Financial Planning – Oegema, Nicholson & Associates Insurance

Financial Resolutions to Help You Put Your Best Financial Foot Forward in 2018

Oegema — Tue, 30 Jan 2018 11:06:00 +0000

The holidays are an easy time of year to go a little (or a lot!) out of control with spending. It is easy to get caught up with the idea of creating the perfect holiday season, but when January comes along with the credit card bills and reality hits with your less than perfect financial situation, it can be tough for some to make a plan to get their finances back on a healthy path. That’s where our list comes in. The tips we’ve included below are not meant to solve your finances overnight, but can help make your goals more attainable. If you have any questions about how to get your finances back on track, contact a member of our financial services team, we would love to help you put your best financial foot forward in 2018! Set a reasonable savings goal Although many people say they want to save more, many don’t know how much they should be saving or where they should save it. A reasonable monthly savings goal to start with is 15% of your gross monthly income. An easy way to achieve this goal is to use any automatic transfer functions your banking institution offers you. This way the money is out of sight and out of mind and you can focus on the money left over to cover your necessary expenses for the month. Of course, if 15% doesn’t work with your current income and monthly budget, consider lowering your monthly savings goal or cutting costs in other areas such as entertainment to meet your desired savings goal. Create a plan to tackle your debt Although paying down debt can feel like climbing a mountain, it’s important to remember that with time and the right strategy you can reach the top. The first step in creating a plan to tackle your debt is to determine how much debt you have to pay off. This process can be a little scary when you see the grand debt total, but you can only begin to address the problem once you see the problem. Once you’ve determined your grand debt total and figured out your interest rates, look for ways to consolidate your debt or lower your interest rates. With your debt and interest rates settled, you can then pick the best repayment strategy for your situation. Some people choose to pay off the smallest debts first while others choose to pay off the largest debts first. Whichever method motivates you most is the one you should pick. Track every dollar you spend Many who find themselves in sticky financial situations claim they “don’t know where their money goes”. This is a perfect example of mindless spending where people don’t think about the dollars and cents leaving their account when they tap or swipe their plastic cards for everything from a trip through the drive-thru for coffee or at the store when they put an extra unnecessary item or two in their cart without thinking about the cost. There are many free apps you can download on your phone to help with expense tracking, or you can input the information into a spreadsheet on your computer and make a habit of adding your daily spends in at night. Tracking your expenses makes it easier to be much more mindful about your money and spending and force you to think about what is worth spending for or what is an unnecessary purchase. Work with a weekly cash allowance To cut any unnecessary purchases made on plastic, allow yourself a certain amount of cash every week to live off of (typically around $50-$100). This exercise will also make you more aware of your spending and force you to be mindful about which purchases make the cut and which don’t. Mindfulness of your money is an important component in getting financially healthy, and one of the most effective ways to instill the importance of being mindful with your money is using cash because you physically see the money leaving your wallet. Schedule financial exercises for yourself Get your planner out and write in days to commit to financial exercises such as no spend days, where you don’t spend any money, or monthly spending bans where you commit to not spending at one of your weakness stores. By committing to these exercises you avoid the failure that comes with the “I’ll do it tomorrow” mentality. These tips are meant to be examples of small steps you can take to work towards better financial health and are in no way a definite solution for all financial issues. For financial advice or assistance in reaching your financial goals, contact our offices to get started with one or more of our many financial products to fit your financial situation.

Should I Rent or Buy?

Oegema — Mon, 03 Apr 2017 13:05:00 +0000

Deciding whether to buy or rent a home is a major decision and the right answer can vary from person-to-person. Home ownership is often associated with the great Canadian dream, but does it make the most sense for your personal situation and lifestyle? There are many factors to take into consideration when deciding, and we’ve compiled a list to help you start thinking about the pros and cons of each option. Here are four great questions that you should ask yourself when considering whether to rent or buy a home: 1. What does your 5-year plan look like? What do you see your life looking like in the next 5 years? Do you have a steady job now and plan to keep it, or do you think that you’ll switch jobs or careers? Are you planning on living in the same city, or do you think you might want to move for family, school, or career purposes? Or perhaps do you see yourself becoming a world traveler and jet-setting off to some new destination for a period of time? If you are planning on buying a condo, how soon do you think you may need more space? If you think that any or all of these variables might happen, then you should consider renting over purchasing. However, if you plan on staying where you are for the foreseeable future then buying might be a good option for you. 2. How much do you have saved for a down payment? Do you have enough saved for a good sized down payment for the property? In Canada, you must have a minimum of 5% for a home under $500,000 and 10% for a home over $500,000. However, a good rule of thumb is to save at least 15-20% of the down payment instead of just the minimum. 3. Are you aware of ‘hidden costs’ that can come with a home? After the purchasing of the property, a lot of other costs can come up unexpectedly with being a homeowner. If something breaks, there is no landlord to call to fix it anymore; it is now up to you to get it repaired. Condo fees can also be a cause of extra costs and can go up without much notice. Another factor to consider is whether you want to spend time on upkeep or not. Do you want to spend your Saturday afternoons mowing the lawn? Time is an important piece to consider in the ‘hidden costs’ or homeownership. 4. Do you have enough money saved for closing costs? You also need to make sure that you have enough money saved for the closing costs that are associated with the purchase. You aren’t just buying the house; you also need to consider transfer land taxes, lawyer fees, realtor fees, appraisals, and home inspections. These can all add up pretty quickly, but when purchasing a home that is hundreds of thousands of dollars a couple hundred dollar home inspection is definitely worth the money. These questions can be pretty difficult to answer, but if you think you are ready for home ownership you also need to make sure your bank account is too! There is a helpful Rent or Buy Calculator from Global News that may help in the decision process. With each situation varying so greatly, it’s always a good idea to ask for a professional opinion. If you like to speak with one of our many qualified financial advisors we are always here to help and get you a financial plan that works best for your life.

Should You Pay Debt or Save for Retirement?

Oegema — Mon, 28 Nov 2016 13:16:00 +0000

Canadian debt levels are growing at a faster rate than our incomes are (read the latest report from Statistics Canada). Canadians now owe $1.68 in debt to every $1 made. And while interest rates are low now, they are expected to rise. Credit monitoring agency, Transunion reported that if interest rates were to rise by just one percentage point as many as one million Canadians would be financially stressed. Now is the time to speed up your debt repayment schedule, in advance of the inevitable rise in interest rates. But this begs the question: Does it make more sense for me to pay off my debt, or save for my retirement?

Before we get to answering that for you, here are few things you need to know:

The difference between consumer debt and traditional debt

Consumer debt: Debt incurred as a result of purchasing consumable or non-appreciating goods. Typical consumer debt is your credit card purchases or financing options like payday loans.

Traditional debt: Debt that helps you generate income, or increases your net worth. This could include your education, mortgage, or investing in your business.

2. The difference between an emergency fund and retirement savings

Emergency fund: Money set aside to cover you if something unexpected happens. An emergency fund covers unexpected expenses and will save you from going into debt more. It’s recommended you set aside at least 2 months living expenses, and ideally up to 6 months.

Retirement savings: Savings, typically placed in an RRSP program, that is set aside to cover living expenses for you once you retire. It’s money that you set aside, and do not touch again.

For the purposes of this guide we’re referring to consumer debt and retirement savings.

Now on to the question. Long story short: Repayment vs. saving depends on your specific situation.

If your debt interest is higher than your savings interest rate: Repay

It costs you money to hold debt. For example, if you’re being charged 12% interest on a $10,000 loan, then you are spending $1,200 each year just to hold that money. In the long run you’ll end up paying more if you continue to pay interest while saving money. In this case, you’re better off paying your high-interest debt before contributing to retirement. Paying off a 15% interest rate credit card means you’re guaranteed to have 15% more income once it’s paid off. That’s money you can re-invest into your savings once you’re no longer incurring the expense.

If you’re close to retirement: Save (most of the time)

Experts agree, in an ideal world you should retire debt and mortgage free. But if you’re planning on retiring in the next 10 years and you still have a considerable amount to save, it may make sense for you to split your money between saving and debt repayment. Consider the lifetime value of paying even a small amount into your RRSP now while paying off your debt and take advantage of the compounding interest. You’ll be surprised at how much even a small payment each month can compound over 10 years.

If you’re getting matched on your RRSP contributions: Save

If your employer offers matched contributions then always choose to take advantage of the minimum you need to take part in the program. Not participating is like leaving money on the table, and it will make a big difference for you in the long run. This said, still plan on allocating the remaining amount you can afford each to debt repayment.

If you’ll end up owing taxes at the end of the year: It depends

Look into whether contributing to your RRSP will lower the amount you’ll owe on your taxes. If you’re going to owe money, you might as well choose to invest in yourself. Depending on the nature of the debt, you can also invest in your RRSPs throughout the year with the plan to divert your return back into debt repayment. No matter what your situation, here are a few helpful debt and saving tips:

Holding consumer debt is typically a sign of living outside your means. Reflect on your monthly and yearly budget and look to see if you need to get control of your spending habits.
For traditional debt, strongly consider before choosing to accelerate your payment schedule. Don’t use your emergency or retirement savings to pay extra money on your mortgage or car loan now, if it means you may not have enough money later. Your lender won’t re-evaluate payments based on how much you owe so you’re better to keep scheduled payments rather than depleting your savings account.
Live on less. When building out your budget determine the largest amount you can afford to shift to debt payment each month. Once you pay off your debt, don’t go back to spending that money. Instead, shift the same payment into retirement savings until you’re caught up on your savings goal.

Not sure where to start? Contact us today for expert advice. One of our financial planning experts will be able to help you find the best plan that works for you. Visit us online for a full list of services.

9 Bright Ideas To Make Your Home More Efficient (and Save You Money)

Oegema — Thu, 14 Jul 2016 00:09:29 +0000

The warmer months can certainly be good for your soul… but tough on your wallet. If you’re a homeowner, you’ve probably noticed that some of your utility bills tend to increase during the summer. While some increases may be inevitable, there are some steps you can take to make sure that your bills don’t totally spike.

HVAC and A/C

Make sure your furnace filters are replaced regularly. Even during the summer months, you should check on your air filter and, experts say, probably replace it once every month or two. A clean air filter allows the system to work its best. Some estimates say that a clean air filter can save you 5 to 15 percent on costs.
Apart from keeping the filters fresh, make sure all your HVAC equipment is properly maintained. Here’s a great list of things that should be checked on a regular basis.
On hot days, set your air conditioner to run on a timer. A programmable thermostat can, of course, save you significant money during both the summer and winter. If you work a typical schedule, you probably don’t need to be cooling your entire home at full blast during the day!
Ceiling fans can be a good way to cool things down without cranking the air conditioning. Running a fan in the room that you’re relaxing in can be a lot more efficient than cooling the whole house.

Water Usage

The summer months can cause an extra strain on your water bill. Most people’s water bills are quite a bit higher during the warmer months of the year.

Toilets are responsible for over 25% of water use in your home. Modern low-flow toilets often use about 5 to 6 litres per flush, compared to some older toilets that use up to 25 litres of water per flush.
Showers account for 15% of water in many homes. Modern showerheads can use as little as 56 litres per 10 minutes, compared to standard, older showerheads which can use 95 litres every 10 minutes.
Clothes washers account for 20% of water use in a standard home. Newer washing machines can use about 30% less water than older models.
Dishwashers use only a small percentage of water in the home, but the water savings on new models are spectacular – as low as 7 litres per cycle, compared to old units that could use more than 60 litres.

Other Upgrades and Good Habits

It seems like only yesterday when everybody was replacing their typical incandescent lightbulbs with compact fluorescent (CFL) bulbs. These days, the trend is towards LED lightbulbs. They cost quite a bit more up front, but they tend to last for much, much longer… and many people prefer the quality of light that comes off them.
Don’t forget about your homes’ windows as a source of waste. Modern windows tend to be much better at conserving energy through improved insulation. If you have older windows, there are some steps you can take to improve their efficiency; here is a nice guide.
Try to establish ‘energy-conscious’ habits for yourself and your family:

Thanks for reading, The ONA Team

Home Renovations: How to Manage Costs & Choose a Contractor

Oegema — Thu, 24 Sep 2015 12:06:00 +0000

Your home is your sanctuary; your escape from the hectic world outside its doors. Of course, when you’re having work done on your house, that can turn things upside down for a while. And the final result is so often worth it; not only do you end up with the look you want, renovations to your home can greatly increase the value of your property when you end up selling it. However, if things aren’t managed correctly, home renos can also put you in a financial hole that could be difficult to dig out of – or a mismanaged renovation that adds a good dose of stress to your solitude. Here are some tips to help you make sure the project is nicely on track, before a hammer is lifted.

Choosing a Contractor:

Choosing the right person to head up your renovation project is crucial to ensure that it remains on time and on budget. Here are a few pieces of advice to keep things moving along smoothly.

Never pay the full costs upfront. There are some really great, professionals out there in the renovation industry. However, like almost any trades, there are a few bad apples out there who have no moral issue exploiting trusting homeowners. 10% of the total project cost is a fairly standard down payment on the project, though that may fluctuate depending on the scope of the project and materials cost. For the balance, work out a payment schedule with the contractor, and get it in writing, based on completion of portions of the project.
Make sure everything is in the contract. If you really trust the contractor that you’ve chosen, you may not see this as necessary, however, it’s pragmatic to make sure that everything is in writing.
Verify contractor’s licenses and make sure they are using licensed pros for specialty work. The average general contractor is not a licensed plumber or an electrician. Jobs like these are the domains of licensed specialists who do the work day-in and day-out. Make sure that the person doing your work is properly licensed and experience.
Ensure that permits are pulled. Many home reno projects require permits from the local government before any work is done. For those in Ottawa, check out the city’s guide here: Do I Need a Building Permit? If you live elsewhere in Eastern Ontario, check in with your local municipality as regulations may differ.
Stay in contact, but don’t be overbearing. If the crew is working during the day while you’re at the office, make sure you keep in regular contact with them. By the same token, by following a proper vetting process, you can have some faith that your hired contractor is responsible enough to work hard, and let you know when decisions are needed.

Financing your renovation:

Set aside a contingency fund. Even with the most thorough plan possible, cost overruns are possible. Build this into the budget of the project (10-15% is a good starting point) so that things aren’t thrown wildly off track if the project turns up an issue.
Explore rebates and grants for energy-saving, “green” renos. Both the province and the municipality offer a variety of credits and rebates for healthy homes. Here’s a good article as a starting point. There are also rebates offered by the provincial government for items such as high-efficiency furnaces, low-flow toilets, and other items designed for energy efficiency.
Resist putting more into the home than you’ll get out of it. Even if you have the nicest house on the block, your home’s eventual sale price could be limited by the neighbourhood you’re in – so if you plan to sell in the short or medium-term, be conscious that there might be a limit to what you can get out of a house by what you put in.
Speak to your insurance broker about the insurance implications of the project. Some renovations, remodels, home improvement projects or additions are likely to affect your home insurance policy. As an example, you may be eligible for a reduced premium in the case of a new roof installation; on the other hand, if you significantly upgrade a room like your kitchen, there could be much more value there that your current policy is not accounting for. Speak to your broker and make sure you have a handle on how your project will affect your home insurance policy before you dive in headfirst.

Choose Wisely:

To sum up, take your time to do your research and don’t rush into making a decision on a contractor. And always thoroughly consider the financial and insurance implications of a large-scale investment in your home’s value. In the Capital Region and Eastern Ontario, be sure to touch base with your financial advisor and insurance broker before kicking off any project. Thanks for reading, The ONA Team.

Tips for New Car Buying: Financial Management, Insurance & More

Oegema — Wed, 09 Sep 2015 08:54:22 +0000

Apart from purchasing a home, a new car is one of the bigger purchases that many people make during their adult lives. And buying a car certainly has big financial management and insurance components to it, something that we specialize in as your local insurance brokers here at Oegema, Nicholson & Associates. The car buying process can be stressful, but with some preparation and advance legwork, you can greatly minimize the worry. Here are some suggestions on making the process as painless as possible.

Choosing a Vehicle:

When you’re beginning the process, take your time to do some research. If you have an idea of the segment of car you’re looking to purchase (e.g. 4-door sedan, compact SUV, etc.), compare multiple models. You may find pay-sites like Consumer Reports to be a useful investment, but there are a lot of free resources out there as well.

Finding a dealer:

If this is not your “first trip to the rodeo” and you’ve bought a car through a dealership before, you might feel that it was an unpleasant experience. As in many industries, the Internet has given consumers a lot more power in terms of sharing reviews and information about car dealerships. Use these resources, as well as feedback from any friends, family or colleagues to gather some insight on their own personal experiences.

Finding a bargain:

Go to your bank and see if you can be pre-qualified for a car loan. If nothing else, you can then take this to the dealership to see if they can match or better this offer, giving you a bit of leverage that you wouldn’t otherwise have in financing your automobile. Consider making use of services such as CarCostCanada or Unhaggle to level the playing field against salespeople. These sites provide you with the dealer invoice price, and get various dealerships bidding for your business. Be prepared to walk out of the dealership if they’re not budging when you suspect they still have some room to move. Car salespeople know that if you walk out the door, you’re not likely to come back. But once they see that you’re serious about leaving the dealership, they might just find a little more wiggle room in their price.

Consider the insurance implications of your choice:

Don’t forget to have a look at how certain cars are treated by auto insurance companies. That flashy sports car may be calling to you, but it may end up costing a lot more to insure than an everyday sedan, even if the purchase price of the vehicle is similar. Rely on the expertise of a car insurance broker such as our team here at Oegema, Nicholson & Associates to help guide your insurance decision. In the end, you want to be comfortable in your decision, and make the buying process as comfortable as possible. Keep these tips in mind, and consult with your local insurance experts at ONA to broker the best insurance options for your needs.