebuyers Plan (HBP). If you’re planning to buy a home and you have money in an RRSP, you can make tax-free withdrawals up to $25,000. But of course, it’s not that simple. There are some qualifying requirements to meet, so speak with an advisor or someone at your financial institution about all the pros and cons of using the Homebuyer’s Plan before you commit to it. Because you’re going to have to pay that money back into the RRSP eventually. So Jeff, perhaps you can spend a little bit of time shedding more light on that Homebuyer’s Plan option. Jeff: Certainly. It’s one that I know about personally. It’s probably easier to think of the Homebuyer’s Plan as a loan. In fact, that’s how I was able to get my first home as well. I dipped into my RRSP and paid it back interest-free over time. So, how you want to think about it is, it’s a tax-free loan from your RRSP to yourself. You’ll have up to 15 years to pay back that loan. Think about the long-term consequences before jumping in on this plan. Yes, you’ll be buying a house or condo, which is a fantastic financial goal and a great asset to start building equity with. But what are some of the other potential costs of this program? For one, it may have taken you years or decades to build that RRSP up to that amount. So, it could be seen as robbing from your future to pay for the present. But that doesn’t mean it’s a bad thing, either. It’s really one of those pros and cons options that you’ll need to evaluate and do your homework on before you decide whether it’s the right choice for you. Building equity in an asset that will usually gain value over time is a great use of your money, but so is saving for a secure retirement. As with any choice, there’s going to be consequences. You have to make sure you know all the ins and outs of the Homebuyer’s Plan before you start house hunting. Ben: Great. Those are some great points on the Homebuyer’s Plan. These are big decisions, so don’t rush them. If you don’t understand something, find help. Another reason you might want to tap into your RRSP funds is for continuing education, or perhaps starting a second career a little bit later on in your life. And that program is called the Lifelong Learning Plan. And for someone considering a career change, it can be a great way to finance your education or some training. The Lifelong Learning Plan does have some wordy eligibility criteria to meet, but essentially it allows you to withdraw up to $10,000 a year to finance full-time training or post-secondary education. The total amount that can be withdrawn is $20,000 over four years. Another great benefit of the Lifelong Learning Plan is that any withdrawals are made tax-free. But similar to the Homebuyer’s Plan, this is a loan. You’re going to have to pay that money back. At least 10% of the money borrowed must be repaid each year for a maximum of 10 years. That’s why it makes sense to take a little bit of time looking at what you are earning. Jeff: I think we’ve established that saving for retirement, however you plan to do it, is never a bad idea. From those stats, it’s clear that this is a source of financial stress for far too many Canadians. It’s your money. These are your retirement goals. So make sure your RRSP aligns with those goals. If your goals don’t align with the benefits of an RRSP, it doesn’t mean you should stop planning your retirement altogether. It just means that contributing to an RRSP makes more sense for others than it might for you. And that’s why we should take a minute to go over TFSAs and how they might be a better choice for some over an RRSP because there’s often a lot of confusion about the two. Ben: I agree. Contributing to an RRSP is never a bad idea. I also hope that we’ve stressed the importance of some type of a long-term savings plan, even if it’s not an RRSP. If an RRSP is not going to help you achieve your retirement goals right now, then you might want to look into the benefits that come with a TFSA. It’s an easy-to-use, low-risk investment vehicle, and the interest earned within the TFSA is 100% tax-free. If you’re young or are earning a lower income, then contribute to a TFSA. And if you start earning more money and are moving up in the tax brackets, then you can always move money back over to an RRSP. So, what’s your savings plan? Jeff: If you’re one of the many Canadians out there who is confused about what’s better – a TFSA, or RRSP – just ask yourself: “Can an RRSP help me achieve my retirement goal?” If it doesn’t make sense right now, then contribute as much as you can to a TFSA. All these acronyms are tough to keep up with. It’s a place to deposit and withdraw money. Low-risk investments that can be made within a TFSA will grow tax-free. And if your income situation changes later on, you can always move that money from your TFSA to your RRSP. Ben: Another common question I get is, “Do I need to contribute to my RRSPs?” or “Do I need to contribute to my RRSP by the deadline?” I’d say yes, or maybe no. You’ll have to decide that on your own. Hopefully, some of what we’ve talked about today made things a little easier. The bottom line is, ask yourself now, what’s your long-term financial plan? What goals have you set for yourself, and how do you plan on getting there? If you’re still unsure about what to do with your RRSP, maybe you’re unsure if you should even start one, then maybe talk with friends or family. Now, that doesn’t mean take the advice of your crazy Uncle Gary who keeps his retirement funds stuffed under his mattress so the government can’t get it. That’s not going to earn him or you any interest or tax-deferral benefits. So we see right there that 61% of people in that 2017 Financial Planning Standards Council poll all started to seriously think about their retirement savings plans when triggered by a discussion with family or friends. Maybe at your next family event or dinner, you might want to ask some of your older family members what their plans were. Jeff: Right Ben. Talking about money usually isn’t the most comfortable topic to bring up at the dinner table. But with retirement planning, it’s a bit different. People love to talk about their dream retirement with one another. That being said, however, I’ve spoken with a number of Canadians who have unfortunately had their retirement dreams put on hold after speaking with a pushy salesperson. Typically, they wind up leaving the salesman’s office more confused than when they went in with a pile of confusing graphs and glossy reports. So find a trusted advisor to speak with. A good place to start might be at your workplace. Many great organizations out there offer an employee RRSP matching program. And for 83% of the participants in that poll, that’s what it’s going t take to encourage active retirement planning. If your company offers an RRSP matching program, jump on it right away. It’s essentially free money offered by your company to ensure you have a better chance of planning a secure retirement. Ben: Great, so while we’re on the topic of that, maybe Jeff if you could just explain to us if you need help, where can you go, or who should you look for. Jeff: If you’re looking for a trusted financial advisor, a CFP (Certified Financial Planner) or a financial counsellor can help you lay the groundwork for a secure retirement. If you have some more lofty retirement goals, then you may want to look for a financial advisor who specializes in retirement planning. They’ll have a much better understanding of what will be needed to get you on your way to your retirement dreams. CRSs (Certified Retirement Counsellors) or RRCs (Registered Retirement Consultants) are great places to start. You can find out a ton of great information about financial planners by visiting the FPSC website. So, that wraps up our webinar here, and we’ll just take a second or two to answer a few common questions we get. Ben: Sure. The first one we get quite a bit is, “How much should I contribute to my RRSP? Is there a dollar amount I should focus on, or a percentage?” That sort of thing. Jeff, maybe you want to take a stab at that one. Jeff: Firstly, the fact that you’re considering putting money aside for an RRSP each month is a great idea because that really eliminates the need to come up with a lump sum of cash right before March 1st. If you’re doing it all year long, you get the growth throughout the year in addition to the fact that you’re saving yourself from having to contribute a lump sum all at once and coming up with that cash. So, let’s address what you really asked, and it’s a complex question. You’ll need to take a serious look at your monthly budget to see what you can safely stash away for retirement while meeting all of your monthly financial obligations but still leave room to save for your other financial goals. Now, according to Money Sense, each year two-thirds of Canadians don’t contribute anything at all. So any contribution you make is an accomplishment. If you’re able to stash away the maximum 18% of your income per year in RRSP, you’re doing great. But your situation might be different. Start with your monthly budget, and if you don’t have a monthly budget, it’s time to start one. After your monthly expenses are paid, if you’re able to it away 5% to 15% of your monthly income into savings, figure out how much of that amount you’ll need for your other savings goals, like your emergency savings funds, or if you’re planning a vacation, or purchasing new appliances, and so on . The rest of that savings should be earmarked for retirement. And the earlier you start, the better, so stop waiting. Ben: I like that. Start with a budget, and then go from there. So, another one I hear often is, “How long can I have an RRSP and what can I do with it once I retire?” Well, you’ll have to transfer that money out of your RRSP by the end of the year that you’ll be turning 71. But you’ve got a few options on how to do that, where you want to do that, and that sort of thing. Certainly seek the advice of a trusted financial professional, hopefully one that has experience, because those options include taking out the money in cash, which has its tax implications. You can also purchase some annuities for some regular type of retirement income. And the other option which is pretty popular is transferring your money to a Registered Retirement Income Fund, or a “RRIF”. A RRIF allows you to keep that money invested with the opportunity for it to grow tax-deferred. But every year you need to withdraw a minimum amount from your RRIF, and any amounts taken above will be taxed. So, there are a few different options, so you really want to speak to your financial advisor or professional about what you want to do. If you wanted to connect with us, please do. We hope you have a little bit of a clearer understanding of what RRSPs can do for you and why there always seems to be a mad rush to contribute before the RRSP deadline. So hopefully next year you’ll be ready and actively working towards that goal, that dream retirement. Please feel free to contact us here are Consolidated Credit Counselling Services of Canada with any of your burning financial questions. We hope you enjoyed the webinar and we’ll see you next time

42% of Canadians overspent in 2018 and the average amount was $530. That means many Canadians had budgeted to spend X amount of money, but actually spent much more than that.
Where did this extra money come from? Most likely it came from some type of debt. Some even plan to go into debt for their holiday spending.
So they’ve partied too hard and have a spending hangover that lasts well into January, so what can they do? Stop using credit! Use cash or your debit card for now.
Like with any hangover, you need to stop doing what you’ve been doing in order to start feeling better.
If I have too many celebratory drinks during the holiday festivities, the morning after I’ll feel terrible, so I’ll probably cut back on drinking… at least for a few days anyway.
If I eat too much candy and chocolate during a week of festive dinners with family and friends, I’m probably not going to feel too well the week after. So I’ll start eating healthier in the New Year and feel better in no time.
But time after time with credit and debt we see people taking the “hair of the dog” approach to their holiday spending hangovers.
They’ve fallen deep into debt, and instead of cutting out credit “cold turkey,” they take on more debt as a stop-gap solution (like a Bloody Mary on Boxing Day).
Your bank accounts and credit card debt levels won’t change for the better unless you do. And it won’t take any extreme measures or overly detailed planning. Start small today to make a big difference tomorrow.
Like any great holiday party, if you don’t start cleaning up the night before, there’s going to be a big mess in the morning.
Nobody likes cleaning up the mess after a party, and having a hangover just makes it worse. Holiday debt can quickly become uncomfortable messes too, so we should take some time to look at ways to clean them up.
Start by looking at where you spent your money. In today’s digital age that’s never been easier. Start by looking at your mobile banking; the expense tracking and budgeting software found in your pocket or purse has already done the work for you. Or you could head to your bank’s website and log into your online banking, or ask a teller to print out copies of your statements.
Look at some of the basics like…
What did you spend on Groceries in December?
How much did you spend on decorations at the dollar store in November?
Which gift cost the most? What store was it at? Who was it for?
A big reason why you need to start planning is so that you can see how much debt you have in dollars and cents as well as where it came from.
Then you’ll be ready to set a SMART goal. BTW, “Paying off my holiday debt” is not a SMART goal. Getting specific and coming up with realistic numbers and time frames will help you ditch this hangover now and in the future.
Instead of trying to “pay off my holiday debt” Why not try writing down a SMART goal? Try something along the lines of “Put an extra $50 on top of my visa card’s minimum payment this month with money I saved from my entertainment expenses”
Can you afford that extra $50? If you’ve found yourself with an outstanding debt from this year’s holiday spending, then there’s a good chance you don’t know. But don’t worry, even then a budget can be your best friend.
A common mistake we see is trying to use last year’s budget as a future planning tool for next year. Ask yourself: “When it comes to holiday spending, how’d your plan go last year?”
If you’ve got a holiday overspending hangover, it probably didn’t go well, or like many, you never had a plan to begin with. But that’s a good sign, now you can start over from zero.
First, use our budgeting tools to figure out your monthly expenses, roughly categorized into fixed expenses – the same every month, flexible expenses – change season to season or month to month, and make note of any irregular expenses you have in the year – oil changes, medical expenses, or any other annual or semi-annual commitments.
And if paying down debt is your goal, it’s essential that you add your debt repayments as a line item in your budget, most likely categorized under fixed expenses.
It’s not mandatory, but prioritizing your expense list can also help out when looking for places to save.
For example, ask yourself if going to a restaurant or ordering Uber Eats is more important than paying your internet or cellphone bill? Is paying for your rent more important than that Caribbean vacation?
Your answers may not yield any earth-shattering results, but that’s not what they are meant to do. They’re meant to help you with two things. 1) Understanding where your money is going, and 2), to help you understand how much of your money is going where.
Find out things like:, how much you spend each month on discretionary expenses: entertainment, restaurants, take out? On food? TV? Internet? Cell Phone?
Now you can see where there’s areas to save. What can you cut down? And what can you cut out completely?
Start doing something today. This can be tough for some and it’s not for everyone. But the facts are still the same: you need to do something and you need to do it now.
And don’t be tempted into to just make the minimum payment on each bill. That’s a trap and it’s only going to make your situation worse as the majority of each minimum payment goes towards interest and any fees you may have incurred. This does nothing for the principal debt amounts you have outstanding.
This happens a lot and often people justify it to themselves by saying things like: “I just need some time to catch up,” – or – “once work picks up again, I’ll have no problem paying them off.”
This could be a time to start looking for extra income. This could be any passive income you’ve received such as bonuses or commissions, tax refunds, gifts, or inheritances. Or perhaps you’re a little more proactive and willing to look for a second or part time job, drive for a car sharing service, or sell some unused sports equipment, electronics or other valuables.
Whether its $5 or $500 added to the minimum payment, try your hardest to save as much money as you can (using your new budget), and put that towards your debt.
Coming up with a plan of attack will be the next step. If holiday debt is the issue at hand, then we need to find a way to put your money to work so that it pays off the debt in the fastest and most efficient way possible.

There’s certainly more than one way to pay off high interest debt, but for our purposes we’ll talk about two methods that might work for you. The bottom line is that you need some type of a plan to maximize your debt repayment so you can put your holiday overspending behind you.
First we have the powerful Tiger Style. Now please pay attention to the Sensei.
Make list of all your debts and write down the balance and the APR (interest rate).
Prioritize from highest APR to lowest.
Make minimum payments on all your debts except the one with the highest APR.
Make the biggest payment possible highest APR debt.
Keep that up until the debt is gone, then move on to your next highest APR debt.
As you eliminate each debt, you free up more money to pay off the next. This accelerates repayment until you reach zero on all your balances.

Tiger style works well if you’ve got room to free up some extra cash in you budget. If upi think this style won’t work for you then perhaps the Crane Style would be a better fit for your situation. First
Make list of all your debts and write down the balance and the APR (interest rate).
Prioritize from lowest amount or balance to highest
Make minimum payments on all your debts except the one with the lowest balance.
Make the biggest payment possible on the lowest balance debt
Keep that up until the debt is gone, then move on to your next lowest balance debt, and so on.
As you eliminate each debt, you free up more money to pay off the next.

This style works well if you want to gain some quick wins and have limited cash available to pay off your debt.
Just because some of the stuff you saw here today looks simple, doesn’t mean that it’s easy.
But you need to start somewhere, and you need to start doing it today.
If you need help, there are people out there ready to speak to you.
Budgeting and credit use can be difficult for some, and if you need help with either of them I’d recommend speaking to a non-profit credit counsellor. They can go over a monthly budget snapshot with you, recommending areas for savings and highlighting any places where you might be overspending. If debt is an issue, a credit counsellor can also go over a detailed debt assessment with you, recommending a plan of action to repay those debts based on your current situation.
Of course if you have a trusted financial advisor, they would also be a valuable resource in helping you manage your money and develop a plan to avoid and pay off debt.
The most important thing to remember is that there is help out there waiting for you, all you need to do is ask for it.
Q&A
There were a couple of questions we get a lot that I think we should take some time to go over, and now would be a good time to do that. So our first question is…
Q: “I have no money at all, I used credit to pay for all my holiday shopping, and now I’m in over my head, where do I start?”
A: Start somewhere, we all have room to save. Start with something like entertainment or food, is there any way you can save there? You also need to make debt repayment a priority, right up there with food shelter and utilities. Can you pay your debt payment first? Make it your first payment, and better yet, make it invisible and automatic. You can easily set this up at your bank or even through your online banking.
$5 or $500, what matters is that you start today. Which leads us in to our next question,
Q: Should I save my money or pay off my debt?
A: Yes… but allow me to elaborate. Do both if you can. Many people go into debt because they have no emergency savings. Life is going to happen and it can be expensive when it does. If you’ve built some sort of emergency savings before the emergency, then you won’t have to finance that home or car repair with a credit card or loan.
Connect With Us
So thanks for watching and please feel free to connect with us on Facebook or tweet us on twitter. You can also contact us at the information on your screen. If you have any questions, Jeff or myself would be happy to answer them, and if you need to speak to a non-profit credit counsellor, please feel free to call the number there
That’s all for now, thank you and have a great rest of your day.