A Money Coach in Canada

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I have a counterpart in the States, currently residing in the UK. (actually, I’m flattering myself by referring to him as a counterpart. He’s years further into this privileged business of helping people take charge of their money than I am.) Steve Rhode recently posted a thoughtful blog post. He asks the question: are you functionally poor, even though you have plenty of money? Are you debting yourself out of the life you could have, if you paid more attention to your money?

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debtsucksshirt.jpgHave you ever noticed that society seems to define people with money troubles as only those that can’t make the monthly payment? What about the functionally poor. Those people that make enough money to pay their bills but pay so little attention to their spending or finances that they are never late, but never ahead either.

A person can be a debtor without making friends with the collection people. It is possible to do so horribly with your finances that you rob yourself of life opportunities and fun and after all isn’t that the major consequence of debt, lost opportunity?

It is interesting that people see no problem with hiring live-in caregivers to raise their children, personal chefs to cook meals, gardeners to manicure the lawn and housekeepers to help keep things tidy. But when it comes to our finances; who keeps those neat and clean for us?

People of wealth have financial professionals that watch over the books for them and keep things headed in the right direction but people in the rest of society feel that professional money management is unnecessary and an expense not worth paying for. I wonder if that belief is why they can’t make their money go further and have to work harder for it?

In the past, the daily money management in the U.S. or the AllPaid approach in the U.K. has worked best for busy professionals and attorneys, doctors and police officers. The lawyers and medical doctors often worked long hours and just wanted their finances managed well. They also understand the value of a professional service. Police officers on the other hand, I guess it is just a stress elimination thing for them. Coming home after a hard shift dealing with bad people, who wants to deal with the bills after that?

So what shall we call this concept of debting without poverty? Anyone got a good name for it? I’m open to suggestions.

The major problem with debt is not that you get collection calls and a bad credit report. Nope, the big problem is that debt robs you of life. When you go into debt or spend recklessly, you have to earn more and all you are doing is sacrificing future labor to make up for your financial management inefficiencies. At the end of the day all that is lost is the opportunities and possibilities that you would have had if you kept a grip on money that need not have been spent.

Now I’m not talking about labeling expenses like cut flowers as a ridiculous expense, in fact, quite the contrary. If you can use money to bring joy into your life then that’s a great use of money. But in my belief, unconscious and self-medicated shopping does not fall into the same category.

When we overspend in an effort to hide or medicate ourselves from the underlying issues, that just becomes like yet another bottle to crawl in to. It’s an escape and a numbing agent and not a bringer of joy and happiness. As one client told me once, “Shopping is my heroin and the credit card is the needle.” Oh so true.

Another example of this concept of debting without poverty is the therapist that was so busy with her practice that when I examined her bills in detail I found out that she was paying double for a home alarm service, paying for satellite television she was not receiving, was on a high rate long distance plan and was spending way too much for her mobile phone because she was using additional minutes.

When I pointed out all of this to her she kept saying that she had not paid attention to these issues or even looked at her bills because she was so busy earning money to make ends meet. The amount of money she wasted was huge, but she was not delinquent on her bills.

So let’s stop thinking about debt as delinquency and instead focus on debt as a sacrifice of future life energy. If you could, wouldn’t you rather work less so you can take longer vacations or have more time to do the things you want? I would.

You can be a debtor without poverty. Are you?

Ask an Accountant is provided by YMbD’s favourite accountant, Mindy Abramowitz.  Today, she gives some good news to parents — payments from the gov’t for kids, and tax credits.   (hmm.  I wonder if they’d consider helping out parents of daschunds.)

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babyHere is a roundup of the benefits and tax credits for parents of young children:

Canada Child Tax Benefit

The CCTB is a monthly, tax-free payment for any child under the age of 18. Payments begin in July and carry on through June based on the net income reported on your tax return from the previous year. Everywhere but in Alberta, the basic amount is $1,238/child/year (plus an additional $90 for third and each additional child). This amount is reduced by 2% of the family net income that exceeds $37,178 (4% for families with two or more children). Eligibility for the benefits tops out at a family income of approximately $101,328. But keep in mind that this figure is income net of RRSP contributions. You must apply to the federal government in order to receive this benefit.

Universal Child Care Benefit

The UCCB is available for each child under the age of 6. It is a flat payment of $100/month intended by the government to contribute to child care costs, though its use is left to the discretion of the recipient. The payments are taxable in the hands of the lower income earner in the family. Enrolment in the program is processed with the Child Tax Benefit application.

Child Care Expenses

The spouse with the lower income can deduct up to $7,000 in child care expenses for each child under 16. Eligible expenses include payments to: nannies, daycare centres, nursery schools, day camps, boarding schools and sleep-away camps. Advertising costs to locate a child care provider can also be claimed.

Proposed Children’s Fitness Tax Credit

Starting in 2007, parents are eligible for a tax credit for registering children under 16 in ongoing, supervised activities intended for children that improve cardio-respiratory fitness along with one of the following: muscular strength, muscular endurance, flexibility, balance. The maximum amount eligible for the credit is $500 per child, so the maximum credit is $77.50 per child ($500 x 15.5%). The fees must have been paid in 2007 in order to be eligible. You will need a receipt to document the claim, though you are not required to submit receipts with your tax return.

New Child Tax Credit

The 2007 budget introduced a new child tax credit based on $2,000 per child under 18. The credit is calculated using the lowest personal tax rate of 15.5% and works out to $310/child. Either parent can claim the credit when the child lives with both parents throughout the year. In other cases, the parent who is eligible to claim the child as a dependent can claim the credit.

Friday, October 26, 2007 7:30pm
Pacific Baroque Orchestra

Delirio Amoroso: Handel’s Italian Years

St. James Church (Gore & Cordova)

Free admission

As a 20-year old musical hopeful, Georg Händel (he hadn’t anglicized his name yet) took a trip to Italy to find out what was going on in that musical world. The Italians were singing (what else?), and the young composer quickly adopted an exuberant operatic style. “Il Delirio Amoroso” was one of three cantatas he composed at that time. In this concert you’ll not only hear what Händel wrote, but also what he heard. Music by Handel interspersed with Stradella, Corelli, and Perti.

Mamma mia, bring on the pasta. You’ll love it!

Pacific Baroque Orchestra with Alexander Weimann, harpsichord and guest leader; Chloe Meyers, violin; and Washington McClain, oboe

Friday, October 26, 7.30 PM • Free Admission

I ‘switched’ a few months ago, and then so did my brother and last week so did my mom. While it has not been the problem-free experience I expected, there’s no question: I’ve drunk the Apple kool-aid.

So have a whole lot of other people. Sales this past quarter are up 29 – Hello, 29%! – over last year same time.

Share prices jumped by 7% overnight.

ipods, macbooks, iphones … keep ’em coming, Steve. You’re making me rich.

(ahem, if I may say so, I did see this coming.)

Real life case studies draw on my experience past-and-present with clients. The individuals are heavily disguised, but the underlying issues are the same.

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Roger had stocks that had made money and lost money.

He had debts owing the gov’t, student loans, banks and credit cards.

He had boxes, and boxes of unopened financial documents.

He hasn’t filed taxes for three years.

Although he is a high-income earner, he honestly has no idea if he’s dead-broke or on reasonable ground. He wants to clear up the past years of un-tended finances, yet just thinking about it causes him to do anything but take action on it. He’d rather just keep working harder and harder to earn enough to ‘feel like’ he’s doing OK.

We spent three months working together on his finances, and there is a happy ending. But what might you have suggested to help Roger successfully take on the project of clearing the decks and taking charge of his money?suit.jpg