Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

6 smart ways to clear Credit Card Debt as quickly as possible

Posted By |

By Shiv Nanda

Special to the Financial Independence Hub 

Credit cards can be a saving grace in time of financial need, but if abused can ruin your financial health. Most Americans have a love-hate relationship with their credit cards and the stats seem to agree.

Total US credit card debt is over $830 Billion.

 Of the more than $1 Trillion of revolving debts, Americans are carrying the vast majority of debt in 2018.

 Let’s break down these troubling credit card debt statistics by category:

Studies have found an average of 39% of credit cardholders pay their credit balances in full. And only 29% make low or minimum payments. This is an alarming finding because cardholders who make the minimum payments 20% of the time are the ones with a credit score of 800 and above. While cardholders with credit score of 700 and above are more likely to make full payments towards their credit-card balance. However, there are other factors that contribute to the credit card payment pattern:

1.) Income and Employment

 It is quite surprising that high income doesn’t guarantee freedom from debt. Ironically, the debt seems to be increasing with increase in annual income. And the highest credit card balances are seen with people with the highest income.

2.) Age and Gender

Studies reveal that older customers are more likely to pay their credit-card balance in full whereas middle-aged consumers may pay in full or pay the minimum amount due. Middle-aged consumers have high home expenses as they have dependents to take care of. Gender of the consumer is also a contributing factor of credit card debt. Data shows that men and women have a revolving debt of 29.9% with women having 3.7% less than their male counterparts.

3.) Region

Location has proved to be an interesting influence on credit-card debt. The Midwest and the Great Lakes regions seem to have responsible credit cardholders. They have the highest average credit score and lowest average credit card debts: while Alaska seems to have the highest credit card debt and average credit score stuck somewhere in between the high and the low.

6 smart ways to clear credit-card debt ASAP

1.) Have a plan and stick with it

It is essential that you take a stock of the situation. Continue Reading…

Could you become car-free?

Posted By |
Billy and Akaisha on a Jak-a-Ran in Thailand

By Akaisha Kaderli, RetireEarlyLifestyle.com

Special to the Financial Independence Hub

It wasn’t a decision we took lightly.

In fact, Billy and I discussed the idea of becoming car-free for several years. There were good reasons to do it: no more maintenance and repair costs; no more fees for insurance, license plate renewal, or registration; no more fuel expense; and no more worry about storing the vehicle here in the States when we are traveling overseas for months or years at a time.

But there were also some obvious downsides. We wouldn’t have the freedom to come and go at a whim. And because we live in the American Southwest, where temperatures reach triple digits in the summer, we wondered how we’d manage to get around during the sun season.

Silly idea or feasible plan?

Most people we know couldn’t fathom the idea of giving up their vehicle and saw this new lifestyle choice as a hardship. Americans love their automobiles, and owning one is packaged as part of the American Dream. A look at the automobile and truck commercials today describe how we will be sexier, more popular, physically stronger, and obviously smarter if we purchase their brand of car.

As we’ve described on our Retire Early Lifestyle website, Billy and I live in an active adult community where we are within walking distance to stores, restaurants, and several different entertainment options. Most of what we need is near to us, and we appreciate the slower pace of life with all the rewards it brings. Many of our neighbors use a small scooter, golf cart, or bicycle to get around within a reasonable range. When we need to go somewhere farther, we trade services or pay cash to a neighbor or friend for their time. This is much cheaper than a taxi, more sociable, and we aren’t bogged down with worries about maintaining a vehicle. Both sides appreciate the trade, and our lives are enriched.

After almost two decades of world travel, we realized that the only place where we need to drive is in the States. Elsewhere, we take public transportation or hire a private driver. For the amount of time we live in the States, and for the amount of money that owning our own transport required, we finalized our decision to sell our vehicle.

The year was 2009.

What about you? 

Retirement takes many expressions and even if you could never see yourself as becoming completely free of car ownership, maybe you have toyed with the idea of keeping only one vehicle instead of two.

The following sites may help you with this transition: Continue Reading…

7 tips for earning extra money from your Driveway

Posted By |

By Sarah Kearns

Special to the Financial Independence Hub

Do you want to earn a quick extra buck or two with items that are just lying around the house? How about making money off your handyman skills? And, oh, did you know that it’s also possible to earn extra money from your unused driveway space?

If you’re looking to earn some extra cash by running your own business right on your very own driveway, then you might want to consider these seven money-generating tips.

1.) Hold a garage sale

The first thing that comes to mind when you think of earning money from your driveway is the garage sale. Aside from earning a few hundred dollars, you also get to clean out the clutter in your home. A garage sale is also a good weekend family activity and is a great exercise to learn about the basics of entrepreneurship.

2.) Set up a concession stand

Remember those lemonade stands kids put up during summer break? You can set up a concession stand on your own driveway too! It’s even better if your street has lots of foot traffic. Of course, different countries, states, or territories have different laws regarding this; so, always check your local regulations first before you set up.

3.) Rent out your tools

If you have tools that are seldom used, you can rent them out to neighbors and contractors in your area for extra cash. There are websites like ToolMates that let you post your for-rent tools and equipment online. These services let you make some extra money off your tools; which is always better than letting these expensive items just gather dust in the shed.

4.) Start your own handyman business

Since we’re already on the topic of tools, you can also set up your own, independent, handyman business. If you have handyman (or handy woman!) skills like carpentry, ceiling repair, car maintenance, and such, then it might be good to put those skills into work and earn some extra money. Sites like AirTasker allow you to post your services online so that people in your area can get in touch with you whenever they need your skills.

5.) Share your car with neighbors

Now, this is a fairly new concept and companies like Lyft and Uber have taken this innovative idea to the next level. However, if you don’t like driving around that much, it’s also possible to rent out your car to your neighbors when you’re not using it. CarNextDoor is a service that allows neighbors to ‘share’ their cars with each other, thereby offsetting the cost of ownership.   Continue Reading…

Aging business owners need to tackle estate planning

Posted By |

By Andre Guillemette

Special to the Financial Independence Hub

Did you know that more than 50% of medium sized enterprises in Canada are controlled by an owner between the age of 50 and 64? Additionally, about 75% of Canadian business owners plan to exit their business before 2022. However, according to the Canadian Federation of Business, only half of Canadian business owners have a proper succession plan in place. If you are a business owner, you need to think about the future of your company, no matter your age.

When a family’s assets and income are linked to a business, if the business owner passes away, both estate and succession planning will ensure that the family is taken care of and the company remains viable. If a person passes away without a will, provincial wills and estate law will determine how their assets are dispersed. Without any kind of estate planning in place, their heirs could be hit with a hefty tax bill, and unexpected fees and administrative costs.

There are many steps to effective estate planning and whether they all apply to you will depend on your personal circumstances. Some of them include:

  • ensuring your will is up-to-date
  • appointing an appropriate executor
  • establishing an Enduring Power of Attorney (EPOA)
  • providing an income for your spouse and family in the event of your unexpected disability or death
  • developing a plan for equitable and tax-efficient distribution of your assets
  • creating an emergency business plan
  • writing shareholder/partnership buy-sell agreements if applicable
  • planning for succession

To accommodate the above, there are several financial strategies at your disposal to help you meet your goals. As a business owner you should investigate:

1.) Looking at insurance as a way to shelter assets for the next generation.

Permanent cash value life insurance policies, such as participating whole life and universal life, are attractive to corporations for the potential tax-free death benefit and the tax-preferred cash accumulation benefits they offer. These insurance policies provide the corporation with valuable life insurance protection on a key person or shareholder. Another benefit is they allow for tax efficient growth and access to policy values tax-free immediately or in the future. By using life insurance, the estate value available for future generations can be significantly increased by the tax-free death benefit. Continue Reading…

What to consider before converting your RRSP to a RRIF

Posted By |

By David Mortimer

(Sponsored Content)

Congratulations, you’ve retired! After many years of working and saving, the time has finally come for you to travel, spend more time with family, or do any number of activities you may not have had time for when working 40+ hours per week.

One of the first decisions you now need to consider is when to convert your RRSP to a RRIF? Technically, you are required to do so by December 31stof your 71styear, but many retirees find themselves wondering if they should do so early. Here are some things to consider before making the conversion from RRSP to RRIF.

Am I retired for good?

It’s important for people to consider whether they’ve retired for good before converting their RRSP to a RRIF. Remember that you can’t turn back after making the conversion from RRSP to a RRIF so if you are planning to return to work, even part time, you may find yourself with a tax problem if you’re working and taking an income through your RRIF. The taxes you end up paying could easily wipe out any financial gains you would make from working part time, not to mention it would not allow you the option to continue contributing to your RRSP, which will further reduce your taxes – providing of course you are under the age of 72!

Thinking you might like to keep busy with a part time job? Consider supplementing your finances with your tax-free savings account and non-registered investments before touching your RRSP. If you draw these out first while still working, there will be fewer tax consequences. You may also be better off taking money from your RRSP on a short-term basis rather than officially converting to a RRIF right away.

When it comes down to it, don’t collapse your RRSP into a RRIF until you’re fully retired, and have considered all your potential income streams and their potential tax consequences.

What income streams are available to you?

When making the decision on when to convert your RRSP to a RRIF, it’s important to look at how you will be funding your retirement. Do you have a workplace pension you will be receiving? What about Old Age Security (OAS) or Canada Pension Plan (CPP)? Keep in mind that your OAS has certain claw-back provisions once your income exceeds a certain threshold. Continue Reading…