Credit Card Convenience Has a Catch

ccI remember nearly 25 years ago a friend dropped me at a car rental at Orlando Airport. I wanted a car to go down to Miami; I was flying to Cancun in Mexico later in the day. I was asked for a credit card. I said I had plenty of money and would pay cash. I didn’t have a credit card even though I had been working for many years by then. Cash was not acceptable initially until I showed them my airline ticket. I got the car with a warning that if it was not returned to their Miami office by a certain time the FBI would be on my tail.

The reason seems obvious now. A credit card was a combination of identity card and the company’s insurance that I was not going to drive off over the USA a bit like Thelma and Louise did in the film of the same name. There are many questions relating to how people use credit cards and what benefits they have brought to their users and the companies that accept them for payment. The answer to the question pre-recession is certainly different from the one that many would give today. Credit Card Companies were throwing credit around before the recession came, and lots of people were happy to take it.

Things have changed. Cards are still very convenient, but used irresponsibly can still create all kinds of problems for their users. Many people use to have a number of credit cards and spent up to their limits on each; they simply got another and paid the minimum monthly amount on those where their credit was finished. The minimum rarely knocked anything off the outstanding balance when interest was added.

While a consolidation loan could sometimes pay off the balances often, they merely added to the amount of money people were spending each month to keep afloat.

Financial institutions often looked at students as their future customers and offered incentives for them to sign up for a credit card. Suddenly they had something on their hands that they could use to spend on anything they wanted up to the approved limit. The problem was not confined to young students; everyone was tempted and generally everyone was accepted and given a card.

Things have changed, but there is still a level of temptation with that little piece of plastic. There are some rules that everyone should follow for getting the convenience of not having to carry cash. Most are obvious but often forgotten. A credit card is not free money; interest will be charged on outstanding balances making that bargain purchase more expensive than it seemed.

Anyone signing up for a credit card needs to use it sensibly and know exactly the terms and conditions under which the card has been issued. It is essential that the card is used in such a way that the convenience is a definite advantage, and there are no downsides. It is important that users are never late with their monthly payments and that the expenditure that is going on to the card is included in any personal budget that the user is supposed to be following.

Budgets that are artificially supported by a credit card are quite dangerous. Everyone can meet their monthly bills while building up an increasingly large balance on a credit card. The day of reckoning will come in the end, and it will not be pleasant.

I got a credit card shortly after my Orlando experience; it is convenient, but it demands discipline.

Steve Smith is a retired financial director living on the wonderful Turquoise Coast of Turkey. He has seen many wonderful places in every Continent of the World.  He is a Graduate with Honors and since retirement has been writing professionally for a range of business clients either side of the Atlantic for four years.

Picture by Tax Credit


If Tax Problems Arise, Turn To A Qualified Tax Firm

A man doing his taxes using a calculator and pencil on a white background

Taxes can be quite complicated and can easily lead a person astray. No one is spared the stress or confusion that comes with filing taxes. There are so many small details that it can be very difficult for a person to try to file their taxes or solve tax problems on their own. Luckily, there are professionals who are trained to do just that. A tax firm is a diverse company employing a wide range of professionals.

There are accountants, tax specialists, as well as lawyers. This is why the bigger tax problems are best solved by firms. Accountants and tax preparers do not have the same access to lawyers that these tax firms do, and this access gives tax firms a unique perspective.

The CRA has a department working very hard at finding people who slip through the tax collection cracks. Over 25 million Canadians file taxes every year, so this is an especially large and complex job. People who don’t pay their taxes and people who earn unreported income are two of the biggest problems they face. Over $35 billion every year is earned and not reported to the CRA. Steep penalties and possibly harsher punishments are waiting for those who avoid compliance with their taxes. There is a silver lining to this, though.

It can be stressful to deal with problems like audits, unreported income, overdue tax debt or being in arrears. The CRA can garnish wages or other income, put a lien your house or other property, or even press criminal charges in extreme cases. But it is never too late to try to set these problems right. Firms are especially handy in these situations because of the lawyers on staff. They can help understand what might happen from a legal point of view.

If filing taxes for a person is difficult, then filing taxes for a business can be a nightmare. There are all of the problems that exist with individual taxes, with additional problems that might arise because of the business aspect. There are several kinds of business taxes that must be paid, including the GST/HST for some businesses. It can be a maze to try to navigate through the tax system – from knowing how to correctly handle payroll and the various different kinds of payroll taxes, to knowing whether certain supplies or services are deductible business expenses. Small businesses, especially, who cannot hire a dedicated accountant but still must abide by the same tax laws as big businesses, can find the help they need from a highly knowledgeable tax firm such as Tax911, which can provide you with all the help you need regarding tax preparation services in Canada (visit their website for more information). In many cases the CRA will waive any penalties and extra fees if a taxpayer makes a voluntary disclosure and steps forward to correct their mistake before the CRA has discovered it.  One of the best ways for dealing with tax problems is to get ahead of the situation, and the best way to do that is to go to a tax firm to devise a plan.

Tired Of Corporate Banks? Try A Credit Union

family-saving-money-in-piggy-bankFor hundreds of years, banks were the way to do business when it came to saving money, investments, loans and lines of credit. For many years, this worked. However, consumers are now demanding more for their money and this goes for the banking industry as well. A credit union offers many of the advantages that consumers are looking for.

But what are these benefits? If you want to understand what credit unions offer in comparison to conventional banking, you need to understand their structure. These organizations are usually set up as not-for-profit enterprises and are seen mainly as cooperatives. Just like any other co-op, the members put the resources in and take all of the resources out. Credit union members all share in the profits and resources of their organization. While it’s an unusual foundation for a bank, the members find that they play a more active role in the financing and handling of their own money.

This structure usually results in several advantages for a member, including higher interest rates on savings accounts and sometimes even checking accounts (they’re usually referred to as dividends), lower interest rates on loans and the possibility for micro-loans. Geared to the personal needs of the individual consumer, credit unions focus on the client to get the services they need with the lowest possible fees.

Another advantage that credit unions have over banks is that they are focused on more than profits. Banks are usually corporations, which have millions of shareholders. These shareholders are the owners of the business and get paid accordingly, through stock or cash dividends. This means that any profits that the bank does not retain goes directly to their shareholders and not to their customers. Credit unions do not have shareholders, which is why they are a better option for independent consumers. Their customers are their members, and all of the profits they gain are given back. This is why most credit unions can offer very competitive rates and have extraordinary customer service. They’re unique that way, especially when compared to major financial institutions.

Credit unions are also very involved in their communities. They realize that their members are their owners, so they are invested in their interests. This means they always try to get involved with food drives, runs and walks for the cure and other great causes in their communities. Many credit unions often give very generous donations, showing that they truly care about the communities in which they were founded. This “local is best” mentality is another common denominator when determining why customers leave banks and move their assets to a credit union. If you live in the Ontario area, Pace Credit Union offers 14 locations across the province with a focus on community-building.

According to the Credit Union National Association, membership rates have increased to over 100 million users and continue to grow every day. As people realize they can get better rates and more friendly service at a credit union, they are switching to the best alternative to banks.





The Importance Of Having A Back Up Plan

Recently, a well established British company called its nationwide sales staff for an unplanned meeting and fired most of them as soon as they arrived without any warning. A lot of those who were fired were devastated and reportedly returned home in tears. Apparently, they didn’t have a backup plan because they had never imagined something like that would ever happen to them. This incident shows how important it is for everyone to have a backup plan in these economically uncertain times.

So what is a backup plan? Basically, it is a plan for an alternative course of action in case things do not go your way. It gives you something to fall back on and a chance to start all over again or to give your life a completely new direction. It ensures that you will not have to end up in the streets or hand over your children to foster care in case you lose everything you have. It makes sure that you will have enough to feed your family, pay your monthly bills and repay your debts.

Here is a backup plan (or Plan B) that you could use as a model for your own backup plan if you lose your business or job:

  • Save a portion of your income for a rainy day: When times are good, make sure to set aside a portion of your income for a rainy day. Having enough money to pay your bills and your debts makes life more bearable in times of hardship. If you have large enough savings, it gives you something to restart your life with. I would say 6 – 12 months worth of expenses.

  • Practice living within a budget: When money is flowing in, it is easy to get carried away and spend extravagantly. But you should never forget that good times do not last forever and there may come a time when you will have to count your pennies, so create a monthly budget and learn to live within it. It will help you to make a painless transition into a life of reduced income.

  • Invest in a side business or find a part time job: If you have some money or an additional skill, invest in a side business or find a part time job. Having an alternative source of income, however little it may be, makes the prospect of suddenly becoming unemployed less bleak. With a business or job already in place, you will find it easier to rebuild your life.

  • Develop a hobby and learn new skills: The process of learning should not end until the day you die. Develop a hobby, such as cooking, and enroll in training courses and programs. Many people who have lost their job or business have found great success with the skills they have learned as a hobby.

How about you, what’s you back up plan?


7 Rainy Day Activities Your Kids will Love

Once those rainy days roll around and the kids are off from school, parents have two things on their mind: how to keep their kids out of the rain and how to keep them occupied without having to spend much money. It is always handy to have a few options up your sleeves to make a rainy day a memorable one for your kids as well as for yourself.

Here are 10 rainy day activities that your kids are sure to love and will cost you very little:

1. Play board games the old way

Although kids these days have access to hundreds of online board games, they’ll appreciate the old fashion way of playing if you play with them. The all time favorite classic board games for kids include Monopoly, Snake and Ladders and Candy Land.

2. Take the kids swimming

Children love swimming and seem to be able to swim all day. Besides being a great way to exercise, swimming is cheap. Take your kids to an indoor pool to avoid the rain.

3. Take the kids to a movie

These days, children spend a great deal of time watching TV online. However, they still love going to the movie with their parents. There are always great movies playing at the theatres, so choose one that is making waves and take your kids to see it. To cut the cost, choose a day when there is a discount.

4. Read stories

Good stories never go out of fashion and children of every generation love them. Choose a good book and read it to yourself first. Then plan how you are going to read it to your kids, improvising the voice and mannerism of each character.

5. Give the kids a cooking lesson

Kids do not generally like cooking because they think of it as a chore. However, they will love it if you make it fun. Choose some simple dishes that your kids love and show them how to prepare the recipe and cook them. Do it over several days – one dish per day. Besides being fun, it will be a lesson they will greatly value when they become adults themselves.

6. Paint the walls

If your rooms need repainting, then involve your kids in DIY painting. Show them how to use the brush and how to apply the paint without creating a mess. When they have learned enough, give each of them an area that they can call their own. It may not be a good idea to paint the exterior of your house, but you can always paint the interior walls and ceilings. And your children will simply love it.

7. Have a party

Most children love to dance and eat. Besides being fun, dancing is a great way to reenergize the body and mind. You can get a karaoke machine and sing your favorite songs.

Use your imagination, be creative and think out of the box when searching for things to do with your kids on a rainy day. To keep the costs down, concentrate on the resources available at home. You may not know it yet, but if you look carefully you will find that your home is a treasure-trove of things that help you save money on children’s activities at any time of the year.

What do you do on a rainy day to keep your kids occupied?

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